Expand your business into Vietnam - without an entity
New Horizons provides global employment solutions for businesses wanting to hire employees and distribute payroll in Vietnam. Through our Vietnam PEO & Employer of Record, we manage your company’s payroll, benefits, and expenses in Vietnam. Additionally, we oversee HR duties, as well as employment and tax compliance.
New Horizons will act as your employees’ Vietnam Employer of Record, which means you can begin doing business in Vietnam without a local entity. This not only allows your business to go to market faster, but also has the potential to save your business thousands in expansion costs.
As the only Vietnam PEO with an in-house recruitment team, New Horizons will source, hire, and onboard your Vietnamese workforce. We hire employees in accordance with Vietnamese labor regulations and coordinate all expense claims and benefits payments. Although we act as your employees’ Employer of Record, you still maintain full autonomy and control over all employees.
Our Vietnam PEO simplifies your expansion
New Horizons enables your business to expand its operations into Vietnam – without setting up a legal subsidiary.
New Horizons ensures day-to-day guidance to help your business navigate Vietnamese labor laws and regulations. We also provide mandatory monthly payroll requirements, and absorb all local employment liabilities. Partnering with our Vietnam PEO is the quickest and most cost-effective way to enter the Vietnamese market.
Employment & Labor Laws in Vietnam
Employment contracts in Vietnam
Vietnamese law requires employers to draft written employment contracts when hiring staff. Contracts should be concise, strongly-worded, and outline an employee’s compensation, benefits, job responsibilities, and any rules around termination.
Letters of offer and employment contracts should be drafted in both Vietnamese and English. Any reference to salary and benefits should be made in Vietnamese dong (VND), rather than a foreign currency.
By partnering with our Vietnam PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Vietnam
In Vietnam, it’s typically prohibited for employees to work for than eight hours per day and 48 hours per week. Employers are required by law to provide their employees with one day off per week. In most work arrangements, a day off is taken on Sundays.
A standard work week in Vietnam is Monday to Friday, with eight hours per day.
Holidays in Vietnam
In Vietnam, there are 9 public holidays each year. The Tet Lunar New Year is a week long holiday.
Public holidays are as follows:
International employees in Vietnam are entitled to a paid day off on National Day.
New Year’s Day
Tet Nguyen Dan
26 Jan-29 Jan
Hung Kings Temple Festival
Entities, enterprises, and organizations in Vietnam may be subject to Statutory Social Insurance. This is dependent on whether employees are hired under indefinite-term labor contracts or fixed-term labor contracts with a duration of more than three months. Vietnam’s social insurance fund pays allowances for:
- Maternity leave
- Sick leave
- Occupational disease
- Work-related accidents
There is also a mandatory social, health, and unemployment insurance scheme in Vietnam. Both employees and employers must provide contributions this scheme. Contributions are determined by an employee’s monthly salary, as stipulated in the relevant labour contract (capped at 20 times Common Minimum Wage for SI / HI) and 20 times Minimum Regional Wage for UI.
Mandatory unemployment insurance is only applicable to enterprises with 10 or more employees.
- Local: Employers contribute 21.5% of payroll to social insurance; local employees contribute 10.5%
- Expat: Employers contribute 6.5% of payroll to social insurance; expat employees contribute 1.5%
- Union Fee: 1% (only compulsory when a professional joins TU organization).
- Trade Union: 2% (compulsory to the employer).
In Vietnam, standard insurance is provided through the national system. By law, employers must provide health insurance for their employees. Additionally, employers must offer employees regular annual health checks.
Vietnamese labor law stipulates that employees are entitled to 12 day’s annual leave. Leave conditions are as follows:
- For employees with at least 12 month’s experience with an employer, they are entitled to 12 day’s paid annual leave. Employees with less than 12 month’s company service are entitled to prorated leave.
- Employees are entitled to an extra paid vacation day for every five years’ company service.
- For leave not taken by the end of a year, employees are entitled to pay in lieu of annual leave. Employers will generally allow an employee to carry over unused annual leave to the following year, but no later than March 31st of the following year. This would be an alternative to payment in lieu of unused leave.
- As a supplementary benefit, employees working in hazardous conditions may earn additional leave (this is negotiated between an employee and employer).
- In Vietnam, vacation leave is classified as separate to sick leave or maternity leave.
Employees in Vietnam are also entitled to paid personal leave for their wedding or the wedding of their child. Additionally, paid or unpaid personal leave is typically available to employees after the death of a parent, spouse, or child.
Employees suffering from an illness or injury may be eligible to receive an allowance that is paid for by Vietnam’s social insurance fund. To be granted this allowance, an employee must submit the required medical certification supporting their leave.
In Vietnam, sick leave allowance is based on an employee’s salary, which is then used to calculate the social insurance premium. The maximum entitlement is:
- 30 days per year – if an employee has contributed to the social insurance fund for a duration that is less than 15 years
- 40 days per year – if an employee has contributed to the social insurance fund for a duration that is between 15 and 30 years
- 60 days per year – if the employee has contributed to the social insurance fund for a duration that is more than 30 years
Maternity and paternity leave
Female employees in Vietnam are eligible for six month’s paid maternity leave at full salary (the base salary of the social insurance contribution). An employee’s maternity leave is paid for by compulsory social insurance.
A female employee who is pregnant, on maternity leave, or has a child younger than 12 months of age, can only be dismissed if her employer ceases operation. There are no other grounds on which an employee in these circumstances can be dismissed.
Employers in Vietnam are not required to pay salary to an employee who is on maternity leave. However, an employee’s maternity leave is based on their salary and used to calculate the social insurance premium. The maximum entitlement is VND 29.800,000.
Fathers in Vietnam are eligible for between five and 14 day’s paid paternity leave. This is dependent on whether a child is born naturally or by caesarean; and whether it is a single or multiple birth.
Termination and severance
In Vietnam, an employee’s rights regarding termination are dependent on their employment contract and the reason for dismissal. This has an impact on notice periods and any severance payments.
When hiring new employees in Vietnam, it is common for employers to arrange a probation period. For work that requires specialized or highly technical skills, probationary periods are not allowed to exceed 60 days. For all other types of work, probationary periods must not exceed 30 days.
Employers are permitted to terminate a fixed-term labor contract by serving advance notice of 30 working days. For indefinite-term labor contracts, 45 working day’s notice is required. In both instances, employers must have sufficient legal grounds for termination.
In order to legally terminate an employment contract, sufficient grounds can include performance issues, prolonged illness, a force majeure event, or dissolution of the company.
A termination may be declared unlawful if the employer cannot prove legal grounds or if they fail to follow proper statutory procedures. If a termination is proven to be wrongful, an employer may be required to reinstate the employee and/or pay the employee’s salary for the period that they were not allowed to work. Additionally, an employer may be forced to pay two months of the employee’s salary as a penalty for the wrongful termination.
In most cases, settlements and resignations can be negotiated with an agreed amount of severance pay that is provided to the employee.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Vietnam PEO can mitigate risk for foreign companies and provide guidance through this process.
Vietnam compensation and benefits
Vietnam compensation laws
Minimum wage laws in Vietnam are determined by the area in which a business is operating. This is due to wages being adjusted to factor depreciation and socioeconomic conditions for workers and their families.
Major cities in Vietnam have the highest minimum wage, at VND 3,521,926 per month. Meanwhile, rural areas generally see a minimum wage of VND 2,408,543 per month. Minimum wages will often fluctuate as the economy improves.
Minimum Wage Country Comparison Chart
(Per month in USD)
Guaranteed benefits in Vietnam
Employers need to be mindful of all statutory benefits required by Vietnamese law. This includes time off for both holidays and vacations.
Employees in Vietnam are entitled to time off for the country’s nine public holidays. The Tet Lunar New Year is a week-long celebration, which means that employees receive the whole week off.
Vietnam’s nine public holidays are separate to the country’s minimum vacation requirements. Vacation leave is determined by the length of time that an employee has worked for a company. As an example, employees with 12 month’s company service receive 12 day’s paid annual leave. Employees receive an extra day’s paid vacation for every five year’s company service thereafter.
Vietnam benefit management
Employers in Vietnam should also consider providing supplemental benefits for their employees. This can have a significant impact of employee retention rates. Whilst these benefits are not compulsory, many employees will expect them as part of their compensation.
For employees that have been with a company longer than a year, employers will often provide a 13-month bonus. This bonus can range from a month to a year’s salary and is normally paid before the Lunar New Year Holiday.
Although Vietnam offers standard health insurance through its national system, many employers will elect to provide their employees with supplementary health and life insurance. Alternatively, an insurance allowance may be paid to employees.
Benefits and compensation restrictions
For expanding businesses, one of the major restrictions to benefits and compensation involves setting up a local entity. Employers are generally prohibited from hiring and paying employees without first establishing a subsidiary in Vietnam. This process can take months to complete, which causes significant business delays.
With New Horizons’ Vietnam Employer of Record & PEO, businesses can begin operating in Vietnam in as little as 48 hours. New Horizons acts as your employees’ Employer of Record, which means there’s no need to establish a subsidiary in Vietnam. And as the only Vietnam Employer of Record & PEO with an in-house recruitment team, we can help you source, hire, and onboard top local and international talent.