10 Notable Points When Hiring in Vietnam

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Vietnam is a country with a rich culture and history. It is also one of the fastest-growing economies in Southeast Asia. If you are planning to hire employees in Vietnam, there are several things you need to know. In this blog, we will discuss 10 notable points when hiring in Vietnam. Whether you are hiring locally or remotely, this blog post will equip you with the knowledge you need to navigate the Vietnamese employment landscape. 

Here are the 10 key points that will help to ensure a successful hiring process in Vietnam:

 

1. Compliance with Employer Cost You Must Follow

If you are hiring employees in Vietnam, you should take note that the employer's cost in Vietnam amounts to 24% of the employee's salary. It's important to note that the maximum monthly salary considered for calculating social insurance, health insurance, and control union fees is VND 36,000,000.

• Social Insurance - 17%
• Health Insurance - 3%
• Accident Insurance - 0.5%
• Control Union Fee - 2%
• Unemployment Insurance - 1%

 

2. Vital Inclusions for Contracts

When hiring, contracts in Vietnam should be written in Vietnamese, but it is essential that they are in written form and signed by both parties involved. A valid contract in Vietnam must include the following elements:

• Name
• Start Date
• Length of the employment
• Job description
• Termination conditions

 

3. Essential Documents for Onboarding in Vietnam

• Social Insurance Form
• Citizen ID Card
• Bank Statement
• Passport or Government-Issued ID
• Proof of employment eligibility (For Foreign Workers)

In Vietnam, the onboarding process typically spans three business days, during which the employee will be registered with the tax authorities and enrolled in the social security system.

 

4. Mandatory Benefits for Employees in Vietnam

In Vietnam, employee mandatory benefits encompass:

• Social Security
• Unemployment Insurance
• Workers' Compensation Insurance
• Public Health Insurance
• Pension Insurance 
• Private Health Insurance (optional)

 

5. Compulsory Paid Time Off & Public Holidays

Both full-time and part-time employees in Vietnam have the right to receive 12 working days of paid time off (PTO) annually. The PTO accrues on a monthly basis, with employees earning one day of PTO per month. Furthermore, for every consecutive five years of employment with an employer, the annual leave entitlement increases by an additional day.

In Vietnam, there are six national holidays celebrated, totalling 11 days off in a year. Additionally, employees may also observe regional holidays based on their specific work location. 

The national public holidays in Vietnam include:

 

6. Minimum Wage Requirements

Employers need to consider the local currency, which is the Vietnamese Dong (VND). The monthly minimum wage in Vietnam varies based on the region in which the employee resides. 

• Zone 1 - 4,680,000 VND
• Zone 2 - 4,160,000 VND
• Zone 3 - 3,640,000 VND
• Zone 4 - 3,250,000 VND

 

7. Overtime Pay & Rules

For both remote and non-remote employees in Vietnam, it is compulsory for employers to provide overtime payments to employees. Overtime is defined as hours worked outside of the standard work hours, which are set at 8 hours per day and 40 hours per week. The standard work week in Vietnam typically runs from Monday to Friday. Employees are not permitted to work more than 12 hours in a day, including both regular and overtime hours. For overtime hours, employees are paid:

• Weekdays - 150% of the hourly rate
• Weekly days off - 200% of the hourly rate
• Public holidays - 300% of the hourly rate

 

8. Individual Income Tax Rates

Individual income tax in Vietnam follows a progressive tax rate system, ranging from 5% to 35%. The applicable tax rate depends on various factors, including household status and the number of children. 

• Up to VND 60,000,000 - 5%
• Up to VND 120,000,000 - 10%
• Up to VND 216,000,000 - 15%
• Up to VND 384,000,000 - 24%
• Up to VND 624,000,000 - 25%
• Up to VND 960,000,000 - 30%
• Over VND 960,000,000 - 35%

 

9. Leave Policies in Vietnam

Maternity Leave

Pregnant employees who have made social security contributions for a minimum of three months are eligible for six months of paid leave. They can choose to take two weeks of leave before the child's birth. During this leave period, the employee is entitled to receive 100% of their average salary, which is calculated based on their social insurance contributions from the previous six months. The responsibility for paying this salary lies with the Social Security administration.

Paternity Leave

Employees who have made social security contributions for a minimum of three months are granted five days of paid paternity leave. During this leave period, the employee is entitled to receive 100% of their salary, and the responsibility for paying this amount rests with the Social Security administration.

Sick Leave

In Vietnam, employees have the right to paid sick leave for a maximum of 30 days. While on sick leave, the employee will receive 75% of their salary, which will be paid by the Social Security Administration. The duration of sick leave can be extended based on the individual circumstances of the employee, but such extensions are evaluated on a case-by-case basis.

 

10. Procedures for Terminating Employees

Navigating terminations in Vietnam can present complexities. Outside the probation period, employers are not permitted to terminate employees without just cause, as there is no at-will termination. Compliant termination methods encompass:

• Voluntarily by the employee
• By mutual agreement
• Unilaterally by the employer based on:
  • probation period
  • objective grounds
  • disciplinary dismissal
  • performance due to unsuitability for the job
• By the expiration of the contract

Severance

In Vietnam, employees who have been employed for more than a year and are terminated are generally eligible for severance pay, except in cases where termination is due to acts such as theft, embezzlement, disclosure of trade secrets, or causing significant loss to the company's property and interests. 

Additionally, if an employee is transferred to another position as a disciplinary measure and then repeats the same breach of labor discipline while the disciplinary measure is still in effect, severance pay may not be applicable. Severance pay is calculated as half a month's salary for each year of service. It's important to note that there is no legal limit on the amount of severance pay that can be provided.

Complying with Notice Period

The minimum notice period in Vietnam is three days, which can be extended depending on the specific terms outlined in the employment contract.