How To Hire And Pay Employees In Vietnam

Emerald Technology's guide to hiring employees in Vietnam

CURRENCY

Vietnamese đồng is the official currency of Vietnam. Its currency symbol is , VND.

CAPITAL CITY

Hanoi is the capital which is situated in northern Vietnam on the western bank of the Red River.

LANGUAGE

Vietnamese is the official language and English is growing to be the second favoured language.

POPULATION The current population of Vietnam is 98.17 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Salaries are paid monthly and employers are not required to, but it is customary to pay a 13 month salary bonus.

PUBLIC HOLIDAYS

Vietnam has 17 public holidays.

GROW YOUR TEAM IN VIETNAM

NO ENTITY, NO PROBLEM

To start growing your team in Vietnam, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN VIETNAM

Vietnam has witnessed an economic boom over the past decade with rates of economic growth reaching over 13% in 2022, bringing new injections of foreign investment and revenue. Vietnam’s young, dynamic workforce and low cost of living has complemented the high rates of economic growth and have proven to be beneficial to businesses relocating to the country. However, there has also been an increase in the migration of Vietnamese workers to other neighbouring Asian countries, particularly Malaysia.

WHY VIETNAM IS GOOD FOR REMOTE WORKERS

With a low cost of living and prices lower than in neighbouring countries, such as Thailand and Indonesia, Vietnam is becoming a hotspot for remote working in Southeast Asia. Despite the generally lower cost of living, Vietnam is favoured by digital nomads as cities, Hanoi for instance, also provide the opportunity for a more lavish lifestyle. Additionally, obtaining the appropriate visas for remote working in Vietnam is a less complicated process than in other nearby countries.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN VIETNAM

The maximum working hours in Vietnam are eight hours per day, six days per week. It is legally required that employers provide employees with one full day off per week, which is usually Sunday. In practice, normal working hours are 40 per week (eight hours per day, Monday-Friday). Overtime hours cannot exceed 30 per month or 200 per year, except from in special cases regulated by the government, where the annual maximum can be increased to 300 hours.

Overtime pay is at least 150% of normal hourly salary on a normal working day, at least 200% on a weekly day off, and at least 300% on a public holiday or normal paid day off.

ANNUAL LEAVE AND PUBLIC HOLIDAYS

Employees who have completed at least one year’s service for an employer are entitled to 12 paid annual leave days, with a pro rata entitlement granted to employees with less than one year’s service. Employees receive one additional day for each additional five years they work for an employer. Employees are entitled to pay in lieu of annual leave days not taken by the end of the year. In practice, employers usually permit employees to carry over untaken annual leave to be taken no later than 31st March the following year. Employees working under hazardous conditions may earn more leave, and additional leave is often a negotiated supplementary benefit.

There is 17 public holidays 

January 1st: New Year's Day 

January 2nd- 3rd: New Year's Holiday 

January 29th - February 6th: Tet

April 10th: Kung Kings Commemoration Day 

April 11th: Kung Kings Commemoration Holiday 

April 30th: Reunification Day 

May 2nd: Labor Day 

May 13th: Labour Day Holiday

September 1st: National Day Holiday 

September 2nd: National Day 

PROBATION PERIOD IN VIETNAM

Probation periods are common in Vietnam. They must not exceed 60 days for work that requires specialist or highly technical skills, or 30 days for other types of work.

RESIGNATION AND DISMISSAL IN VIETNAM

Employers must give 30 working days’ notice for termination of fixed term labour contracts, and 45 working days’ notice for termination of indefinite labour contracts. They must have proper legal grounds for termination. Upon termination of employment, a worker who has completed one year’s service is entitled to severance pay of half a month's salary, plus other benefits (if any), for each year of service. Severance pay shall be paid within 7 days from the termination date.

RESTRICTIVE COVENANTS

Generally, non-compete and non-solicitation provisions are permissible, but the labour authorities have taken the view that labour documents may only deal with labour matters during the term of employment, and covenants that are drafted to survive termination of the employment relationship are not enforceable. It is uncertain, therefore, how the courts would interpret this.

Given this, it is recommended that any non-competes or non-solicits that are intended to survive termination of the employment relationship are also included in a separate standalone contract, as such agreement would be treated as a civil agreement and covenants therein may survive termination of the employment relationship.

READY TO HIRE YOUR EMPLOYEES IN VIETNAM?

CONTRACT OF EMPLOYMENT IN VIETNAM

Employment agreements may be in written or electronic form, or – if the term of employment is less than one month - in verbal form.

MATERNITY LEAVE IN VIETNAM

Pregnant employees are eligible for six months of paid maternity leave at 100% of salary (the base salary for the social insurance contribution) for their first child, and an additional 30 days for each additional child. Salary during this period is paid by the compulsory social insurance. The maximum entitlement is VND 29.800.000 and the employer normally cover the difference where the employee’s actual gross salary base is higher than this amount. Fathers are eligible to receive 5-14 days of paid paternity leave, depending on whether the child is born naturally or by C-section and whether it is a single or multiple birth.

SICKNESS LEAVE IN VIETNAM

Employees who suffer from illness and/or disability, or take leave in accordance with a doctor’s order, receive an allowance paid by Vietnam’s social insurance fund, provided that they submit the required documentation supporting their leave (certificate issued by a public hospital doctor). The sick leave allowance is based on the employee’s salary used to calculate the social insurance premium. The maximum annual entitlement is:

  • Less than 15 years’ contribution to social insurance fund: 30 days
  • 15-30 years’ contribution to social insurance fund: 40 days
  • 30+ years’ contribution to social insurance fund: 60 days

SOCIAL SECURITY

The social and health insurance contribution, which applies to both Vietnamese employees and expatriate employees working in Vietnam, is calculated based on the salary, allowance, and additional payments stated in the labour contract. It does not exceed 20x the common minimum salary provided by the government. The unemployment insurance contribution, which is calculated and capped in the same way, is only required for Vietnamese employees.

Contribution Employer Employee
Social Insurance 17.5% 8%
Health Insurance 3% 1.5%
Unemployment Insurance 1% 1%

 

HEALTHCARE AND INSURANCE

All Vietnamese and expatriate employees contribute a mandatory 1.5% of their salary into a health insurance fund, in addition to a 3% contribution by their employer.

Employment of

FOREIGN NATIONALS IN VIETNAM

A work permit is required for a foreign national to legally work in Vietnam, except for cases of work permit exemptions.

Visas in the Vietnam

This document will only be granted to a foreign national who is sponsored by an entity in Vietnam. The sponsoring entity must submit the demand for employment of foreign nationals to the relevant government’s body at least 30 days before recruiting or transferring the foreign nationals to work in Vietnam. The local DOLISA responds to the sponsoring entity in writing within 15 days, confirming the acceptance or refusal of the demand, which is deemed a pre-approval for using foreign employees in Vietnam. A work permit application must then be filed with the local DOLISA at least 15 business days before the expected commencement date for the employee. Work permits can be granted with a maximum validity period of two years and can be renewed through the reissuance process. Typically, depending on the role, a foreign national wishing to work in Vietnam will require management experience, or at least three years’ relevant professional experience and a Bachelor, engineering or higher degree.

Salary Taxes

MINIMUM WAGE IN VIETNAM

Vietnam's official monthly minimum wage varies by region:

  • Region I: VND 3,500,000 per month
  • Region II: VND 3,100,000 per month
  • Region III: VND 2,700,000 per month

Region IV: VND 2,400,000 per month

INCOME TAX

Net Taxable Income 

Rate on Excess

0 - 60,000 5%
60,001 - 120,000 10%
120,001 - 216,000 15%
216,001 - 284,000 20%
384,001 - 624,000 25%
624,001 - 960,000 30%
960,000+ 35%

 

SALARY PAYMENTS IN VIETNAM

The payroll cycle in Vietnam for full time employees is monthly, paid on the last working day or as otherwise agreed within the employment contract. Part-time employees, independent contractors, and freelancers are paid their salaries as agreed within the employment contract. Though there is no statutory requirement to do so, it is common for employers to pay a 13th month salary as a Christmas bonus. Employees may also receive smaller bonuses for public holidays.

SOCIAL SECURITY CONTRIBUTIONS IN VIETNAM

All employees contribute a mandatory 17.5% of their salary into social insurance and 1.5% into a health insurance fund, in addition to 8% and 3% respective contributions by their employer. Vietnamese employees contribute an additional 1% of their salary to unemployment insurance, which is matched by their employer.

WORKER MISCLASSIFICATION IN VIETNAM

Similar to other countries, Vietnam has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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