Employer’s Guide to Vietnam Labor Law

Vietnam's Labour Code sets out clear obligations for every employer in the country, whether you run a small team or a large enterprise. If you’re planning to expand to Vietnam or employ remote staff in the country, understanding local labor laws and regulations is crucial for operations. It ensures that your payroll and HR administration remain compliant while fostering a positive work environment for your staff. 

This guide covers the key labor laws encompassing minimum wage, employee benefits, statutory contributions, and taxation. We will also tackle other legal compliances for hiring, managing, and growing your team in Vietnam. 

Vietnam's Legal Framework for Employment

Vietnam's primary legal framework for employment is the Labour Code (most recently substantially amended in 2019, with subsequent decrees updating specific provisions). The Code governs the employment relationship between employees and employers across all sectors, covering everything from contracts and wages to working hours, termination, and dispute resolution.

The Labour Code applies to all workers in Vietnam. This includes Vietnamese citizens employed by foreign-invested enterprises and foreign nationals working for Vietnamese companies or individuals. As an employer, you are responsible for compliance regardless of your business's country of origin

Key Regulatory Updates in Vietnam (2025-2026)

There have been recent changes to the Vietnamese Labour Code to adapt to the current state of employment in the country. Here are some changes you should know about as an employer:

• Foreign employees can now join trade unions. Starting July 1, 2025, foreign workers in Vietnam are officially allowed to join trade unions and participate in workplace representation activities. This is a significant shift that affects how you manage labor relations at the enterprise level.
• A new ministry oversees foreign worker management. Under Decree No. 25/2025/ND-CP effective March 2025, the Ministry of Home Affairs (MHA) now handles foreign worker oversight, replacing the Ministry of Labour, Invalids and Social Affairs (MoLISA) in this role.
• The Employment Law 2025 expanded unemployment insurance (UI) coverage. Law No. 74/2025/QH15 broadened who must participate in UI contributions, now including employees on contracts as short as one month, part-time workers earning at or above minimum wage, and workers in non-traditional arrangements where one party exercises management control.
• Minimum wages increased effective January 1, 2026. Under Decree 293/2025/ND-CP, regional minimum wages rose by an average of 7.2%, with new monthly and hourly rates across all four zones.
• Workers can now form independent representative organizations. Employees have the right to establish representative groups outside the state-run trade union structure, giving them more autonomy in advocating for workplace rights.

Employment Contracts in Vietnam

Written contracts are mandatory for most employment relationships in Vietnam. Oral agreements are only permitted for temporary work lasting fewer than one month and for domestic workers.

Every written employment contract must cover the following:

• Job description and responsibilities
• Work location
• Contract duration
• Working hours and rest breaks
• Salary and payment method
• Occupational safety and health conditions
• Social insurance obligations

If a contract gives an employee fewer rights than what the law or a collective labor agreement requires, those portions are invalid and must be corrected. A labor inspector has the authority to compel amendments if you refuse.

Types of Contracts

Vietnam recognizes two main contract types:

• Indefinite-term contracts have no fixed end date. These are appropriate for permanent roles and provide the most job security to employees.
• Definite-term contracts run for 12 to 36 months. You can renew a definite-term contract once. If the employee continues working after the second term expires and no new contract is signed within 30 days, the contract automatically converts to indefinite-term.

Employee Payroll Regulations

Minimum Wage in Vietnam (2026 Rates)

Vietnam uses a regional minimum wage system based on four geographic zones. The rates below are effective January 1, 2026 under Decree 293/2025/ND-CP, reflecting a 7.2% average increase.

These are the legal floor rates. Your employees must receive at least this amount. If your business operates in an industrial park spanning multiple regions, you must apply the highest regional rate that applies.

For the most current breakdown by specific districts and provinces, see our Vietnam Minimum Wage guide.

Working Hours and Overtime Rules

The legal maximum is 8 hours per day and 48 hours per week. Many employers in Vietnam adopt a 44-hour or 40-hour workweek as standard practice, particularly in office environments.

Employees must receive at least one day off per week (24 consecutive hours). If the nature of the work makes this impossible, you must ensure employees receive an average of at least four rest days per month.

Any work on top of the recommended working hours is considered overtime. Overtime pay rates are set by law:

Employees under 18, pregnant women, those raising children under 12 months, and workers with disabilities with a 51% or greater reduction in work capacity cannot be required to work overtime.

Keep in mind that overtime is permitted but must be within the following thresholds: 

• No more than 4 hours of overtime per day
• No more than 40 hours of overtime per month
• No more than 200 hours of overtime per year

In certain industries, such as manufacturing, processing, electricity, oil and gas, and some services, annual overtime can extend to 300 hours. However, this only under specific government-approved conditions and with the employee's consent.

Mandatory Social Insurance Contributions

On top of salaries, you are required to contribute to three mandatory insurance programs for every eligible employee. Contributions are calculated as a percentage of the employee's gross insured salary.

Social Insurance covers retirement pensions, survivorship allowances, sickness, maternity benefits, and occupational accident coverage. Health Insurance provides access to public medical care. Unemployment Insurance supports employees between jobs.

Personal Income Tax for Employees

Vietnam uses a progressive personal income tax (PIT) system for residents. As an employer, you are responsible for withholding PIT from employees' salaries and remitting it to the tax authority.

Before applying tax rates, employees are entitled to the following standard deductions:

• Personal deduction: VND 15,500,000  per month
• Dependent deduction: VND 6,200,000 per dependent per month
• Mandatory insurance contributions are also deductible

The progressive tax brackets range from 5% on the lowest income band to 35% on income above VND 80,000,000 per month. You must file monthly or quarterly tax declarations depending on your revenue scale, and issue annual income statements to each employee.

For a full breakdown of PIT calculations and filing requirements, see our Vietnam payroll and taxation guide.

Leave Entitlements for Employees in Vietnam

Annual Leave

Employees who have worked for 12 months are entitled to paid annual leave as follows:

• 12 working days for employees in normal working conditions
• 14 working days for employees in heavy, dangerous, or toxic work, or those under 18
• 16 working days for employees in extremely heavy, dangerous, or toxic roles

Leave entitlement increases by one day for every five years of service with the same employer. Employees who leave before taking their leave must be paid out for unused days.

Maternity and Paternity Leave

Female employees are entitled to 6 months of paid maternity leave before and after childbirth. If the employee gives birth to more than one child at a time, she receives an additional 30 days per additional child from the second child onward. Maternity benefits are paid at 100% of the employee's average insured salary over the six months prior to taking leave.

Paternity leave varies based on the type of birth and number of children:

• 5 working days for normal births
• 7 working days for caesarean births or premature births under 32 weeks
• 10 working days for twins born normally, or 14 days for twins born by caesarean

Sick Leave

Employees on sick leave receive 75% of their previous month’s salary, paid by the Social Insurance Authority. The amount of paid sick leave varies based on the employee’s contribution history. 

Employees working in hazardous conditions may have higher entitlements. 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.

Personal Leave

Employees are entitled to fully paid leave for personal events: 

• 3 days for their own marriage
• 1 day for a child's marriage
• 3 days for the death of a parent (including a spouse's parent), spouse, or child.

Public Holidays

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.

Termination and Severance Pay

Compared to the U.S., At-will termination (employer’s right to end employment at any time) is illegal in Vietnam. Terminating an employee needs to have valid grounds whether they are justified or unjustified. 

Valid Grounds for Employer-Initiated Termination

An employer can unilaterally terminate a labor contract in the following situations:

• The employee repeatedly fails to meet the requirements of the job as specified in the contract
• The employee is subject to dismissal as a disciplinary measure
• The employee has been sick or injured and unable to work for an extended period (12 consecutive months for indefinite-term contracts, 6 months for definite-term contracts)
• The employer is forced to reduce headcount due to natural disaster, fire, or other force majeure after exhausting all other options
• The enterprise ceases operations

Severance Pay

Employees who have worked for 12 months or more are entitled to severance pay equal to half a month's salary for each year of service. This applies when the employment contract ends for reasons other than disciplinary dismissal or voluntary resignation.

If you terminate someone without lawful grounds, you must reinstate the employee, pay wages for the period they were unable to work, and pay an additional minimum of two months' salary as compensation. If the employee does not wish to return, additional compensation must also be negotiated.

Notice Requirements

When terminating (except in cases of disciplinary dismissal), you must provide:

• 45 days' notice for indefinite-term contracts
• 30 days' notice for definite-term contracts of 12–36 months
• 3 days' notice for seasonal or specific-job contracts under 12 months

Other Employment Regulations in Vietnam

What You Can and Can’t Do as an Employer

When an employee breaches workplace rules, you have three levels of disciplinary action available:

• Reprimand (cleared automatically after 3 months with no further violations)
• Extension of wage increase period (up to 6 months) or transfer to a lower-paid position for up to 6 months, or removal from office (cleared after 6 months)
• Dismissal (the most severe measure)

Dismissal is only permitted in three situations: theft, embezzlement, disclosure of trade secrets, or conduct that seriously damages the enterprise; repeated violations after a prior disciplinary action; or taking 5 or more unauthorized days off in a month, or 20 or more in a year.

Critically, you cannot apply multiple penalties for a single violation, deduct wages as a fine, or apply discipline without being able to prove the employee's fault. The employee also has the right to be represented and to appeal any decision.

Occupational Safety and Health Obligations

Vietnam's Labour Code places clear obligations on employers for workplace safety. You must:

• Provide sufficient personal protective equipment for employees in hazardous roles
• Maintain and inspect machinery, equipment, and facilities regularly
• Ensure the workplace meets standards for space, ventilation, lighting, and exposure limits for dust, toxic gases, radiation, heat, and noise
• Cover all health examination costs during recruitment and periodic checks during employment
• Report and investigate all workplace accidents and occupational diseases

Employees have the right to refuse work or leave a worksite where there is a clear and serious danger to their life or health without facing retaliation.

Rules for Foreign Workers in Vietnam

Foreign nationals working in Vietnam for three months or more must hold a valid work permit issued by the provincial labor authority. The permit duration matches the labor contract but cannot exceed 24 months, and it can be extended once  for an additional 2 years at the employer's request.

Foreign-invested enterprises must notify the local labor authority of all recruited employees and cannot use short-term or seasonal contracts to avoid compliance obligations. Where a Vietnamese candidate cannot meet the requirements for a role requiring highly technical or management skills, the enterprise may hire a foreign employee for a defined period, provided it establishes a plan to train Vietnamese workers to eventually take over the role.

Starting July 1, 2025, foreign employees are permitted to join trade unions, a notable change for managing employee relations in multinational teams.

Hire in Vietnam Without the Compliance Risk

As an employer, it is your responsibility to stay on top of Vietnam’s employment laws. This includes precise payroll calculations and liaising with multiple government agencies across employment, taxation, and social insurance. 

For businesses that want to hire in Vietnam without establishing a local legal entity, RecruitGo's Employer of Record (EOR) service is the most direct path. RecruitGo becomes the legal employer of your Vietnamese team, handling all statutory obligations on your behalf: contracts, payroll, social insurance contributions, PIT withholding, leave administration, and compliance with the latest labor regulations.

Explore RecruitGo's Vietnam EOR service and get your team started in as little as 2–5 business days.