Employment Laws in Vietnam
Overview
Vietnam's labor framework is governed primarily by the Labor Code 2019 (effective January 1, 2021), which introduced significant reforms to align with international standards. The country's employment laws are notably employee-protective, covering areas from working hours and wages to social insurance, leave, and termination procedures.
Understanding Vietnam's employment laws is essential for any foreign business operating or planning to expand in the country. Non-compliance can result in penalties, operational disruption, and reputational damage.
Labor Code 2019
The Labor Code 2019, effective from January 1, 2021, is the cornerstone of Vietnam's employment law framework. It replaced the 2012 Labor Code and introduced several key reforms including expanded rights for employees, updated trade union rules, and mandatory bilingual contracts for foreign-invested enterprises.
The code also mandates that employers with 10 or more employees must have an Internal Labor Regulation (ILR) registered with the Department of Labor, Invalids and Social Affairs (DOLISA). This document is critical for any disciplinary actions or terminations.
💡 Note: Employment contracts for foreign employees must be in Vietnamese. For foreign-invested enterprises (FIEs), contracts may be bilingual — Vietnamese and the foreign language, with the Vietnamese version taking precedence in disputes.
Employment Contracts
Vietnam recognizes two main types of employment contracts under the Labor Code 2019. The type of contract used directly affects the rights of both parties and must be carefully selected based on the nature of the work.
⚠️ Important: The probationary salary must not be lower than 85% of the agreed full salary. Only one probationary period is permitted per position per employee.
Working Hours & Overtime
Vietnam's Labor Code sets clear limits on working hours to protect employee health and work-life balance. Standard hours are 8 per day and 48 per week, though employers are encouraged to adopt a 40-hour working week.
⚠️ Overtime cap: Total overtime must not exceed 40 hours/month or 200 hours/year (300 hours/year in specific industries such as textiles, electronics, and seafood processing).
Minimum Wage
Vietnam operates a two-tier minimum wage system: the Basic Minimum Wage (used for state employees and social insurance calculations) and the Regional Minimum Wage (used for private sector workers). The Regional Minimum Wage is divided into four zones based on economic development.
The Basic Minimum Wage is 1,800,000 VND/month (as of 2024), used primarily for calculating compulsory social insurance contributions for state employees. Employers in the private sector must comply with the applicable Regional Minimum Wage.
Leave Entitlements
Vietnam's Labor Code provides comprehensive leave entitlements including annual leave, public holidays, sick leave, maternity leave, and paternity leave. Employers must comply with these statutory minimums.
Social Insurance & Benefits
Mandatory social insurance in Vietnam covers three schemes: social insurance (SI), health insurance (HI), and unemployment insurance (UI). Both employers and employees must contribute. The rates differ for local and foreign employees.
📌 Foreign employees have been subject to compulsory social insurance since January 1, 2022, under Decree 143/2018/ND-CP, unless they are intra-company transferees or work under contracts of less than 3 months.
Termination & Notice Period
Vietnam's Labor Code sets out specific grounds and procedures for lawful termination of employment. Employers must follow these procedures strictly; failure to do so may result in the termination being deemed unlawful, triggering reinstatement orders and compensation obligations.
⚠️ Unlawful termination requires the employer to reinstate the employee, pay full back wages for the period without work, and pay an additional 2 months' salary as compensation.
Foreign Workers
Foreign nationals working in Vietnam must have a valid work permit issued by DOLISA, unless they qualify for an exemption. The work permit is separate from the work visa — both are typically required for foreigners to legally work in Vietnam.
Compliance Tips for Employers
Staying compliant with Vietnam's employment laws requires ongoing attention to regulatory updates, proper documentation, and timely filings. Here are key areas to focus on: