Introduction

Vietnam is fast emerging as a potential regional leader in Southeast Asia. A rapidly growing economy, strategic geographic location, favorable trade agreements and an improving rank on the Doing Business Index (it was ranked 70th amongst 190 nations in the world), and the opening up of the economy for FDI are some of the reasons that Vietnam is becoming a hotspot for foreign investments.

Employer of Record in Vietnam

If you plan to expand globally and look to enter Vietnam, you have many options to do so. You could incorporate a firm in Vietnam, work with a subsidiary, or appoint an Employer of Record in Vietnam.

You could alternately choose a PEO or Professional Employer Organization to facilitate commercial business on foreign shores. Skuad is one of the leading EOR solution providers in the region, with thorough knowledge of Vietnamese labor laws and a comprehensive grasp of the hiring, boarding, payroll, and taxation processes. Choosing to go ahead with Skuad as your EOR can help you save time and costs, and ensure compliance with the local regulations with minimized risks.

Vietnam at a Glance

Estimated Population: 99,5 million

Currency: Vietnamese Dong (VND)

Capital: Hanoi

Number of officially recognized languages spoken: 110 officially recognized dialects

Languages frequently used: Vietnamese

GDP: USD 408.80 billion

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Employment In Vietnam

Vietnamese labor laws are known for being employee-friendly. The country's potential as a market for international corporations cannot be doubted even though traditionally Vietnam has been an agricultural country. There have been several changes to the Labor regulations so that the new rules are at par and coherent with international standards. Vietnam's current labor force constitutes about 58 million people, of which about 1 million are youths. Lack of skilled labor is an issue here, with only 12% of the population belonging to the skilled or trained workforce.

According to Vietnam Labor laws, there is no distinction between foreigners and the local workforce. The Vietnam employment laws also give special protection to groups of society like the elderly, women, etc.

Even with the lack of a skilled local workforce, the laws in Vietnam are well-developed. Here is a short guide on various facets of employment in Vietnam.

Vietnam Labor Laws

2019 Labor Code	Effective 1st January 2021, the Employment Contract mandatorily has to be in the Vietnamese language. In the case of foreign-invested enterprises, the contract can be bilingual. Employees need to report to the Labor Authority about the use of employees within 30 days of operations.
Decree 152/2020/ND-CP	Primarily meant for foreigners, the Decree offers details about work permits for foreigners.
Internal Labor Rules(ILR)	ILR is mandatory for organizations that employ 10 or more employees in Vietnam and must be registered with DOLISA. The ILR is essential, especially when terminating employees or taking any disciplinary action. If an offense is not mentioned in the ILR or the ILR is not registered, employers can find it difficult to terminate an employee based on the said offense.

Different terms of the Vietnamese Labor Code and their explanations are listed here.

Labor Contract

The law recognizes two types of contracts.
The first is the Definite Term Labor Contract where the maximum term period can be up to 36 months.
Indefinite Labor Contracts have no fixed period.
Firms employing foreigners can have contracts with a maximum of 24 months due to work permit laws.

Working hours

Employees are allowed to work for 8 hours a day and 48 hours a week, maximum.
Though not mandatory, the government encourages employers to let their employees work 40 hours per week.

Breaks and rest during working hours

Thirty minutes break minimum during daytime and 45 minutes break during the night

Overtime

The permissible overtime as per Vietnam Labor laws is as follows.

In Vietnam, the maximum allowed working hours per day is eight, or a total of 48 hours per week.
Overtime hours: Employees are paid 1.5 times their regular hourly wage for overtime hours worked after the first 8 hours each day. Night shift overtime: Employees are paid 1.5 times their regular hourly wage for overtime hours worked during the night shift. Holiday overtime: Employees are paid 2 times their regular hourly wage for overtime hours worked on a holiday.

Wages

Two types of minimum wages exist in Vietnam:
1. Basic Minimum Wage
2. Regional Minimum Wage
The bare minimum is used for calculating the salary for state employees. It is also the base for calculating the social and health insurance of state employees. The Basic Minimum Wage in Vietnam is 1,490,000 VND every month.
The regional Minimum Wage is used to calculate the salary of non-state employees and forms the base for capping unemployment insurance. It is dependent on the regional cost of living and is divided into four groups to match with economic disparities.
The Regional Minimum Wage with effect from January 2020 lies in the range of 3.07 million VND to 4.42 million VND.

Regional Minimum Wage Groups

Region	Cities	Minimum wage (per month)
Region 1	Urban Ho Chi Minh City and Hanoi	4,680,000 VND
Region 2	Rural areas around Ho Chi Minh City, Hanoi, and Da Nang	4,160,000 VND
Region 3	Provincial cities and districts of Bac Giang, Bac Ninh, Phu Tho, Vinh Phuc, Hai Duong, and other areas not included in Regions 1 and 2	3,640,000 VND
Region 4	Locations not included in Regions 1, 2 or 3	3,070,000 VND

Bonus

In Vietnam, employers pay a bonus called the Tet Bonus based on the performance of the employee. It is usually the 13th salary.
Foreign companies are known to offer private health insurance to the local workforce in Vietnam.
Also, team outings and paid trips are common among employers in Vietnam.

Leaves

Annual Leave or Paid Leave	Twelve days of paid leave is granted mandatorily to all employees who have worked for 12 consecutive months with one employer. Employees with five years of employment get one additional day of paid leave.
Public Holidays	January 1, Vietnamese New Year’s Eve February 8-14, Tet Holiday April 18, Hung Kings Festival April 30, Liberation Day, also known as Reunification Day May 1, International Labor Day September 2-3, Independence Day
Sick Leave	Statutory Minimum mandate is 10 days of paid sick and hospitalization leave.
Maternity Leave	Female employees in Vietnam are entitled to 6 months of paid maternity leave. The maternity leave can be split between before and after childbirth. The employee must take at least 4 weeks of leave before childbirth and at least 8 weeks of leave after childbirth. The prenatal leave period should not exceed 2 months.
Paternity Leave	The paternity leave for married fathers in Vietnam is between 5 to 14 days. The number of days of leave is calculated based on various parameters. Natural birth or C-section Single birth or multiple births
Personal Leaves	Employees can take paid personal leave during certain life events like the death of a family member or weddings.

Health and Safety Obligations of Employers

Occupational safety and hygiene are the responsibilities of the employer
Employers need to comply with the national and local technical regulations for every equipment or machine and workplace.
Health insurance is mandatory by law and needs to be provided by employers.
Regular health checkups yearly for employees are mandatory for employers.

Many other inclusions make the HR domain difficult to traverse all on your own, especially if you are entering the Vietnamese market for the first time. It is best to seek expert assistance by working with an EOR of repute. Skuad offers all-inclusive HR functionalities. To learn about how we can help you, write to us today!

Contractors vs. Full-time Employees

Like most other nations, there is a difference between hiring full-time employees based on employment contracts in Vietnam and independent contractors.

Independent contractors are hired on a case-to-case basis depending upon the requirements of a project. Contractors bring in their materials to complete the project and operate independently. Contractors are paid a fee per the mutual agreement in writing, while employees are paid per employment agreement in Vietnam or labor contracts.

The difference between contractors and employees in Vietnam is that employers need to pay for health insurance, social security, and unemployment taxes in the latter. In the case of contractors, the hiring company is under no such liability. Besides, employees are entitled to leaves, minimum wages, overtime pay, probation, and termination notice per terms mentioned in Vietnam’s employment contract law.

Hiring in Vietnam

There are several ways to hire employees in Vietnam. One way is to set up your company in Vietnam and outsource the recruitment process to hiring companies in Vietnam. These are third-party companies that are specialists in hiring and recruitment processes in Vietnam. Such companies help you get local and foreign workers, as per need-based.

Besides, you can use the power of social media to connect with potential employees in your business domain. Other than that, you can take the help of online job portals like Vietnam Works, and CareerBuilder.vn, CareerLink.vn, Mywork.com.vn, TNH Vietnam, Timviecnhanh, Indeed, Google For Jobs, and Jobsvietnam.org.

If you are not keen to open your subsidiary or business entity in Vietnam and yet expand your business in the country, you can take the help of an Employer of Record Vietnam. Skuad is an expert in EOR Vietnam with thorough knowledge of the local labor laws and the hiring process for natives and foreigners. We are a one-stop solution provider handling payroll, taxes, employee health benefits in Vietnam, social security, and more. When we are there at the backend, you can focus on your business core areas hassle-free. Speak to Skuad experts for more information.

Probation and Termination

The probationary period in Vietnam can be a part of the Labor contract or a specially drafted probation agreement. In the latter case, employers are not required to pay Social Security contributions during the probation period. The probationary salary cannot be lower than 85% of the original salary mutually agreed upon by both parties.

Standard Probation Period in Vietnam

Statutory Minimum is 6 working days.
Statutory Maximum is as follows:
180 days for the position of enterprise executive.
60 days for positions that require a junior college degree or above.
30 days for positions that require a secondary vocational certificate, professional secondary school; positions of or for technicians, and skilled employees.

Termination of Employment in Vietnam

A Labor Contract in Vietnam can be terminated on the following grounds:

The labor contract term period expires. No prior notice is required.
Work completion with no prior notice required.
Termination is mutually agreed upon by both parties without any prior notice required.
In case an employee is served a jail sentence or capital punishment. No prior notice is required.
The death of an employee or when an employee goes missing. No prior notice is required.
In case the Employer closes the operation. Here too, no prior notice is required to be given to the employees.
Foreign employees with an expired work permit

Statutory Notice Period

For an indefinite-term Contract, 45 days.
For definite-term contracts less than 12 months, three working days.
For definite-term contracts, 30 days.

EOR Solutions

If you’re looking to hire employees in Vietnam, a great way to ensure compliance with all regulations and laws is to work with Skuad, one of the leading employers of record companies in Vietnam. Skuad is a versatile and adaptable platform that can help you expand your business in Vietnam cost-effectively and get a competitive edge over other companies hiring in the country.

As your Employer of Record EOR, Skuad will handle end-to-end recruitment and hiring processes on your behalf. And, once the employee is on board, the payroll and taxes, salaries, minimum wages, leaves, overtime, probation, termination, and all other aspects of employment will be effortlessly managed by Skuad so that you can engage yourself in your expansion plans without having to worry about these things.

Skuad offers some of the most comprehensive employers of record services and is an online solution provider with a self-service platform, open 24x7 to provide professional services for easy expansion.

Types Of Visas In Vietnam

In Vietnam, a Vietnam work visa and work permit are two separate entities. The visa allows foreigners to enter and stay in Vietnam. A work permit gives the foreigner the right to work in Vietnam. Basically, if a foreigner wishes to work in Vietnam, they need a visa and a work permit or a TRC (Temporary Residence Card).

Types of Work Visa	This visa type is given to foreigners who wish to enter Vietnam for work purposes. The multiple-entry visa and the work permit have the same validity. The maximum term of the Vietnam work visa is two years.
Vietnam work visa requirements	Application form Passport copy Enterprise registration certificate
Temporary Residence Card or TRC	When foreigners have a work permit, they are issued the TRC. If a foreigner has a Law Practice Registration in Vietnam or an Investment Registration Certification showing investments of 3 billion VND and more, they can get TRC. Only when a foreigner has worked for the employer that has sponsored their work visa the first time can his TRC get renewed.

To know more about the visa process in Vietnam, speak to our experts at Skuad.

Work Permits

All non-Vietnamese citizens need a work permit in Vietnam issued by the Department of Labor, Invalids, and Social Affairs or DOLISA. The Employer needs to apply at the local DOLISA office before employing a foreign national. The work permit can be granted for a maximum of two years with a one-time renewal clause.

In certain cases, there are exceptions for Vietnam work permits for foreigners. It includes – short-term assignments that are less than 30 days; internal transfers in eleven service-oriented industries; board members in Vietnamese entities with more than 3 billion VND investment; and individual investors with more than three billion VND investment. Lawyers with a Foreign Registration license, trainees, and foreigners who marry a Vietnamese person can also work in Vietnam without a Vietnam work permit and without a job offer.

The application process for the work permit includes:

The employer needs to register with the local DOLISA on the need to employ a foreign national. The office will approve the same within ten working days.
Once approved, the employer needs to apply for a work permit.
The labor contract needs to be submitted.

Payroll and Taxes in Vietnam

Organizations planning to build a team in Vietnam may find it difficult to navigate the Vietnam payroll and tax system complexities. While there are many payroll services in Vietnam, partnering with an Employer of Record like Skuad will provide the best solution to an organization’s team-building processes in Vietnam. Besides acting as your Vietnam payroll provider, Skuad provides a unified platform that enables a hassle-free hiring and onboarding process and managing tax and employment laws compliance.

Vietnam Payroll Tax Rates

Corporate Income Tax Rate

20%
Companies operating in O&G and natural gas are subject to tax rates between 32% to 50%.

An expert EOR like Skuad can be of great assistance to your growth plans as you do not need to get into the intricate details of the payroll taxes in Vietnam. Talk to our experts to get customized solutions.

Employer Taxation

Tax	Explanation
Compulsory schemes	Health insurance, social insurance, and unemployment insurance schemes are compulsory Vietnam employer payroll taxes. Both employees and employers need to contribute. Employers deduct the employees' contribution from their salary and deposit the amount together with the employer's contribution to the insurance carrier.
Social insurance	17.5% (In the case of local employees) Earlier, it was 3.5%. In 2022, it will be 17.5%. (In case of a foreign employee)
Health insurance	3% (For native employees) 3% (For foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees
Trade Union Fee	2% of the salary fund to the Trade Union Fund.

Employee Taxation

Tax	Explanation
Social insurance	8% (In the case of local employees) Earlier, it was 0%. Currently, after the 1st of January, 2022, it will be 8%. (In case of a foreign employee)
Health insurance	1.5% (For native employees) 1.5% (For Foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees.

Talk to our experts to get customized solutions for your business.

Bonuses

Employers in Vietnam are not obligated by law to give bonuses to their employees; however, it is typical to pay a 13th-month bonus or offer performance-based incentives.

Incorporation

To set up a long-standing business in Vietnam, you need to comply with the Enterprise Law and the Investment Law. For incorporating a holding company in Vietnam, you need to get your company registered in Vietnam as per the Enterprise Law and ensure it meets all requirements of the Investment Law that have been created explicitly for foreigners.

There are ample business opportunities in Vietnam, and you might want to speak to a specialist to get your company registered for forming your company in Vietnam. For registration, you need to have the incorporation documents before conducting a feasibility study. You need to submit all these documents to the Provincial People's Committee or the Industrial and Export Processing Zones Management Authority.

Professional Employer Organization (PEO)

A PEO, just like an EOR, offers handholding support in the niche of HR functionalities. A professional employer organization in Vietnam is not a legal Employer in Vietnam, unlike an EOR. Skuad offers both types of services, and you can get in touch with us to ensure that you start your business in Vietnam without much stress and hassle.

A PEO is your co-employer, while an EOR is an independent employer with total liability and responsibility for payroll, taxes, and compliance. With a PEO, the salaries, taxes, and other employer liabilities are your responsibilities.

Conclusion

Skuad offers you world-class PEO and EOR services in Vietnam. Skuad has an outstanding and impeccable track record, having helped numerous SMEs and start-up companies expand their global footprint seamlessly. Since all countries have different labor laws, codes, rules, and regulations, you can save time and resources when working with Skuad while ensuring that you have the best local and foreign talents working with you.

Speak to Skuad experts who can help you decide between a PEO and EOR based on your unique business requirements.

FAQs for Employer of Record in Vietnam

What is the Employer of Record service in Vietnam?

The Employer of Record (EOR) service in Vietnam is a third-party organization that hires and manages employees on behalf of another company, taking on all legal and HR responsibilities. The EOR navigates Vietnam’s employment laws and regulations, handling payroll, tax compliance, and employee benefits, and ensuring legal compliance, enabling businesses to efficiently onboard and manage local or foreign talent in Vietnam.

What services are offered by the Employer of Record?

‍An Employer of Record in Vietnam provides a comprehensive range of services to facilitate seamless employment and workforce management. This includes employee onboarding, payroll processing, tax withholding, benefits administration, and ensuring compliance with Vietnamese labor laws. The EOR acts as the legal employer, handling all HR-related tasks and responsibilities, allowing the client company to focus on its core business activities while ensuring a compliant and efficient employment process.

What is the 13th month's salary in Vietnam?

The 13th-month salary, also known as the Tet bonus, is a common practice in Vietnam, where employees are paid an extra month’s salary at the end of the year or during the Lunar New Year Festival. This payment is a form of bonus and is not mandated by law, but it is a widely followed custom and expected by employees, playing a significant role in employee retention and motivation.

Vietnam

Table of Content

Introduction