Hire in Vietnam

Companies with 10 or more employees are obligated to have Internal Labor Regulations (ILRs). Employers can formulate ILRs to align with the unique aspects of their business and industry, ensuring they comply with Vietnamese labor legislation. The employer is obliged to consult the proposed ILRs with the executive committee of the pertinent trade union (if present), and once adopted, they must be registered with the relevant government agency.

• The probationary period in Vietnam is at the discretion of the employer, with a maximum duration of 60 days, extending up to 180 days for executive positions within enterprises. The definition of executive positions in Vietnam is somewhat ambiguous and may differ from standards in other countries. It is recommended to directly consult with GoGlobal for precise information on specific positions before making any hires.
• This probationary period can be stipulated in either the labor contract or a separate probation agreement. If detailed in the probation letter, there is no obligation to make social security contributions during this period.
• Throughout the probationary period, the employer is required to pay a minimum of 85% of the salary for the given job.
• Either party has the right to terminate the employment during probation without the need for a notice period or payment of compensation.

According to Vietnamese law, the implementation of overtime must be agreed upon through voluntary negotiations between both parties. The employee’s overtime hours should not surpass 50% of the normal working hours per day, with the standard workweek set at 48 hours.

There is an overtime limit of 60 hours per month and 300 hours per year applicable to all industries and sectors.

Ending employment in Vietnam can be challenging in practical terms. Consequently, opting for negotiation is strongly advised as a viable alternative. A mutual agreement, along with compensation for the employee, has the potential to save time, money, and mitigate legal risks for the company.

The updated Labor Code introduces additional grounds for both employers and employees to unilaterally terminate labor contracts, as detailed below:

• Contracts with foreign employees will be terminated if the employee is expelled based on judgments or decisions from courts and relevant authorities. Termination can also take place if their work permits expire.
• Labor contracts can be unilaterally terminated by either the employer or the employee once the employee reaches the retirement age.
• Furnishing false information during recruitment or being absent from work for five consecutive working days without permission or a legitimate reason are now grounds for employers to unilaterally terminate labor contracts.
• Employees, irrespective of the contract term, have the option to unilaterally terminate a labor contract without providing reasons, given they comply with the required advance notice.

In instances of permissible unilateral termination, employers must provide advance notice to employees within a specified statutory timeframe. Likewise, employees choosing to resign are mandated to give advance notice to their employers within a prescribed statutory time limit. The relevant time limits in both scenarios are as follows: 45 days in advance for indefinite-term employment contracts, 30 days for definite-term employment contracts exceeding 12 months in duration, and three working days for definite-term employment contracts lasting less than 12 months.

Employees who have consistently worked for a complete 12 months and are not covered by unemployment insurance are eligible for severance pay. A payment equivalent to half a month’s salary is granted for each year of employment.

There are a minimum of 12 days of paid annual leave, exclusive of public holidays. An employee must be given one additional annual leave day for every five years of consecutive service for an employer.

Typically, a bonus clause is included in the respective employment contract. There are no specific restrictions or guidelines regarding bonuses. Employers have the flexibility to establish bonus regulations, which must be communicated to employees after consulting with the trade union. Offering a 13th-month salary bonus is a widely adopted practice across various sectors in Vietnam.

Vietnam imposes limitations on additional bonuses, and these bonuses are generally subject to taxation. However, fixed lump sum amounts, known as ‘khoan chi,’ allocated for phone services, stationery, uniforms, and per diem allowances are exempt from taxes if they fall within the specified levels outlined in the relevant regulations.

In Vietnam, there is a mandatory social, health, and unemployment insurance (SI, HI, UI) scheme that involves contributions from both employers and employees. Employers are required to make a compulsory Trade Union (TU) contribution of 2%, irrespective of whether a union is established in the company. The total contributions for both employees and employers must be transferred by the last day of each month.

Vietnam has implemented the Personal Data Protection Decree (PDPD) to oversee data protection within its borders. This decree is applicable to all entities and individuals operating in Vietnam. The PDPD aligns with several principles akin to the GDPR, emphasizing legality, transparency in processing, minimal data collection, purpose limitation, accuracy, storage constraints, and the adoption of suitable measures to safeguard personal data.

Monthly payslips can be provided through a website, PDF format, or in print.

Under the New Labor Code, the number of public holidays will be raised from 10 days to 11 days, with full salary payment for employees in Vietnam. If a public holiday occurs on a weekend, employees have the right to take the following weekday off. Additionally, apart from these public holidays, an expatriate employee is entitled to one day off for their traditional new year and another day off for the national day of their home country.

According to the law, employees in standard working conditions in Vietnam are granted a minimum of 12 days of paid annual leave (excluding public holidays). Those working in heavy, hazardous, or toxic conditions are entitled to a minimum of 14 annual leave days, while those in ‘extremely’ heavy, hazardous, or toxic conditions are entitled to a minimum of 16 annual leave days. Additionally, employees receive one extra annual leave day for every five years of continuous service with an employer.

Employees facing illness, disability, or those on leave as prescribed by a doctor receive an allowance from the social insurance fund. The sick leave allowance is determined based on the employee’s salary, the same figure used to calculate the social insurance premium. There is a maximum entitlement, which is:

• 30 days per year (for employees contributing to the social insurance fund for less than 15 years),
• 40 days per year (for employees contributing to the social insurance fund for between 15 and 30 years), or
• 60 days per year (for employees contributing to the social insurance fund for more than 30 years).

The mentioned entitlements increase by 10 days per year for employees engaged in heavy, hazardous, or toxic occupations or in jobs listed by the Ministry of Labor and the Ministry of Health (or those regularly working in specified regions).

Sick pay is covered by the social insurance fund, specifically for Vietnamese employees. The allowance provided in lieu of salary amounts to 75% of the Social Health Insurance (SHI) contribution salary from the preceding month.

For Vietnamese employees infected with a disease listed by the Ministry of Health, necessitating long-term treatment, the following paid sick leave regime applies:

• A maximum of 180 days in a year, encompassing public holidays and weekends, is allowed for paid sick leave.
• Employees requiring further treatment beyond 180 days remain eligible for the sick leave regime, albeit at a reduced level (ranging from 45% to 65% of their salary or remuneration as defined above).

The sick leave entitlement for expatriate employees will be determined through an agreement between the employer and the expatriate employee.

Maternity leave:

• Female employees typically have an entitlement to six months of combined prenatal and postnatal leave, with prenatal leave not exceeding two months. In the event of a multiple birth, an additional month of leave per child (starting from the second child) is granted.
• Following the conclusion of the specified maternity leave, if requested, a female employee may be granted extra unpaid leave under mutually agreed terms with the employer. If a woman opts to return to work after a four-month maternity leave, she must obtain a document from a qualified medical center confirming her fitness for work.
• For each month of leave, Vietnamese national employees are entitled to a monthly allowance equivalent to 100% of their average monthly salary, on which social insurance premiums were based in the six months preceding their leave. However, the maximum salary or remuneration during maternity leave is capped at 20 times the minimum common salary.
• Payment for maternity leave for Vietnamese employees is covered by the social insurance fund. The payment for maternity leave for expatriate employees is determined through an agreement between the employer and the employee.

Paternity leave:

• For natural births: five days
• For cesarean section births: seven days
• For natural births to twins: 10 days
• For cesarean section births of twins: 14 days.
• For the birth of more than two children at once: an additional three days of leave for every additional child (starting from the third child onwards).
• Moreover, if the male employee is the sole participant in the social insurance program and the mother of the baby passes away or faces health risks, the male employee is entitled to leave until the child reaches six months of age.
• For each day of leave, the employee must receive a prorated amount of the monthly allowance from the social insurance fund (applicable to Vietnamese employees only). Payment for paternity leave for an expatriate employee is determined through an agreement between the employer and the employee.

Parental leave: Parents are eligible for paid leave to attend to their unwell children. The maximum entitlement within a year, per child, is 20 working days if the sick child is under three years old and a maximum of 15 working days if the sick child is between three and seven years old. The compensation for employees during their leave to care for their sick children is computed in a manner akin to their own sick pay. This provision is covered by the social insurance fund and is applicable exclusively to Vietnamese employees.

Moreover, an employee may also take fully paid leave for personal reasons in the following cases:

• Marriage: three days
• Marriage of their child: one day
• Death of a blood parent or a parent of their spouse, their spouse, or child: three days.

Any further unpaid leave is subject to an agreement between the employer and the employee.

Under the Law on Occupational Safety and Health, Article 21 mandates that employers must conduct health checks for workers at least once a year. Specifically, workers engaged in heavy, toxic, or hazardous tasks, those with disabilities, minors, and elderly workers should undergo a health check every six months. Employers bear the responsibility of overseeing employees’ occupational health records, communicating the results of health checkups to employees, and annually reporting on employees’ health to health management agencies.