Vietnam is one of Asia’s populous countries and a major economic power. It also holds for an attractive destination for businesses who wish to expand and for hiring foreign workers in Vietnam. This is because its workforce and economy offers a combination of cost-effectiveness, skill, adaptability, and favorable government policies.
However, businesses often face challenges during the recruitment process, especially with navigating Vietnamese labor laws and understanding complex regulatory requirements.
In this article, we will walk you through the step-by-step process of hiring foreign workers in Vietnam along with essential insights into local labor laws and compliance requirements.
1. Understanding the Vietnamese Labor Market
Hiring foreign workers in Vietnam begins with a comprehensive understanding of the local labor market. Vietnam offers a dynamic workforce, but there are important legal frameworks and standards that employers must adhere to.
Labor laws
Established under the now amended 2021 Labor Code, these laws were introduced by the Vietnamese government as a way to navigate and regulate the relationship between employers and employees, ensuring fair treatment, safety, and equitable working conditions.
The labor code addresses a variety of issues such as minimum wage, working hours, child labor, workplace safety, anti-discrimination practices, and the right to unionize.
They serve as a protective measure to safeguard the rights of workers while establishing guidelines that employers must follow to promote a balanced and productive work environment.
Minimum wage
Companies hiring foreign workers in Vietnam must ensure they comply with the country’s regulations on minimum wage and compensation. As of recent updates, Vietnam sets a region-based minimum wage that differs across its provinces and cities.
Vietnam currently utilizes two types of minimum wages.
The first type is known as the common minimum wage and is set at VND 2,340,00 (approximately $93). This wage applies to employees in state-owned organizations and is used to calculate social contributions across all enterprises.
The second type of minimum wage when it comes to Vietnamese hiring is the regional minimum wage. This varies by geographic zone and is applicable to non-state enterprises. The rates for 2024 are:
- Region I: VND 4,960,000
- Region II: VND 4,410,000
- Region III: VND 3,860,000
- Region IV: VND 3,450,000
Working hours
Standard working hours in Vietnam are eight hours a day, 48 hours per week. Overtime must be compensated, and there are strict regulations on the maximum amount of overtime an employee can work.
Social security
Another concept you must understand when it comes to hiring foreign workers in Vietnam is social security. Both employers and employees are required to contribute to Vietnam’s social security system if the foreign employee has a contract lasting one month or more. This system provides coverage for sickness, maternity, occupational diseases, retirement, and death benefits.
2. Process for Vietnamese Hiring
Once you are familiar with the legal framework, you can move on to the actual hiring process. This typically includes creating job descriptions, recruiting through appropriate channels, and offering competitive job packages.
Job description
The first step in the Vietnamese hiring process involves outlining a clear job scope. Ensure the job title and duties comply with Vietnamese labor regulations, and for foreign workers, outline any specific skills or qualifications required.
Recruitment channels
When considering hiring foreign workers in Vietnam, you must think of how you’ll attract and engage potential candidates to fill those roles. In Vietnam, recruitment can be done through various channels, including online job portals, local recruitment agencies, and networking platforms. Popular websites like VietnamWorks and CareerViet are widely used to find talent.
Screening and selection
The next process involves reviewing resumes and conducting screening interviews to identify the best fit. Focus on verifying the candidate’s personal and professional background, work experience, relevant skills, and legal eligibility to work in Vietnam.
Job offers
In Vietnam, job offers are extended after a suitable candidate is identified. This document should contain salary, responsibilities, fringe benefits and employment terms. Be clear about any probationary period, which can last up to 60 days under Vietnamese law.
3. Onboarding and Compliance for Hiring Foreign Workers in Vietnam
Successfully hiring foreign workers in Vietnam involves complying with strict regulations related to work permits, employment contracts, and social security registration.
Employment contracts
A written employment contract is mandatory in Vietnam.
For the employee, it provides clear terms regarding their job role, salary, working hours, benefits, and conditions for termination. It also offers protection under Vietnam’s labor laws, ensuring that they receive the rights and benefits they are entitled to, such as social insurance, paid leave, and a safe working environment.
For the employer, the contract serves as a legally binding document that defines the responsibilities and expectations for both parties. It helps protect the business by clearly outlining performance standards, probation periods, and grounds for termination, reducing the risk of disputes. Additionally, it ensures that the company complies with Vietnamese labor regulations, preventing potential legal issues and fines.
Under the labor code, Vietnam specifies two types of employer contract: indefinite and fixed term.
Indefinite employment contracts do not specify a duration or termination date. It allows for ongoing employment until either party decides to terminate the contract.
Fixed term contracts, on the other hand, have a specified duration, which cannot exceed 36 months.
Work permits
Obtaining a work permit is an essential requirement for businesses hiring foreign workers in Vietnam. Without this permit, businesses cannot legally employ foreign nationals, which may result in penalties and complications for both the employer and employee.
Ensuring compliance with local regulations is critical for smooth operations and avoiding legal issues. The employer is responsible for initiating the application process and submitting the required documents:
- Valid passport
- Visa
- Job offer letter
- Employment contract
- Health certificate
- Police clearance certificate
- Other documents, depending on the specific circumstances, additional documents may be required, such as educational certificates, work experience certificates, or specific industry licenses.
Social security registration
Foreign workers must also be registered for social security in Vietnam if they have a work contract lasting more than one month.
Social security registration is mandatory for foreign workers in Vietnam to ensure they have access to essential social benefits and contribute to the country’s social security system. This requirement aligns with the government’s goal of providing a safety net for all workers, regardless of their nationality.
Induction training
Induction training is a crucial component of the onboarding process for hiring foreign workers in Vietnam. It serves as an introduction to the company culture, policies, and procedures, ensuring that new employees are well-prepared to contribute effectively to their roles. Familiarizing foreign workers with the company’s policies, rules, and procedures is also essential for compliance and avoiding misunderstandings.
4. Managing Your Workforce
Effective workforce management in Vietnam involves understanding payroll, benefits, leave entitlements, and performance management systems.
Vietnam payroll and benefits
Payroll in Vietnam must be processed in compliance with local laws. Employees are paid monthly, and salary deductions for taxes and social security contributions must be made accurately.
Leave management
Employees in Vietnam are entitled to various types of leave:
- Annual leave: For employees who have worked for 12 months, they are entitled to 12 days of paid annual leave.
- Public holidays: Vietnam observes 11 public holidays annually, including significant dates like Tết Nguyên Đán (Lunar New Year), Reunification Day, and National Day. If a holiday falls on a weekend, the following Monday is typically observed as a day off.
- Maternity leave: In Vietnam, the specific duration of maternity leave can vary depending on the number of children born and the type of employment. For example, in the case of the birth of a single child, female employees are granted 126 days of paid leave. If twins or more are born, the maternity leave can be extended to 156 days.
- Paternity leave: Male employees are entitled to 5 days of paid leave. However, male employees who contribute to social insurance can take paternity leave in the first 30 days from the day the baby is born.
- Sick leave: Employees are also entitled to sick leave, the duration of which depends on their contributions to the social security fund.
- Parental leave: Female employees are entitled to 6 months of maternity leave, fully paid by social insurance. Fathers can take 5 days of paid paternity leave for a normal delivery, 7 days for cesarean sections, and up to 14 days for multiple births.
Performance management
Hiring foreign workers in Vietnam requires a well-structured performance management system. This ensures that employees meet the company’s standards and continue to develop their skills. Employers should establish clear performance goals, conduct regular evaluations, and provide feedback to help employees improve.
Relevant reading: The 9-Box Grid: Your New Favorite Performance Assessment Strategy (With a Template!)
Employee relations
Good employee relations are important when hiring foreign workers in Vietnam. Employers should encourage communication, respect cultural differences, and address issues quickly to create a positive work environment and keep employees happy.
Compliance
Compliance is also essential when hiring foreign workers in Vietnam. Employers must adhere to Vietnamese labor laws, including employment contracts, work permits, social security contributions, and tax obligations. Ensuring compliance protects the company from legal penalties, helps maintain a good reputation, and ensures smooth business operations while fostering trust with employees.
5. Taxes and Contributions
Vietnam’s tax system for employers and employees is straightforward but requires accurate compliance with tax laws and contribution obligations.
Employer obligations
For employers hiring foreign workers in Vietnam, they must contribute to social insurance, health insurance, and unemployment insurance on behalf of their employees. These contributions are calculated as a percentage of the employee’s gross salary.
Social insurance contributions
Another important factor to consider when hiring foreign workers in Vietnam is the requirement for mandatory social insurance. The purpose of social insurance is to provide financial protection for employees in case of retirement, sickness, maternity, occupational accidents, or death. It ensures that workers have access to benefits during these situations, helping them maintain financial stability when they are unable to work. Employers and employees both contribute to the social insurance fund to support these benefits. Employers pay 17.5% of the employees salary into the social contribution fund.
Health insurance contributions
Health insurance provides medical coverage for employees. Employers contribute 3% of an employee’s salary to the insurance fund.
Unemployment insurance contributions
This contribution fund provides financial assistance to employees who lose their jobs. It is mandatory for employees with contracts of at least 3 months. Employers must pay 1% of the employees salary into the unemployment contribution fund.
Tax compliance
- Payroll processing: Payroll must be processed monthly, ensuring compliance with minimum wage laws and accurate calculations for overtime and deductions for social insurance and taxes.
- Record keeping: During the process of hiring foreign workers in Vietnam, employers must maintain detailed records of employee documents. This includes contracts, payroll, contributions to social security, and tax filings for at least five years, as required by law.
- Tax filing: Annual tax filings must be completed for each employee, detailing their taxable income and any deductions claimed. Employers can assist employees in this process if authorized.
Employee obligations
Employees are also required to contribute to social, health, and unemployment insurance.
Income tax
In Vietnam, income tax follows a progressive tax rate system, meaning that the tax rate increases as the individual income rises. Employees must use the following tax table to calculate their annual personal income tax liability while filing tax returns.
| Taxable income (VND) | Tax rate |
| 0 – 60,000,000 | 5% |
| 60,000,001 – 120,000,000 | 10% |
| 120,000,001 – 216,000,000 | 15% |
| 216,000,001 – 384,000,000 | 20% |
| 384,000,001 – 624,000,000 | 25% |
| 624,000,001 – 960,000,000 | 30% |
| Above 960,000,000 | 35% |
Social insurance contributions
Employees must contribute to social insurance programs, typically around 8% of their monthly salary for retirement and health insurance.
Health insurance contributions
Health insurance in Vietnam provides a comprehensive range of benefits aimed at ensuring accessible healthcare for all employees. For example, employees can access benefits such as medical consultations, hospital stays, surgeries, prescription medications, and preventive healthcare services. Employees contribute 1.5% to the health insurance fund.
Unemployment insurance contributions
Employees also contribute to unemployment insurance at a rate of 0.5%, deducted from their monthly salary.
Optimize Your Vietnam Hiring Strategy Today
When it comes to hiring foreigners in Vietnam, it requires meticulous attention to legal regulations and thorough documentation. You should strive to minimize human error by leveraging automation to ensure accuracy and compliance.
Omni’s suite of features makes the Vietnamese hiring process efficient and compliant. With secure and centralized employee records, HR teams can swiftly access employment contracts and essential documents that support the requirements for hiring foreigners in Vietnam.
For leave management, our time off management capabilities allows managers to approve leave applications on the go, and keep track of who’s in and out of the office with at-a-glance scheduling. Our employee self-service portal allows employees to submit their employee time off request, which automatically routes to the appropriate manager thanks to customizable approval workflows. With automated calculations, employees and managers can easily view leave balances in real-time, and track how many vacation days they have left without having to go through HR.
When it comes time for payroll and tax processing, Omni offers a comprehensive payroll solution tailored to Vietnam’s specific requirements. With features like support for Vietnam dong and automated tax calculations, Omni can help HR teams simplify their payroll processing and ensure compliance with ease.
Book your product tour with our team today to learn more about how Omni can simplify your Vietnamese hiring process.
