Vietnam Employer of Record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Vietnam, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Vietnam ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Vietnam and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

The primary labor law in Vietnam, is the Labor Code, which took effect in 1995 and was extensively revised in 2013; major changes included the treatment of maternity leave, overtime, work permits, and disciplinary dismissal. The Ministry of Labor, Invalids, and Social Affairs is the government agency responsible for labor and employment matters. The Labor Code generally does not apply to businesses employing fewer than 10 workers. 

An employment contract must be in writing with a copy for the employer and the employee. The contract may be made orally only if the job is temporary—with a term of three months or less—or if the employee is hired as a domestic servant. 

A contract may be valid for an indefinite term, for one to three years, or for a seasonal job or a specific job to be carried out in less than one year. (Note: Effective January 1, 2021, there will be only two types of labor contracts: definite term contracts up to 36 months in length and indefinite term contracts.) 

Employers must conduct a self-review of their compliance with employment law at least once a year.

As you look to hire employees in Vietnam, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

By law, normal working time may not exceed eight hours per day and 48 hours per week, although the Labor Code encourages employers to implement a 40-hour workweek.

An employee is entitled to 30 minutes of rest—45 minutes for a night-shift worker—during a six- or eight-hour shift. Employees are entitled to have at least 12 hours between the end of one shift and the beginning of the next.

An employee is entitled to at least one 24-hour day of rest each week on Sunday or any other fixed day in the week. If the nature of the business makes it impossible for a weekly rest day to be arranged, an employer must give the employee at least four days of rest per month.

Female employees are entitled to a 30-minute rest break for menstruation for at least three days per month.

Overtime can’t exceed four hours per day, 40 hours per month and 300 hours per year, except for certain types of employees, in which case overtime can’t be more than 200 hours a year. These types of employees include: 

 Compensation

As you consider the appropriate salary to offer new employees, keep in mind:  

 As your employer of record in Vietnam, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

There is no legal requirement that employers provide employee bonuses. Voluntary incentive bonuses are often granted based on company earnings, however, and an extra month’s pay (the 13th-month bonus) is frequently given as an annual bonus and a Tet bonus awarded before employees begin their Lunar New Year holiday.

The probationary period shall be negotiated by the parties on the basis of the nature and complexity of the job. Only one probationary period is allowed for a job and the probation shall not exceed: 

Under Vietnam’s Labor Code, employers may terminate an employment contract if an employee:

Valid grounds for termination also include closure or contraction of the business.

Except for dismissals due to criminal conduct, repeat offenses, or repeated absences, an employer must give at least 45 days’ notice before terminating an employee working under a labor contract without a definite term. Similarly, an employee working under a labor contract without a definite term must give the employer at least 45 days’ notice before leaving the job.

Upon lawful termination of a labor contract with an employee who has worked for the company for a year or more, the employer must pay severance of one-half month’s salary for every year of service. 

When negotiating terms of an employment contract with a candidate in Vietnam, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

During pregnancy, a female employee can take five days’ paid leave for prenatal medical checkups; five two-day paid leaves if the medical facility is located far or the employee is ill. A woman is eligible for six months of paid leave, but more than two months of these cannot be taken before the birth of the child. If the employee gives birth to twins or more than two children, she can take another 30 days of leave for every additional child.

After the end of the leave, if the employee has not fully recovered, she may take five to 10 days of additional leave with a benefit of 25% of the minimum wage if she recovers at home or 40% of the minimum if she rehabilitates at a rest home.

Maternity benefits for Vietnamese employees are paid at 100% of salary up to a maximum of 20 times the base salary. Maternity leave pay for Vietnamese employees is covered by the social insurance fund. Maternity leave pay for expatriate employees is subject to the agreement between the employer and employee.

Maternity benefits are also paid to insured women who adopt a baby younger than 6 months. The woman gets the maternity benefit until the baby reaches 6 months old, as well as a lump sum equivalent to two months of the minimum wage for each child.

A female employee with a baby younger than 12 months is entitled to a break of 60 minutes every day for nursing.

An employee is entitled to annual leave with full pay after one year with an employer, as follows:

The number of days of annual leave increases at the rate of one for every additional five years with an employer.

An employee with less than one year with an employer receives leave in proportion to the duration of the employment. Wages for the leave time are paid in advance.

An employee may choose to receive pay in lieu of taking annual leave. Employees whose employment is being terminated are entitled to pay for unused leave.

Employees are entitled to the following 6 public holidays with 10 days off and full pay: 

Sickness benefits are available for illnesses unrelated to work that are not self-inflicted or related to substance abuse. The benefit is equal to 75% of the insured’s wages payable for up to 30 days in a calendar year if the insured has fewer than 15 years of covered employment, 40 days if 15 to 30 years, 60 days if more than 30 years.

The level and duration of the sickness benefit increases if the employee works at a hazardous or arduous job. In that case, the benefit is equal to 100% of the insured’s wages payable for: 

If prolonged hospitalization is needed, full benefits can be paid for up to 180 days in a calendar year with reduced benefits if the illness continues after 180 days.

Sick pay is covered by the social insurance fund.

Vietnam’s social insurance system covers all private- and public-sector employees with employment contracts of at least three months. The system provides benefits for employees for sickness, occupational injuries and disease, pregnancy, retirement, and death.

Employee and employer contributions to the system vary depending on the benefit program.

The maximum wage used for calculating contributions to social insurance is 20 times the minimum wage.

A list of occupational diseases is published by the Ministry of Health and the Ministry of Labor, Invalids, and Social Affairs after consultation with the Vietnam General Confederation of Labor, the nation’s central trade union, and representatives of employers.

After a permanent disability is assessed by the Ministry of Health medical board, benefits are paid according to the percentage of disability and number of years the worker has paid into the social insurance system. Workers determined to have lost 5 to 30% of their earning capacity get a lump sum, while those who have lost at least 31% of their earning capacity get a monthly benefit.

If the insured dies in a workplace accident or from an occupational disease or during initial medical treatment for an accident or disease, the worker’s relatives are entitled to a lump sum of 36 times the monthly minimum wage in addition to survivors’ benefits if they are eligible. 

In addition to healthcare benefits, employees in Vietnam are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Vietnam, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed. 

Updated: July 04, 2024

We write and validate all local employment contracts, streamlining the onboarding process for you and your Vietnam employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Vietnam, we will:   

The entire onboarding process for the employee is often completed in as little as two weeks. 

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Vietnam. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.