Guide to Hire Employees in Vietnam

Planning to set up a company or back office in Vietnam? Hiring local talent will be one of your first steps, and it comes with its own set of rules and requirements. This article will guide you through the process, highlighting key Vietnamese labor laws and sharing best practices to help you attract and retain the right people for your team.

Understanding Legal Requirements and Obligations to Hire Employees in Vietnam 

Types of Employment Contracts in Vietnam

Before you start building your team in Vietnam, it is important to understand how employment structures and working hours are regulated. The available employment contracts in Vietnam include:

• Indefinite-term contracts: Employers use this as the most stable and common employment type, offering long-term employment with no end date, typically for full time roles.
• Fixed-term contracts: These last from 12 to 36 months, and can only be renewed once. After the specified period, the law requires you to convert the employee into an indefinite-term contract if they decide to stay.
• Seasonal or Project-based contracts: These are for contracts that are only valid for up to 12 months, often used for temporary or short-term roles.

Probation periods are common in Vietnam, though not legally required. The duration depends on the role, ranging from 6 days for unskilled jobs to two months for most executive positions. Employers usually pay employees at least 85% of their agreed full-time salary during this period.

Working Hours and Overtime Rules

When it comes to working hours, the standard working week is 48 hours, spread across 5 or 6 days. The law caps overtime at 4 hours per day, 40 hours per month, and up to 200 to 300 hours per year, depending on the sector. Overtime pay must adhere to the following statutory rates:

• 150% of the regular wage for overtime on weekdays.
• 200% on weekends
• 300% on public holidays

The minimum wage in Vietnam does vary across regions, so do keep that in mind when structuring your payroll. For a better idea of what you should be paying your employees, here’s a quick look at the average monthly salaries for different roles in Vietnam:

• Administrative Staff: VND 8 million to VND 12 million
• Customer Service Representative: VND 10 million to VND 15 million
• Software Developer: VND 25 million to VND 50 million
• Digital Marketing Specialist: VND 15 million to VND 30 million
• Finance and Accounting Professional: VND 20 million to VND 35 million
• Operations and Supply Chain Manager: VND 30 million to VND 50 million

Emerhub’s HR and payroll experts can assist you with managing your statutory contributions, monthly payroll, and compliance reporting. We will ensure that your workforce is aligned with local labor laws and ensure your employees get paid on time.

Employer and Employee Statutory Contributions in Vietnam

One of the most important parts of hiring in Vietnam is understanding mandatory statutory contributions, which are shared between you as the employer and your employee. The contribution rates are as follows:

• Social Insurance: 17.5% (Employer), 8% (Employee)
• Health Insurance: 3% (Employer), 1.5% (Employee)
• Unemployment Insurance: 1% both the employer and the employee

Employers calculate these contributions based on the employee’s monthly salary and must pay them consistently to stay compliant with Vietnamese labor regulations.

Employee Benefits: Leaves and Severance Pay

As an employer in Vietnam, you must provide a solid baseline of statutory benefits. These benefits play a big role in employee satisfaction and retention. Here is what you need to plan for:

• Annual Leave: Employees require a minimum of 12 paid days off in a year. This increases based on seniority and job classification.
• Public Holidays: Vietnam has 11 paid public holidays in a year.
• Sick Leave: This is covered by Social Insurance, and the number of paid sick days depends on the nature of the illness and how long the employee has contributed to the fund.
• Parental Leave: Maternity leave is 6 months, and paternity leave ranges from 5 to 14 days, depending on the number of children.
• Medical Checkup: Employers must provide annual health checkups for their employees.

On the flip side of things, when employment ends, you need to do your due diligence around the termination process. Employees that have worked with you for over 12 months and were dismissed for reasons other than misconduct or voluntary resignation will be entitled to severance pay. Severance pay is calculated at half a month’s salary for each full year of service.

In cases where termination is due to business restructuring or redundancy, your employee may be entitled to a job-loss allowance instead. This is usually a one-month’s salary for every year of service, with a legal minimum of two months’ salary if the employee has completed at least 12 months of employment.

Considerations for Hiring Foreign Employees in Vietnam

If you are planning to bring and hire foreign talent into your business operations in Vietnam, there are a few key steps that you need to be aware of. The first step is to submit a labor demand report to the local authorities, which confirms that the position genuinely requires foreign expertise and cannot be filled by a Vietnamese.

Upon labor demand approval, you can move forward with applying for a work permit. You must secure this permit before the employee starts working and will be valid for up to 2 years. 

In some cases, foreign employees may be exempt from needing a work permit. This applies to certain short-term assignments, intra-company transfers, or nationals of countries that have signed specific treaties with Vietnam. However, these exemptions will still require their own set of documentation and registration.

To complete a work permit application, you will need to prepare the following:

• A signed employment contract
• Certified copies of diplomas and experience records (CV or resume)
• A valid criminal record clearance certificate
• A health check report from a certified hospital in Vietnam

Flexible Hiring Solutions in Vietnam for Foreign Companies

If you do not have a registered entity in Vietnam or want to avoid the complexities of setting one up, you can opt for an Employer of Record (EOR) service through RecruitGo, our sister company. This allows you to hire talent in Vietnam quickly and compliantly, whether you’re onboarding a single specialist or building an entire remote team. 

On the other hand, if you are interested in setting up a local legal entity for your business operations and hires, Emerhub can assist you through the entire company setup process. Our local experts will handle business registration, licensing, bank account opening, and all the documentation required to get your operations up and running smoothly.

Start your hiring process in Vietnam today by discussing your needs with our certified business consultants. Fill out the contact form below and we’ll reach out to you right away.