Employer of Record in Vietnam

Hiring in Vietnam for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Vietnam in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Vietnam.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Vietnam’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Vietnam if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Vietnam below, to avoid any compliance issues.

Employment Contract Requirements

Essential hiring details in Vietnam include:

• Job description, duties, and responsibilities
• Date of commencement (and employment duration for temporary contracts)
• Salary (as well as other compensation or benefits), payment method, and pay date
• Information on social security contributions

Onboarding Process

We can help you get a new employee started in Vietnam quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Vietnam

The standard working hours in Vietnam are 8 hours per day or 48 hours per week, and employers are encouraged to adopt a 40-hour workweek with Saturdays and Sundays off.

Overtime in Vietnam

In Vietnam, overtime is any work exceeding 48 hours per week, compensated at a rate of at least 150% of the usual salary. Weekend work pays 200% and public holidays pay 300%. Overtime is capped at 40 hours per month and 200 hours per year, with exceptions regulated by the government allowing up to 300 hours annually.

Probation Period in Vietnam

In Vietnam, probation periods vary based on qualification and position, spanning from 6 days for unskilled workers to 180 days for high-level executives, as dictated by the Labor Code. Agreed upon by both parties, this period is crucial for evaluating an employee's suitability for the role.

Fiscal Year in Vietnam

1 January - 31 December is the 12-month accounting period that businesses in Vietnam use for financial and tax reporting purposes.

Payroll Cycle in Vietnam

The payroll cycle in Vietnam is usually monthly, with employees being paid by the last working day of the month.

Minimum Wage in Vietnam

The minimum wage for employees in Vietnam is typically 21,562.50 VND - 31,000 VND reigion per hour, amounting to ~3.45M VND - 4.96M VND per month for a typical 40 hour work week.

Bonus Payments in Vietnam

There is no statutory requirement for employers to pay a 13th salary.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 23.5% on top of the employee salary in Vietnam.

Employee Payroll Tax Contributions

In Vietnam , the typical estimation for employee payroll contributions cost is around 10.5%.

Individual Income Tax Contributions

Income tax in Vietnam is 'Pay As You Earn'. The individual income tax ranges from 5% to 35%. Income tax is calculated according to progressive rates.

Pension in Vietnam

Pensions are part of the social insurance scheme which employers and employees make mandatory contributions. The standard retirement age in Vietnam is current 62 for men and 60 for women. Employees can opt for early retirement if they have contributed to the social insurance fund for at least 20 years and are at least 5 years younger than the standard retirement age. However, early retirement will result in a reduced pension amount.

Mandatory Leave Entitlement in Vietnam

The annual leave entitlement in Vietnam is 12 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Vietnam

Vietnam has 7 mandatory national public holidays in a year.

Paid Time Off in Vietnam

In Vietnam, all employees, whether full-time or part-time, receive 12 working days of paid time off (PTO) annually. PTO accrues monthly at a rate of 1 day per month, with an additional day granted for every five years of employment.

Maternity Leave In Vietnam

Female employees in Vietnam are entitled to 6 months of maternity leave, extended by 1 month for twins and 2 months for triplets. During this leave, they receive maternity benefits from Social Security equivalent to 100% of their normal salary, capped at 20 times the national minimum wage.

Paternity Leave In Vietnam

Fathers in Vietnam are entitled to paternity leave, ranging from 5 days for a single child (7 days for a C-section) to 10 days for twins (14 days for a C-section).

Sick Leave In Vietnam

Employees who are ill, disabled, or on doctor-ordered leave receive an allowance from Vietnam's social insurance fund upon submission of required documentation (typically issued by public hospital doctors). The allowance rate is 75% of the employee's salary used as a basis of social security contributions. The allowance amounts are:

• 30 days per year for employees contributing to the social insurance fund for less than 15 years.
• 40 days per year for those contributing for 15 to 30 years.
• 60 days per year for those contributing for over 30 years.

Parental Leave In Vietnam

There are no legal provisions for additional parental leave.

Marriage Leave

3 days of leave at 100% pay from employer.

Marriage of a Child

1 day of leave at 100% pay from employer.

Bereavement Leave

3 days of leave at 100% pay from employer.

Termination Process in Vietnam

Ending employment in Vietnam can be intricate as there's no at-will termination outside the probation period. Termination must adhere to statutory grounds and formal procedures, including:

• Voluntary resignation by the employee
• Dismissal during probation
• Disciplinary dismissal
• Performance-related termination due to job unsuitability

Notice Period in Vietnam

The minimum notice period in Vietnam is 3 days and varies depending on the contract type:

• 45 days for indefinite contracts
• 30 days for fixed-term contracts of 12-36 months
• 3 working days for fixed-term contracts under 12 months

Severance in Vietnam

In Vietnam, employees with over a year of service are entitled to severance pay, except for terminations for just cause. It equals half a month's wages for each year of employment, mandated by the Vietnamese Labor Code. The salary used for this calculation is the average salary of the employee over the last six months before termination.