Employer’s Guide to Vietnam Labor Law

When expanding your team to Vietnam, understanding local labor laws and regulations is crucial for setting up smooth operations and long-term success. It is a key part of hiring and building a workforce for your business, ensuring you stay compliant while fostering a positive work environment. 

This guide covers the key labor laws encompassing minimum wage, employee benefits, statutory contributions, and taxation, along with other legal compliances to keep in mind for hiring, managing, and growing your team in Vietnam. 

Overview of Recent Updates in Vietnamese Labor Laws

If you are running a business in Vietnam or planning to enter the market, 2025 brings important labor law changes you should be aware of. These updates affect how you manage employees, especially when it comes to foreign workers and representation in the workplace. Here is a quick overview of what is new this year:

• Foreign Employees Can Join Trade Unions: Starting July 1, 2025, foreign workers are officially allowed to join trade unions and participate in workplace advocacy.
• New Ministry in Charge of Foreign Worker Management: As of March 2025, the Ministry of Home Affairs (MHA) now handles foreign worker oversight, replacing MoLISA under Decree No. 25/2025/ND-CP.
• Updated Seaport Labor Regulations: New rules clarify worker classifications, benefits, annual leave, training requirements, and recruitment procedures for foreign workers. Employers in the sector must ensure compliance with safety and upskilling standards.
• Employees Can Form Independent Organizations: Workers now have the right to establish their own representative groups outside the state-run labor union, giving them more autonomy in advocating for their rights.

Legal Requirements When Hiring Employees in Vietnam

When you are hiring in Vietnam, there are a few key responsibilities you need to take seriously. Failure to comply will lead to serious consequences, including heavy penalties and fines for wrongful termination, failure to pay benefits, or violations of employee rights: 

• Register your employees with the government
• Follow national and industry-specific labor regulations
• Ensure all your documentation is in order. This includes employment contracts, health insurance, and other required compliance paperwork.

Key Labor Regulations in Vietnam for Payroll Management

Minimum Wage Rates for Employees in Vietnam

Minimum wage in Vietnam varies depending on the region. Major cities like Hanoi and Ho Chi Minh City offer higher wages, and you must ensure your employees receive at least the legal minimum based on their work location.

The most recent change for minimum wage in Vietnam came into effect on July 1, 2024, with an average increase of 6 percent across all regions under Decree No. 74/2024. Here are the current monthly rates for 2025:

Employee Benefits and Leave Allocations

When managing a team in Vietnam, understanding the standard benefits and leave entitlements is key to staying compliant and keeping your employees happy. While the law requires some benefits, others follow cultural norms that employees still expect. Here is a breakdown of what you need to know:

• Annual Leave: Employees are entitled to 12 days of paid annual leave after completing one year of service.
• Maternity Leave: Six months of fully paid leave are given to female employees, extendable for multiple births.
• Paternity Leave: This is available under specific conditions. The exact number of days depends on whether the birth is natural or via surgery, and how many children are born.
• Sick Leave: Employees on sick leave receive 75% of their previous month’s salary, paid by the Social Insurance Authority, with the amount of paid sick leave varying based on the employee’s contribution history. Employees working in hazardous conditions may have higher entitlements, and those with long-term illnesses can take up to 180 days of sick leave per year, with a reduced payment rate of 45% to 65% if treatment extends beyond that period.
• Compassionate Leave: Offered by some employers for bereavement or family emergencies.
• Lunar New Year Paid Leave: Employers must provide employees with at least five days of paid leave during the Lunar New Year holiday. Employers may propose overtime work during these holidays with employee consent and must provide corresponding overtime wages.

In addition to the above, employees are entitled to 12 paid public holidays each year. These holidays are separate from annual leave, and you must honor them in full. It is common practice to provide a 13th-month salary as a year-end bonus, though not required by law. Employees widely expect this practice, especially around the Lunar New Year. Many companies tie it to performance or profitability, so you should include it in your compensation strategy.

Statutory Salary Contributions for Employee Welfare in Vietnam

Your responsibilities go beyond just paying a monthly salary when hiring in Vietnam. You are also expected to contribute to your employees’ social safety net. This means setting aside a portion of their salary each month for social insurance, health insurance, and unemployment insurance.

These contributions are mandatory and split between you and your employee. The percentages are fixed by law and calculated based on the employee’s official salary as follows:

Refer to our Vietnam Payroll Calculator to understand the total cost of hiring employees in Vietnam.  

Taxation and Income Tax Obligations

As part of the process of employing staff in Vietnam, part of your responsibility is making sure personal income tax is handled correctly. That means you need to withhold income tax from your employees’ salaries, submit those taxes to the tax authority on time, and provide proper documentation like monthly tax declarations and annual income statements.

Vietnam uses a progressive tax system for individual income, which means the more your employee earns, the higher the tax rate they’ll pay. The rates apply only to the portion of income within each bracket. Before you apply these rates, you must provide your employees with certain deductions.

• A personal deduction of 11,000,000 VND per month.
• A dependent deduction of 4,400,000 VND per dependent, per month.
• Additional deductions may apply for insurance contributions or charitable donations.

How to Navigate Legal Compliance in Vietnam

Working Hours As Per Labor Law in Vietnam

It is important to stay within the legal limits for working hours when hiring and operating a team in Vietnam. Employees can generally work up to 8 hours a day and no more than 48 hours each week, depending on the job’s nature and the company’s schedule.

When it comes to overtime in Vietnam, there are clear limits you need to follow. Overtime shouldn’t exceed 50% of the regular working hours in a day, and the total working time, including overtime, can’t go over 12 hours in a single day. 

Monthly, the overtime limit is 40 hours, and the annual limit is 200 hours. In certain situations, like in manufacturing or essential services, you can extend this to 300 hours, but only with employee consent and under specific conditions.

However, there are exceptions. Employees under 18, those with disabilities, pregnant women, and workers in hazardous jobs are not eligible for extended overtime.

Understanding Labor Contract Regulations in Vietnam

A written contract is mandatory for hiring employees in Vietnam. This is not just a formality. The contract should clearly outline the job responsibilities, salary, benefits, and other important terms. It helps protect both you and your employee while setting clear expectations from the beginning.

You can choose between a fixed-term contract, which can last up to 36 months, or an indefinite one. You must follow specific rules when renewing or ending contracts to avoid any legal issues. The contracts also need to reflect the employee’s right to paid leave. This includes vacation days, maternity or paternity leave when applicable, and sick leave.

Labor Regulations on Employee Severance

When expanding your team in Vietnam, understanding local labor laws is essential for smooth operations and long-term success. These regulations cover everything from hiring and employee rights to termination and severance pay. For example, terminating an employee requires justifiable cause, like misconduct or redundancy, and if the termination is without cause, you must provide severance pay based on their length of service and salary, along with compensation for unused vacation days and other benefits.

Ensure compliance with Vietnam labor law by partnering with RecruitGo’s Employer of Record. We become the legal employer of your Vietnamese team, managing all compliance tasks on your behalf. Our local experts handle payroll, severance, and benefits with precision, ensuring they complete everything accurately and on time.

With our services, you can simplify the hiring and employment process in Vietnam, avoiding the complexities of local regulations. We take care of the administrative work, allowing you to focus on growing your business and supporting your team.

Ready to streamline your hiring in Vietnam? Contact RecruitGo below, and we’ll connect you with our local team to get started!

Frequently asked questions

Vietnamese law grants part-time workers the same rights and benefits as full-time workers, including equal opportunities and treatment. However, specific benefits like social insurance may vary depending on their employment terms and recent proposals.

Yes, employers can terminate employees during their probationary period, but they must document the reason and ensure it aligns with the contract.

Yes, but you should renew the contract in writing, and ensure the total duration of fixed-term contracts does not exceed 36 months.

The legal minimum age for employment in Vietnam is 15 years, but there are restrictions for employees dealing with hazardous work under the age of 18.