Hiring guide in Vietnam

What should I know about hiring in Vietnam?

Legal requirements for hiring in Vietnam

When hiring new team members in Vietnam, employers must follow the labour law regulations outlined in the section below.

Legal framework

Types of employment contracts

In Vietnam, employment contracts fall into two categories: indefinite term and definite term. An indefinite-term employment contract doesn’t specify a duration or termination date, while a definite-term employment contract has a specified duration that can’t exceed 36 months from its effective date.

Content of an employment contract

An employment contract in Vietnam must the employer’s name and address, along with the worker’s personal information, including their full name and identification details. The contract must outline specifics about the job and workplace, the duration of the contract, and details regarding wages and allowances. 

Moreover, it should cover policies on wage increases, working hours and rest periods, provisions for personal protective equipment, and requirements for social insurance, health insurance, and unemployment insurance. Lastly, the contract should include provisions for training and skills development.

Download a free employment contract for Vietnam through Native Teams.

Oral, written or electronic employment contracts

Although written contracts are the norm and electronic agreements hold the same legal weight, verbal agreements can also be acceptable for contracts lasting less than 1 month unless specified otherwise in the Labour Code.

In Vietnam, parties have the freedom to draft their employment contracts in either Vietnamese or a foreign language of their choice. If a bilingual contract is used, the parties may agree that the foreign language version takes precedence in case of discrepancies. However, it is recommended that a Vietnamese version or a translation be available for submission to authorities when required.

Working hours

In Vietnam, the law stipulates that normal working hours are limited to 8 hours per day and 48 hours per week. Employers can set daily or weekly working hours as long as they inform their employees. When using a weekly basis, normal working hours can’t exceed 10 hours in a single day and must not surpass 48 hours per week. The law promotes a standard 40-hour workweek.

Night work

Night work is defined as the period from 10:00 PM to 6:00 AM. Employees who work during these hours are entitled to receive additional compensation of at least 30% of their regular salary.

Breaks and types of leaves

A break refers to a specific period during the workday when employees can pause their work duties. Employees who work at least 6 hours a day are entitled to a rest break of at least 30 consecutive minutes.

Moreover, daily rest refers to the time outside of working hours when employees aren’t engaged in work-related activities. The Labour Code mandates a minimum 12-hour break between shifts for employees working in shifts to ensure adequate daily rest.

Weekly rest pertains to the uninterrupted period of rest employees are entitled to each week, allowing them time for recovery and personal activities. Employees are entitled to at least 24 consecutive hours of rest per week.

Annual leave

Employees in Vietnam who have completed 12 months of service with an employer are entitled to a minimum of 12 days of fully paid annual leave. For those who have worked for less than 12 months, paid leave is granted on a proportional basis, calculated at 1 day for each month of employment.

Public holidays

Public holidays in Vietnam include several significant dates, such as New Year’s Day on January 1st, the Lunar New Year, which spans 5 days, Victory Day on April 30th, International Labour Day on May 1st, and National Day on September 2nd (along with the adjacent day). In addition, Hung Kings Commemoration Day is observed on the 10th day of the third Lunar month.

Tet, the Vietnamese New Year, is particularly important and is celebrated as the most significant holiday for the majority of Vietnamese citizens, typically occurring in late January or early February based on the lunar calendar.

Salary

Compensation for Vietnamese employees working for foreign companies in Vietnam is typically negotiated between the parties, but it must not fall below the minimum monthly salary rates set by the government.

Employers are required to pay wages directly to employees or their legally authorised representatives. They aren’t allowed to influence how employees spend their wages or coerce them into purchasing goods or services from specific sources. Moreover, wage statements provided to employees must clearly detail the wage rate, any overtime or night work rates, and applicable deductions.

To calculate the salary and taxes in Vietnam, click here.

Sick leave

Employees who are ill, disabled, or on doctor-ordered leave are entitled to receive a sickness allowance from the social insurance fund. This allowance is calculated based on the employee’s salary used to determine social insurance premiums.

Parental leave

Workers are guaranteed reinstatement to their previous positions upon returning from parental leave, with no reduction in wages, rights, or benefits. If the previous position isn’t available, the employer must provide a comparable job with equivalent pay.

During periods of caring for sick children under 7, attending pregnancy check-ups, experiencing miscarriage, abortion, stillbirth, or implementing contraceptive methods, workers are entitled to social insurance allowances as mandated by law.

Paternity and maternity leave

Female workers in Vietnam are entitled to 6 months of maternity leave, which includes a maximum of 2 months of prenatal leave. For multiple births, the leave is extended by 1 month for each additional child beyond the first. During this period, female workers receive maternity benefits as outlined by the social insurance law.

Male workers whose wives give birth, those who adopt a child under 6 months old, female surrogate mothers, and workers expecting a child through surrogacy are also entitled to parental leave according to social insurance regulations.

Employers in Vietnam must comply with strict regulations to protect the rights and health of pregnant workers and those caring for young children. They can’t require these workers to perform night shifts, overtime, or long-distance travel if the worker is in the seventh month of pregnancy (or the sixth month for challenging locations) or caring for a child under 12 months old, unless they consent. Plus, pregnant workers engaged in heavy or hazardous tasks must be transferred to lighter, safer duties without any reduction in wages, rights, or benefits during their pregnancy and the first year of child-rearing.

Methods of employment termination

Termination in Vietnam can occur via unilateral termination, based on which party initiates it, and mutual termination agreements.

In the case of unilateral termination, an employee who chooses to resign must notify their employer in advance, following the notice period outlined in their employment contract or applicable labour laws. Similarly, when an employer initiates termination, they must provide written notice to the employee, ensuring that the termination process is documented and justified.

Mutual termination agreements occur when both the employer and employee agree to end the employment relationship. These agreements are formalised in writing and specify the terms and conditions of the termination.

Ordinary dismissal by employer

In Vietnam, the unilateral termination of a labour contract by an employer is strictly regulated and entails a lengthy and complex process. As a result, negotiating a mutual termination agreement is often more practical. Any termination must be justified by valid reasons and adhere to the required notice periods.

Notice period and challenging the dismissal

The statutory minimum notice periods differ based on the type of labour contract. For definite-term contracts lasting less than 12 months, the notice period is three working days. Contracts with a specified term of 12 months or more require a 30-calendar-day notice, while indefinite-term contracts necessitate a 45-calendar-day notice.

Rights and obligations of unemployed individuals

Unemployment benefits in Vietnam are based on the length of contributions to the unemployment insurance fund. Workers who have contributed for 12 to 36 months qualify for an initial 3 months of benefits. For each additional 12 months of contributions, one extra month is added, with a maximum limit of 12 months.

Severance pay

Employers are required to provide severance pay to employees with continuous service of 12 months or more, except in cases of dismissal or retirement. In addition, for periods covered by contributions to the unemployment insurance fund, employers are exempt from paying severance.

Probationary period

In Vietnam, employers and employees can agree on a probationary period within the employment contract or through a separate probation contract. For contracts under 1 month, probation isn’t required.

Prohibition of competition

The legal standing of non-compete agreements in Vietnam remains uncertain, as there is no specific law governing them. While Vietnamese law upholds freedom of contract, it imposes restrictions to ensure agreements align with statutory requirements and social ethics.

Intellectual property rights

The right to file an intellectual property (IP) application for an invention usually belongs to the inventor who created it independently. However, if the invention was made during employment or under a hire agreement, this right typically belongs to the employer or hiring entity that provided financial and material support unless otherwise agreed. In these cases, the employee-inventor retains moral rights and may receive specific remuneration.

Employee data privacy

Prior to July 2023, personal data protection in Vietnam was guided by laws such as the 2015 Civil Code and the Law on Cyber Information Security, along with sector-specific regulations. The introduction of the Personal Data Protection Decree (PDPD) in April 2023, effective from July 1, 2023, established a unified legal framework for personal data protection.

Remote working policy

Remote work policies, including health and safety standards, apply equally across all work environments, whether remote or on-site. Employment contracts for remote roles must contain the same essential information as on-site contracts, with no special provisions required for remote work.

Responsibilities within a remote work arrangement

Vietnamese labour law doesn’t require an employee’s home to be registered as a workplace, as the regulations make no distinction between remote and on-site locations. This allows employers flexibility in managing remote work without the need for additional registration.

Health and safety at home

Employers, employees, and all relevant parties must comply with occupational safety and health regulations. Employers are responsible for maintaining a safe workplace, and employees are expected to adhere to established safety rules and procedures.

What are the advantages of hiring employees from Vietnam vs other countries?

Hiring employees from Vietnam offers several advantages over other countries. One of the main advantages is Vietnam’s cost-effective workforce, so it’s a great choice for businesses looking for qualified employees without the high hiring costs. 

In addition, Vietnam is located in Southeast Asia, strategically positioned for companies looking to access other markets in the region. This geographical advantage makes it easier for businesses to manage regional operations.

Last but not least, the country’s culture is increasingly aligned with global business practices, particularly in urban areas. This cultural affinity can enhance collaboration and communication within diverse teams.

Why use Native Teams for hiring in Vietnam?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.