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Vietnam has a strong workforce of educated, skilled talent that can help your company succeed as you grow internationally or take on remote employees. For your working relationship to be successful, you need a firm understanding of how each region’s employment laws work and what your rights as an employer are.
In this guide, you’ll learn how to hire in Vietnam, including tips for navigating cultural differences, understanding local labor laws, and securing remote talent.
What to know before hiring in Vietnam
Before you explore our guide to hiring employees in Vietnam, here are some fast facts you should know about the country:
- Vietnamese currency is the Vietnamese dong, or VND, symbolized as ‘₫.’
- The country’s current population is more than 98 million people, with nearly 38 percent living in urban areas.
- Vietnam’s leading imports and exports are textiles, high-technology manufacturing, information and communications technology, automotive, and medical devices.
- Hanoi, also spelled Ha Noi, is the capital of Vietnam and is located in the northern part of the country.
1. The labor market
Vietnam’s available labor force exceeds 54 million people, with agriculture, industry, and services as the leading career and work industries. Much of that workforce is concentrated in clustered areas across the country, like the metropolitan regions of Hai Phong, Hanoi, and Da Nang, as well as Ho Chi Minh City.
Secondary education has held a steady enrollment rate over the past five years, with leading universities like Vietnam National University in Hanoi, Hanoi University of Science and Technology, and Ho Chi Minh City University of Technology. College graduates typically receive either a vocational education and training (VET) certification, a vocational training diploma lower, or a professional secondary education graduation diploma.
2. Languages
Vietnam’s official language is Vietnamese, but it ranks 65th in the global index of English-speaking countries. Additional languages you might hear or see written in formal documents include French, Chinese, Khmer, and some smaller languages from the country’s mountainous region.
Consider hiring a professional Vietnamese translator and written interpreter if you’re unfamiliar with the Vietnamese languages, and remember to offer copies of critical documents and information, including employment contracts, in both languages.
3. Working hours and time off
There are 11 public holidays in Vietnam — including the week-long Tet Lunar New Year celebration — and Vietnamese employees expect to have most of those holidays off from work in addition to vacation days and other paid or unpaid leave. All employees are legally entitled to a minimum of one entire day off work each week, typically a Sunday. Work shifts rarely exceed eight hours per day and 40 hours per week, with those hours often — but not required to be — between Monday through Friday, 8 a.m. to 5 p.m.
Vietnamese employees are also entitled to a minimum of 12 days of annual leave, including personal paid leave for weddings and bereavement, as well as unpaid leave upon ongoing approval. Qualifying sick or disabled employees may be entitled to leave supported by the country’s social insurance program. Women may have six months of paid maternity leave at no loss of salary and an additional 30 days for each child born. Paternity leave varies between employers, but men are eligible to receive between five and 14 paid days of leave.
4. Employment contracts
Your company is legally required to have a written employment contract with each Vietnamese employee, with copies in both Vietnamese and the employee’s native language. It can be either a contract with a fixed-term or infinite duration, and each type is eligible to renew or terminate as needed and specified.
The written contract should include all relevant information about your working partnership, such as:
- The employee’s salary and additional compensation listed in local currency
- Employee benefits and insurance
- Termination and severance requirements for both the employee and employer
- Employee and employer rights, responsibilities, and expectations
- Specific terms and conditions of employment
- A breakdown of the duration, rights, and duties of a probationary period, if applicable
- Scope of the job and any mandatory or optional resting and working hours
- The anticipated length of the employment contract and working relationship
- Health and safety provisions and guidelines
Companies are subject to a penalty fee if there is no valid written contract in place for each Vietnamese worker. The contract should be mutually agreed upon and signed, except for alterations like promotions, salary increases, and early termination. No Vietnamese employment contract adheres to any implied laws, but employees are entitled to certain statutory rights and benefits even if not expressly stated.
5. Compensation and benefits
Vietnam has two types of minimum wage — the common minimum wage for employees in state-owned organizations and the regional minimum salary for all non-state organizations and positions. Minimum wage rates that vary across regions typically fall between 3,070,000 and 4,420,000 Vietnamese dong. Employers must provide health insurance for their employees, including regular annual health checks.
Mandatory employer contributions include social, health, and unemployment insurance, with additional taxable options like housing assistance, transportation allowance, and other benefits to create an enticing employment package. Learn more about compensation considerations as you hire employees in Vietnam.
6. Taxes
Employees pay an individual income tax (IIT), and all employee salaries and bonuses are subject to personal income tax (PIT), applicable on the total amount after mandatory contributions have been taken out. Employers are responsible for paying a portion of employee social security costs, Value Added Tax (VAT) on purchases, withholding taxes, business taxes, and all taxes associated with a physical location or building in the country.
Although there are no payroll taxes or state and local income taxes to contend with, employers must pay a 20 percent rate for Corporate Income Tax (CIT). The current health insurance and unemployment insurance percentages local companies are responsible for covering are 3 percent and 1 percent, respectively.
Employers must withhold all necessary employee and federal taxes and report them to the Vietnamese tax authority quarterly on the 30th day of the following month or monthly on the 20th day of the following month.
The cost of hiring someone in Vietnam
When hiring in Vietnam, you must consider the cost of recruiting and hiring and consultations with local experts or contractors, in addition to ongoing payments toward each employee’s salary, insurance, and benefits.
1. Recruiting and hiring
One part of the cost of hiring an employee in Vietnam is conducting thorough recruiting efforts to find the best fit for your position and the subsequent hiring costs that follow. Some of these costs include the following:
- Working with a hiring or recruiting agency
- Applicant tracking software
- Job advertisements and online postings
- Background checks
- Third-party resume assistance for visa confirmation
- Traveling expenses to facilitate interviews
- New hire training and any necessary equipment
3. Local experts and contractors
As you enter new countries and hire international employees, you may encounter one or more circumstances that call for the assistance of a local contractor or third-party service to help you stay compliant. Examples include a written and verbal translator for documentation and interviews or employment lawyers to help you maintain compliance with hiring and ongoing labor laws.
One way to simplify the process is working with an Employer of Record (EOR) service like Globalization Partners. An EOR acts as your Vietnamese employees’ official employer while you get all the benefits of an experienced in-house team, payroll management, and local experts versed in Vietnamese employment laws.
Hiring practices in Vietnam
Hiring and managing international employees is a complex process that often varies between regions, cities, and industries. Consider the following hiring practices as you navigate your new working relationships:
- Optional bonuses: Bonuses and 13th-month salaries are not legally required but are a regular part of the Vietnamese working culture. Bonuses may be based on how long the employee has worked with you, special holiday considerations, performance excellence, or other provisions that may or may not be listed in your written employment contract.
- Permit verification: Depending on where your employee is originally from, they might require a visa or resident card and a valid work permit. It’s your obligation as the employer to ensure each employee has a legal right to work for your company. Keep a copy of all relevant documents that certify the legal status of your employees.
- Probationary periods: You may choose to include a probationary period into your written contract, but it may not exceed 30 days for standard jobs or 60 days for highly technical or skilled positions. You can use this time to gauge the quality of your partnership, including how well the employee meets the agreed-upon performance standards and working hour requirements. The probationary contract should be written as a supplement to the original document and include all stipulations for the probationary period, including duration, expectations, rights, and responsibilities. You and the employee can cancel your agreement at the end of the period or sign a formal employment contract to continue your working relationship.
- Labor law compliance: Failure to comply with local and federal labor and employment laws could result in penalties, fines, or legal action. These guidelines are in place to protect employees from unsafe or illegal working arrangements and act as a guideline for employers that want to hire internationally. For example, Vietnam’s 2019 Labour Code states that any foreign nationals working in the country must comply with all federal labor laws unless they’re members of an international treaty program that says otherwise. All Vietnamese-based employment contracts require the employer to adhere to federal laws.
- Payroll options: Payroll options in Vietnam include internal payroll departments — typically an extension of your human resources division — remote payroll, outsourcing to a Vietnamese payroll processing company, or partnering with an EOR like Globalization Partners to handle all payroll management and compliance.
What does a company need to hire employees in Vietnam?
Companies and subsidiaries in Vietnam can be either entirely internationally owned, a joint-venture enterprise, or a business cooperative owned and managed by the service users. Regardless of your business structure, you will need a registered bank account in Vietnam before hiring and paying employees. All money transfers should be converted into dong upon payment or deposited into a Vietnamese bank account as a foreign currency. You must prepare and initiate translated copies of critical documents, such as a memorandum, articles of association, insurance forms, and labor contracts.
If you’re conducting in-person interviews in Vietnam, you’ll need to secure a physical address or interview space to meet one-on-one. Alternatives include telephone or video conference interviews. You can avoid the more complex and costly parts of international hiring by working with an EOR.
Hiring remote employees in Vietnam
Hiring remote employees lets your company take advantage of talented international workers with specialized skill sets or unique professional experience. Keep this information in mind as you secure remote Vietnamese employees:
- Approximately 70 percent of the country’s population has an internet connection, and the internet code for Vietnam-based websites is .vn.
- Vietnam has a single timezone — Indochina Time — and there are no time changes associated with Daylight Saving Time.
- It is customary to formally introduce people beginning with their last name, followed by their middle name, then their first name. Observe any relevant professional or marital titles.
- The date is written in the day/month/year format using four digits for the year and two for the month and day.
Additional tips for hiring in Vietnam
These tips will give you a better understanding of your rights and responsibilities as an employer:
- Hierarchical decision-making: Many business organizations operate on a hierarchy, with decisions coming from the top down. It’s important to be respectful of senior employees, whether they are older, have a higher education or experience level, or have been in the position longer.
- Candidate background checks: You are entitled to confirm the information on each applicant’s resume, including their education, qualifications, employment history, and valid experience, as applicable.
- Contract termination: Both the employer and the employee can initiate a contract termination. Employers can do so without notice if the fault is due to an employee’s lack of performance or failure to meet agreed-upon standards. Employers can also terminate contracts based on long-term injury or illness, disasters that impact the business, employees who fail to show up for their designated working shift, and other special cases. In these instances, it’s critical to work with an EOR to help you navigate the legal complexities of each situation. Depending on the situation and your written employment contract, employees may be entitled to severance pay.
Learn more about managing international employees with Globalization Partners
The steps to hiring in Vietnam take careful consideration and knowledge of each region’s various employment and business laws, as well as cultural respect and understanding. Globalization Partners is a global EOR with a presence in 187 countries worldwide, ready to help your company expand into Vietnam or hire talented Vietnamese employees for your remote positions.
We’ll act as your employees’ legal employer, helping you maintain compliance and handling the more complex logistics of out-of-country hiring while you focus on running your daily operations. We’ll also help with human resources and creating benefits packages to entice top talent to your company.
Learn more about how our comprehensive solution can help your company succeed, and request a proposal today to get started.
