Employer of Record (EOR) in Vietnam

In Vietnam, employer of record (EOR) products and services are essential for ensuring compliance with the country's complex employment regulations. They ensure that employment processes, from hiring to termination, meet local legal requirements. AI-powered EOR services, like G-P EOR, include everything from legal employment contracts and managing payroll taxes to ensuring compliance in business operations.

By tapping into the expertise of an Employer of Record Vietnam, companies can confidently navigate diverse regulatory requirements, minimizing legal risks. Support from EOR Vietnam minimizes compliance issues, enabling companies to concentrate on core operations, and freeing them from the complexities of local legal and tax requirements.

Hiring in Vietnam with an EOR

Located in Southeast Asia, Vietnam is a dynamic and rapidly growing economy with a population of over 100 million people. Successfully navigating the Vietnamese labor market requires a deep understanding of local customs and labor laws. An employer of record (EOR) in Vietnam provides a streamlined, compliant pathway to hiring local talent, avoiding the need to establish a legal entity in the country.

When negotiating the terms of an employment contract and offer letter with an employee in Vietnam, it's essential to understand the statutory requirements and common market practices outlined below. Vietnam EOR experts assist businesses by ensuring compliance with labor laws and local market practices, guiding employers in developing compliant employment contracts.

Vietnam employment contracts

Employment contracts are generally required in writing, with each party keeping one copy. Valid electronic contracts have the same legal value. Verbal contracts are allowed only for terms of less than one month, except where a written contract is still required. Employment contracts should be prepared in Vietnamese. International companies often use bilingual contracts, such as Vietnamese and English, but the Vietnamese version should be included and is usually safest as the controlling version. The contract must include key details such as:

• Employer and employee identification details

• The job description, responsibilities, and workplace location

• The duration of the employment contract (definite, indefinite, or seasonal)

• Salary, payment schedule, allowances, and any other additional payments

• Working hours and rest periods

• Social, health, and unemployment insurance contributions

• Arrangements for training and professional development

• Any required personal protective equipment

The offer letter and employment contract must state the salary and all compensation amounts in Vietnamese dong (VND). An Employer Record in Vietnam ensure that all compensation and benefits are properly handled, including payroll processing and tax compliance.

Working hours in Vietnam

The standard workweek is generally 8 hours per day and must not exceed 48 hours per week. Employers using a weekly schedule may set up to 10 hours in one day, while staying within the weekly limit. While a 6-day workweek is legally permitted, most office-based roles follow a 40-hour week from Monday to Friday. Employees are entitled to at least 24 consecutive hours of rest each week, effectively one full day off. Sunday is common, but the employer usually sets the weekly rest day.

Public holidays in Vietnam

Vietnam observes 6 public holiday occasions totaling 11 paid days off for employees. These are separate from an employee's annual leave entitlement. The largest holiday is the Lunar New Year, or Tết, which typically involves a 5-day celebration.

The public holidays are:

• New Year's Day: January 1 (1 day)

• Tết (Lunar New Year): Typically late January or February (5 days)

• Hung Kings' Commemoration Day: 10th day of the 3rd lunar month (1 day)

• Reunification Day: April 30 (1 day)

• International Labour Day: May 1 (1 day)

• National Day: September 2, plus one adjacent day as determined by the Prime Minister (2 days)

Per the labor code, foreign employees are also entitled to 1 paid day off for their home country’s traditional New Year and 1 paid day off for their National Day. These days are in addition to Vietnam’s statutory public holidays.

Leave entitlements in Vietnam

Annual leave in Vietnam

Employees who have worked for an employer for 12 full months are generally entitled to at least 12 working days of paid annual leave. Higher entitlements apply for certain employees, and annual leave increases by one day for every five years of service with the same employer. For every full 5 years of continuous service with the same employer, an employee gains 1 additional day of annual leave. Employees working in hazardous or strenuous conditions are entitled to additional leave. By law, untaken leave should be paid out at the end of the year, but it is common practice for employers and employees to agree to carry over unused days to be taken by March 31 of the following year.

Vietnam personal leave

Employees are entitled to paid leave for significant personal events:

• Marriage: 3 working days of paid leave for the employee’s own marriage

• Child's marriage: 1 day

• Death of a spouse, parent, or child: 3 days

Sick leave in Vietnam

Employees with a valid medical certificate are entitled to paid sick leave funded by the Social Insurance Fund. The allowance is 75% of the employee's salary used for social insurance contributions for the month immediately before sick leave. This may differ from the employee’s full contractual salary. The maximum number of days per year depends on the employee's length of contribution to the social insurance scheme:

• Fewer than 15 years of contribution: 30 working days per year in normal conditions

• 15 to 30 years of contribution: 40 days

• More than 30 years of contribution: 60 days

Maternity and paternity leave in Vietnam

For mothers, this leave is paid by the Social Insurance Fund at 100% of the employee’s average monthly salary used for social insurance contributions over the 6 months preceding the leave. If contributions were made for less than 6 months, the average is based on the actual contribution period before leave. Vietnamese employers must ensure compliance with maternity rights under local labor laws. An employee on maternity leave or with a child under 12 months old is protected from termination, except in cases where the company ceases operations.

Fathers who participate in compulsory social insurance are generally entitled to 5 to 14 working days of paid paternity leave. The duration depends on factors such as single or multiple births, C-section or other surgical birth, and birth before 32 weeks of pregnancy.

Compensation and benefits in Vietnam

Supplementary insurance in Vietnam

While the state provides mandatory health insurance, many employers offer supplementary private health and life insurance as a competitive benefit to attract and retain talent.

Bonuses in Vietnam

While not legally mandated, a 13th-month salary bonus is a very common and expected part of the compensation package in Vietnam. It is typically paid before the Tết holiday and may be prorated for employees with less than one year of service. Performance-based bonuses are also common.

Termination and severance in Vietnam

Probationary periods in Vietnam

Probationary periods must be agreed upon in the employment contract and cannot exceed the following limits:

• 180 days: For enterprise managers covered by the enterprise manager concept under Vietnamese enterprise law.

• 60 days: For positions requiring a college degree or higher.

• 30 days: For positions requiring intermediate vocational training.

• 6 working days: For all other positions.

Termination and notice periods in Vietnam

Terminating an employee in Vietnam requires a legally recognized reason and adherence to strict procedures. Employers must comply with statutory advance notice where required: 45 days for an indefinite-term contract, 30 days for a definite-term contract of 12 to 36 months, and 3 working days for a definite-term contract under 12 months. Wrongful termination can result in penalties, including mandatory reinstatement, payment of back wages, and a fine equivalent to 2 months' salary.

Severance pay in Vietnam

For employees who have worked for 12 months or more, the payment depends on the termination basis. For redundancy due to organizational or technological changes, a job-loss allowance generally applies at one month’s salary for each year of eligible service, with a minimum of two months’ salary. For other eligible terminations, severance allowance may be payable at a half-month’s salary for each year of eligible service.

Taxes and social insurance in Vietnam

Vietnam has a mandatory social insurance system covering sickness, maternity, work-related accidents, retirement, and death. Contributions for social, health, and unemployment insurance are required from both employers and employees.

• Employer contributions: 21.5% of the applicable salary base (17.5% for social insurance, 3% for health insurance, 1% for unemployment insurance). For some foreign employees, unemployment insurance may not apply, reducing the total to 20.5%.

• Employee contributions: 10.5% of the statutory contribution salary base (8% for social insurance, 1.5% for health insurance, 1% for unemployment insurance). The base may be capped and may differ from gross salary.

These contributions are based on the employee's gross monthly salary, subject to a cap. Additionally, employers must contribute 2% of the payroll fund used as the basis for compulsory social insurance contributions to the trade union fund. This applies even if employees are not trade union members. Employee trade union fees (1%) are voluntary.

Why G-P?

G-P EOR is the award-winning, AI-powered SaaS platform that empowers ambitious companies to build global teams. Onboard, manage, and pay top talent in over 180 countries in minutes, bypassing the typical time, cost, and complexity of local entity setup. G-P EOR is the preferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.

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