Employer of Record in Vietnam: Hire, Manage, and Pay Talent Seamlessly
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Employment norms in Vietnam
Vietnam's rapid economic growth and increasing global integration have resulted in significant changes in its employment landscape. Understanding the country's employment norms is crucial for businesses and individuals seeking to navigate the Vietnamese job market.
General Information:
- The Vietnam currency is the Vietnamese đồng (VND).
- Hanoi is the capital of Vietnam.
- Vietnamese is the official language of Vietnam. Legal documents can be drafted in Vietnamese to be considered legally valid.
- As of 2021, the GDP of Vietnam was reported to be USD 366.14 billion.
Vietnamese labor laws include minimum wage requirements, standard working hours, and regulations related to contracts and termination.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working hours and overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking hours and overtimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements in Vietnam
In Vietnam, agreements between employers and employees are subject to several legal requirements. Some important considerations include:
- Employment contracts must be in Vietnamese and include specific information such as job duties, salary, working hours, and duration of employment.
- Employers are required to provide a copy of the contract to the employee within five days of the start of employment.
- Contracts must comply with Vietnamese labor laws, including minimum wage requirements, working hours, and social insurance requirements.
- Employers are required to provide training and safety measures to employees.
- Termination of employment contracts must comply with Vietnamese labor laws and must be done in writing.
- Fixed-term agreements: They are made for a maximum of 36 months, but only two consecutive agreements are allowed. The contract becomes indefinite by default if employment continues even after the contract.
- Any agreements or contracts in a foreign language must be accompanied by a Vietnamese translation to be considered legally valid.
Onboarding Process in Vietnam
The onboarding process in Vietnam typically includes the following steps:
- Submitting mandatory documents such as identification, employment contract, and social insurance documents.
- Orientation training to familiarize employees with the company's policies and procedures.
- Provision of necessary equipment and resources to employees for their job roles.
- Introducing new employees to their colleagues and supervisors.
Mandatory documents for onboarding typically include:
- Identification documents (passport, ID card, etc.)
- Work permit (for foreign employees)
- Employment contract
- Social insurance documents
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Visa in Vietnam
Vietnam has several types of visas and work permits, including:
- Tourist visa: for short-term visits to Vietnam for tourism or personal purposes.
- Business visa: for individuals engaging in business activities such as attending meetings or signing contracts.
- Work permit: for foreign nationals employed by Vietnamese companies or individuals.
- Temporary residence card: for foreign nationals residing in Vietnam for longer periods, typically for work or study purposes.
Minimum Wage in Vietnam
The current minimum wage in Vietnam ranges from 3,250,000 VND to 4,680,000 VND depending on the region.
- Region 1: 4,680,000 VND
- Region 2: 4,160,000 VND
- Region 3: 3,640,000 VND
- Region 4: 3,250,000 VND
Payroll Cycle in Vietnam
In Vietnam, the standard payroll cycle is monthly or bi-monthly.
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Annual Bonus in Vietnam
It is customary in Vietnam to pay the lunar year bonus or TET bonus before the holiday for the New year begins.
Health Benefits in Vietnam
In Vietnam, employers may provide various health benefits to employees, including:
- Social insurance: Employers are required to contribute to social insurance funds on behalf of their employees, which provides coverage for health care expenses.
- Health insurance: Employers may also offer health insurance plans that provide additional coverage for medical expenses not covered by social insurance.
- Annual health check-ups: Employers may provide employees with annual health check-ups as a benefit.
Working hours and overtime in Vietnam
- Work-hours: the standard workweek is 40 hours, with a maximum of 8 hours per day.
- Break: Employees are entitled to a minimum of one day off per week. Break time is typically one hour per day for lunch
- Overtime: OPayment for overtime is mandatory in Vietnam. Employees who work beyond the fixed working hours get overtime pay. It is typically 150% of the normal wage for weekdays, 200% for weekends and 300% for public holidays.
Leaves in Vietnam
Sick leaves
- Employees are entitled to paid sick leave for up to 30-60 days per year.
- Employee receives 75% of their salary paid through social insurance.
Parental leaves
- Female employees are entitled to 6-7 months of maternity leave completely paid for by social insurance.
- Fathers get 5-14 days of paternity leave, also completely paid by Social Insurance.
- Parental leave for adoptive and biological parents is provided up to 20 days per year until the child is 3 and 15 days per year until the child is 7. This is paid by social insurance and the employee receives 75% of their salary.
Annual leaves
- Employees are entitled to at least 12 days of paid annual leave per year, which increases with the length of service (1 day for every 5 years worked).
Other leaves
- Bereavement leave of 3 days is offered to the employees if the employee's family member dies.
- Marriage leave of up to 3 days for an employee and one day for an employee's child marriage.
Public Holidays (for the Calendar year 2024)
Dates may change as per traditional calendars or official changes.
- New Year's Day: January 1 - January 2
- Tet Holiday: February 10
- Vietnamese New Year's Eve: February 11
- Vietnamese New Year: February 12
- Tet Holiday: February 13 - February 16
- Hung Kings Commemoration Day: April 29
- Reunification Day and International Labor Day: April 30 - May 3
- Independence Day: September 1 - September 4
Public Holidays (for the Calendar year 2025)
Dates may change as per traditional calendars or official changes.
- New Year's Day: January 1 - January 2
- Tet Holiday: January 29
- Vietnamese New Year's Eve: January 30
- Vietnamese New Year: January 31
- Tet Holiday: February 1 - February 4
- Hung Kings Commemoration Day: April 29
- Reunification Day and International Labor Day: April 30 - May 3
- Independence Day: September 1 - September 4
Taxes for Employers in Vietnam
Employers in Vietnam are required to pay several taxes, including:
- Social insurance: Employers contribute to the social insurance program. The employer contribution rate is 17.5%.
- Health insurance: Employers contribute to the health insurance program. The employer contribution rate is currently set at 3%.
- Unemployment insurance: Employers are required to contribute to the unemployment insurance fund. The employer contribution rate is currently set at 1%.
- Trade union fund: this is specific to corporate employees and the rate is 2%
- VAT: at the standard rate of 10%
Taxes for Employees in Vietnam
Employers in Vietnam are required to pay several taxes, including:
- Personal income tax (PIT): Employees are responsible for paying PIT on their salary. The PIT rate is progressive, ranging from 5% to 35% depending on the employee's income level.
- 0-60 million VND: 5%
- 60-120 million VND: 10%
- 120-216 million VND: 15%
- 216-384 million VND: 20%
- 384-624 million VND: 25%
- 624-960 million VND: 30%
- 960+ million VND: 35%
- Social insurance: Employees are required to contribute to the social insurance program, which provides benefits such as sickness, maternity, and retirement benefits. The employee contribution rate is 8% of their salary.
- Health insurance: Employees are required to contribute to the health insurance program, which provides access to medical services and treatments. The employee contribution rate is currently set at 1.5% of their salary.
- Unemployment insurance: Employees contribute 1%. of their salaries towards this fund.
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Probation in Vietnam
The maximum length of a probationary period is typically 6 -60 days but probation in Vietnam is not mandatory by law.
Termination in Vietnam
In Vietnam, an employer can terminate an employee for a variety of reasons, including:
- Poor performance
- Breach of contract
- Misconduct or violation of company policies
- Redundancy due to business restructuring or closure
- Health reasons or incapacity
- Termination by mutual agreement
- Expiration of a fixed-term contract
Severance Pay in Vietnam
Employees in Vietnam are entitled to receive severance pay if their employment is terminated by the employer without just cause. The amount is either half a month or one month's salary for every year worked.
Employees or Contractors in Vietnam
- In Vietnam, misclassifying an employee as an independent contractor can result in penalties for employers, including fines and back pay for missed benefits and entitlements. This is because employees are entitled to additional benefits and protections, such as social security contributions, annual leave, and sick leave, that independent contractors do not receive.
- Misclassifying a contractor as an employee can result in employers being required to pay additional benefits and entitlements, such as overtime pay and health insurance.
Final Words
Vietnam has a well-established legal framework for employment regulations and labor laws, which protect the rights of both employees and employers. The country offers a range of opportunities for businesses to establish themselves and operate in various sectors, with a competitive labor market and a skilled workforce.
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Social Security in Vietnam