Minimum Wage in Vietnam: A Comprehensive Guide

Vietnam has updated regional minimum wages for contract based workers effective January 1, 2026. This update directly affects payroll costs compliance and workforce planning for businesses operating in Vietnam. As an employer, you must understand how the new wage structure applies to different regions and worker categories

In this article, we explain how the new wage structure applies and key actions employers must take.

An Overview of Employee Minimum Wage in Vietnam

Minimum Wage Regulations in Vietnam

The minimum wage in Vietnam plays a crucial role in protecting workers’ rights and promoting economic stability, and is adjusted based on market conditions and recommendations from the National Salary Council. Employers failing to meet the minimum wage face fines ranging from 20 million to 75 million Vietnamese Dong (approximately USD 790 to $2,960).

The minimum wage regulations aim to ensure that workers can afford living conditions suitable for socio-economic development. The adjustments help maintain competitiveness while improving worker conditions, thus preserving Vietnam’s status as an attractive destination for international businesses due to its relatively low labor costs compared to other countries like China.

The country has a dual minimum wage system: a common minimum wage for state-owned enterprises and a regional minimum wage for non-state enterprises (varies by zone). This system aims to balance the needs of workers with the economic conditions and productivity levels across different regions.

Subjects of Application of the Minimum Wage

The minimum wage prescribed by the Government Decrees applies to the following subjects:

• Employees working under labour contracts, as defined in the Labour Code.
• Employers, defined as agencies, organizations, cooperatives, households, and individuals who hire employees to work for them under agreements, in accordance with the Labour Code.
• Other agencies, organizations, and individuals relating to the implementation of the minimum wage prescribed in the respective Decrees.

Social Contributions for Employees in Vietnam

In Vietnam, social contributions are not only mandatory but also a cornerstone of employee welfare. These contributions ensure that workers have access to essential benefits like health care and retirement pensions. You must calculate and contribute to these social contributions as part of your employer payroll obligations, promoting social equity and compliance with Vietnamese labor laws.

Here’s an overview of social contributions to employee welfare in Vietnam:

• Social Insurance (SI) – covers retirement pensions, survivorship allowances, sickness, maternity, and occupational accident insurance.
• Health Insurance (HI) – provides access to medical care and hospital treatment.
• Unemployment Insurance (UI) — supports employees during periods of unemployment, available only to Vietnamese employees.

Monthly social contribution rates from both you and your employee:

To ensure compliance and efficiency, RecruitGo’s managed payroll services allow you to accurately calculate your employees’ social contributions, and make timely tax reporting. We can help mitigate risks of errors, streamline payroll management, and stay compliant with Vietnam’s complex labor laws.

Key Updates to Unemployment Insurance (UI) under Employment Law 2025 

The latest Employment Law 2025 (Law No. 74/2025/QH15) introduces several significant changes to the Unemployment Insurance (UI) regime, greatly expanding its scope and updating benefit rules.

1. Expansion of Employees Covered by Unemployment Insurance

Compared with the 2013 law, the new law significantly broadens employees required to participate in unemployment insurance.

• Contracts from 1 Month to Less Than 3 Months: Employees under contracts from one full month to less than three months are included.
• Part-Time Contracts: Employees working part-time with monthly salary equal to or above minimum wage now participate.
• Non-Traditional Employment: Employees with agreements showing paid employment and management control by one party are also included.

2. New Maximum Cap for Unemployment Benefits (2026)

The 2025 Law keeps the existing formula for calculating unemployment benefits while adding a maximum cap to protect fund sustainability. Under the new rule, an employee’s monthly benefit cannot exceed five times the regional minimum wage of their last insured month.

3. Changes to Eligibility and Waiting Period

The law shortens the waiting period, allowing employees to receive benefits from the 11th working day after submission, five days earlier than previous regulations.

• Flexible Eligibility for Short-Term Contracts: Employees with 1–12 month contracts must have contributed 12 months within the 36 months prior to contract termination. This rule is more flexible than the previous single 24-month period that often disadvantaged short-term workers.
• Other Cases: For contracts of 12 months or longer, or indefinite contracts, the 24-month evaluation period continues to apply as before.

4. Support for Businesses in Special Situations

Under Clause 2, Article 30 of the Employment Law 2025, during economic crises, natural disasters, or epidemics, the Government may reduce unemployment insurance contributions or provide direct financial support.

This support aims to ease businesses’ financial burdens and help them maintain employment during difficult times.

• Contribution Rates: The maximum contribution remains 1% for employees and 1% for employers, while the State may contribute up to 1% of the wage fund.
  Government Discretion: Additionally, the actual contribution rate may be temporarily reduced at the Government’s discretion during these special circumstances to further assist businesses.

5. Reduced UI Contributions for Employees with Disabilities

To encourage social responsibility while providing direct financial benefits, Clause 6, Article 33 permits employers to reduce unemployment insurance contributions for up to 12 months when hiring employees with disabilities. Moreover, this incentive directly lowers initial recruitment costs, enabling businesses to access the skilled talent pool of disadvantaged groups and foster an inclusive workplace.

Current Minimum Wage Structure in Vietnam

Regional Minimum Wage in Vietnam

Vietnam’s regional minimum wage increased by an average 7.2% under Decree 293/2025/ND-CP, affecting monthly and hourly rates across four regions. Employers must apply rates based on operational locations, using the highest for multi-region industrial parks.

Impact of Minimum Wage in Vietnam

As the minimum wage increases, companies face higher operational costs, including increased labor expenses for wages, social insurance, and other employee benefits. This can strain resources, particularly for small or medium-sized enterprises. To adapt to the increasing operational costs, many businesses often reduce personnel to maintain profitability.

Remember that if you do decide to set up a local entity in Vietnam to hire employees, you would need substantial upfront costs and jump through bureaucratic hurdles to comply with the country’s regulations.

RecruitGo’s Employer of Record (EOR) offers a cost-effective and efficient alternative. With an EOR, you can bypass the need for a local entity, avoiding the costs and complexities associated with registration and compliance. This approach enables quick hiring and management of employees, often within a few weeks, and allows businesses to benefit from Vietnam’s still competitive labor costs despite the rising minimum wage.

Selecting the Right Wage Rate for Your Hiring Strategy in Vietnam

To aim for top talent in Vietnam, you need to go beyond the baseline minimum wage and focus on industry standards within the market. For high-demand roles like in technology and finance, you need to offer competitive salaries that align with rising expectations and the cost of living, especially in areas like Ho Chi Minh and Hanoi.

Despite being higher than the average, there is still a stark difference in salary compared to hiring in Western markets such as the U.S. For example, while a software developer in Vietnam might earn between $860 and $1,290 per month, their counterpart in the US could earn between $8,000 and $20,000 per month.

Here is a quick comparison of average wages for the most commonly outsourced roles in Vietnam:

RecruitGo provides localized insights into the country’s labor market trends and industry-specific salary benchmarks. We can help you analyze real-time compensation data to ensure wages are competitive and compliant with regional regulations. RecruitGo’s data-driven approach empowers you to make informed decisions, effectively balancing talent acquisition and cost management.

Stay ahead of the competition with RecruitGo. Let us help you build a strong and efficient workforce in Vietnam! Get in touch with our local experts by filling out the form below!