Hiring in Vietnam

Vietnam's primary employment legislation is the 2019 Labour Code (Law No. 45/2019/QH14), which took effect on January 1, 2021, replacing the 2012 code. This law governs all employment relationships in Vietnam and applies to both local and foreign workers. The 2019 code introduced several changes, including expanded definitions of workplace harassment, flexible working arrangements, and a gradual increase in retirement age to 62 for men (by 2028) and 60 for women (by 2035). Employment contracts must be in writing for any engagement lasting 1 month or longer, and verbal agreements are only permitted for work under 1 month.

Vietnamese law recognizes two contract types: indefinite-term contracts and definite-term contracts of up to 36 months. Fixed-term contracts can only be renewed once. After the second term expires, the employer must either convert the worker to an indefinite contract or end the relationship. Probation periods vary by role: up to 180 days for enterprise managers, 60 days for positions requiring a college degree or higher, 30 days for vocational-trained roles, and 6 days for all other positions. During probation, wages must be at least 85%% of the agreed salary.

Employers who terminate a contract must provide 30 days of notice for definite-term contracts and 45 days for indefinite-term contracts. Employees who have worked 12 months or more are entitled to severance pay of 0.5 months of salary for each year of service, calculated on the average salary of the last 6 months. Severance does not apply when the employee is dismissed for disciplinary reasons. Lawful grounds for employer-initiated termination include repeated failure to perform duties, prolonged illness (12 consecutive months for indefinite contracts), force majeure, and organizational restructuring.

Employees earn 12 days of paid annual leave after 12 months of service, increasing by 1 day for every 5 years of tenure. Workers in hazardous or dangerous occupations receive 14 or 16 base days depending on severity. Vietnam observes 11 public holidays per year, and employees who work on a public holiday receive at least 300%% of their normal daily wage. Unused annual leave can be carried over or cashed out at year-end by agreement between employer and employee.

Payroll contributions in Vietnam are substantial for both parties. Employers pay 17.5%% of gross salary to social insurance, 3%% to health insurance, and 1%% to unemployment insurance, totaling 21.5%%. Employees contribute 8%% to social insurance, 1.5%% to health insurance, and 1%% to unemployment insurance, totaling 10.5%%. Employers also pay a 2%% trade union fee based on the social insurance contribution salary. Personal income tax follows a progressive scale from 5%% to 35%% for residents. The standard workweek is 48 hours (8 hours per day, 6 days per week), though most office-based employers operate on a 40-hour, 5-day schedule.

Overtime is capped at 40 hours per month and 200 hours per year under normal circumstances, with an absolute ceiling of 300 hours per year for specific industries approved by government decree. Overtime rates are 150%% on normal working days, 200%% on weekly rest days, and 300%% on public holidays. Female employees receive 6 months (180 days) of fully paid maternity leave, funded through social insurance, with an additional benefit equal to 2 months of base salary upon returning to work. Male employees receive 5 to 14 days of paternity leave depending on the type of birth. Employers cannot terminate a female employee during pregnancy, maternity leave, or while she is raising a child under 12 months old.