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1. Country Overview
The Socialist Republic of Vietnam represents one of Asia's most dynamic, rapidly expanding manufacturing, electronics, and digital technology epicenters. Driven by political stability, favorable demographics, competitive labor costs, an extensive network of free trade agreements (EVFTA, CPTPP, RCEP), and substantial foreign direct investment (FDI) inflows from global technology titans (Samsung, Apple suppliers, Intel, LG), Vietnam has transformed into a premier global supply chain and software engineering destination. However, operating in Vietnam requires strict compliance with the Labour Code 2019 (Law No. 45/2019/QH14) and executive decrees issued by the Ministry of Labour, Invalids and Social Affairs (MOLISA). Vietnamese labor regulations are defined by 4 regional minimum wage tiers (Decree No. 293/2025/ND-CP), compulsory Vietnam Social Security (VSS) social, health, and unemployment insurance contributions, a mandatory 2% Trade Union payroll fee, the universal 13th-month Tet holiday bonus, and rigorous licensing requirements for labor dispatch under Decree 145/2020/ND-CP. For overseas corporations seeking to hire Vietnamese software developers and operational personnel without incorporating a local 100% foreign-owned enterprise (WFOE), an Employer of Record (EOR) provides a compliant mechanism to employ local personnel within authorized job categories.
1.1 Geography & Business Infrastructure
S-shaped country on the eastern edge of mainland Southeast Asia, bordering China, Laos, Cambodia, and the South China Sea.
1.2 Culture, Languages & Workplace Etiquette
Industrious, ambitious, respectful, and highly tech-forward corporate culture. High English proficiency among engineers. Monday to Friday workweek.
1.3 Historical & Economic Context
Socialist republic with an open market economy; global leader in electronics manufacturing, game development, and software outsourcing.
1.4 Labour Law History & Regulatory Evolution
Governed by the Labour Code of Vietnam (Law No. 45/2019/QH14), overseen strictly by the Ministry of Labour, Invalids and Social Affairs (MOLISA).
2. Key Employment Facts
Summary of statutory baselines verified against primary government and labor ministry records:
| Requirement / Parameter | Statutory / Verified Value | Official Legal Citation |
|---|---|---|
| Region I Minimum Wage (2026) | 5,310,000 VND / month (25,500 VND/hr) under Decree 293/2025/ND-CP | Government Decree No. 293/2025/ND-CP |
| Statutory Base Salary (2026) | 2,530,000 VND / month (establishing SI/HI cap of 50,600,000 VND) | Government Decree No. 161/2026/ND-CP |
| Standard Workweek | 48 hours per week (commercial tech standard 40 to 44 hours/week) | Article 105 Labour Code 2019 |
| Employer Social Security (VSS) | 21.50% total (17.5% Social + 3% Health + 1% Unemployment) | Vietnam Social Security (VSS) |
| Mandatory Trade Union Fee | 2.00% employer contribution on total payroll to Labour Confederation | Decree 191/2013/ND-CP |
| Statutory Annual Leave | 12 working days paid leave (+1 additional day for every 5 years) | Article 113 Labour Code 2019 |
| Mandatory Tet Bonus (13th Month) | Universal market custom: 1 full month salary before Lunar New Year | Vietnamese Labour Market Practice |
| EOR Legal Framework | Labor Sub-leasing strictly licensed; 20 permitted job categories | Articles 52-58 Labour Code / Decree 145 |
3. Employment Law & Statutory Overview
Employment relations in Vietnam are governed primarily by the Labour Code 2019 (Law No. 45/2019/QH14) and specialized government decrees: 1. The Labour Code 2019: Codifies fundamental employment protections, mandatory contract types, working hours, statutory leave, disciplinary procedures, and dispute resolution. 2. Primacy of Employment Substance (Article 13): Where work is performed under the direction, management, and remuneration of an enterprise, it is legally deemed an employment contract regardless of the contract's title or form. 3. Trade Union Representation: Under Vietnamese law, grassroots trade unions or employee representative organizations at the enterprise level represent workers. Employers must contribute a mandatory 2% Trade Union fee regardless of whether a formal union has been established. 4. Internal Working Regulations (IWR / Nội quy lao động): Employers employing 10 or more workers must establish written Internal Working Regulations registered with the district labor authority (DOLISA), defining working hours, disciplinary offenses, and asset protection.
4. Working Hours & Overtime
Under Chapter VII of the Labour Code 2019, working hours and overtime are regulated as follows: - Normal Working Hours (Article 105): Normal working hours cannot exceed 8 hours per day or 48 hours per week: * Commercial Practice: In technology, professional services, and multinational corporate environments, standard working hours are 40 to 44 hours per week (8 hours per day, Monday to Friday or half-day Saturday). * State Policy: The State explicitly encourages employers to implement a 40-hour workweek. - Rest Periods (Article 109): Employees working 8 consecutive hours are entitled to at least 30 minutes of continuous rest (45 minutes for night work), included in working time. - Overtime Rules & Pay Multipliers (Article 98): * Weekday Overtime: At least 150% of the normal hourly wage. * Weekend Rest Day Overtime: At least 200% of the normal hourly wage. * Public Holiday or Paid Leave Overtime: At least 300% of the normal hourly wage (excluding the holiday pay itself). * Night Work Premium (10:00 PM to 6:00 AM): Additional +30% regular hourly wage. * Overtime Caps (Article 107): Overtime cannot exceed 50% of normal daily working hours, 40 hours per month, and 200 hours per calendar year (extendable up to 300 hours in export manufacturing, electronics, and seasonal industries upon notification to DOLISA).
5. Minimum Wage
Vietnam enforces a four-tiered regional minimum wage structure established by government decree under the Labour Code: - Current Statutory Rates (Decree No. 293/2025/ND-CP): Effective 1 January 2026, regional minimum wages are: * Region I: **5,310,000 VND / month** (25,500 VND / hour) — Covers urban districts of Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and major industrial centers. * Region II: **4,730,000 VND / month** (22,700 VND / hour) — Covers suburban districts and regional provincial capitals. * Region III: **4,140,000 VND / month** (20,000 VND / hour) — Covers smaller cities and semi-rural districts. * Region IV: **3,700,000 VND / month** (17,800 VND / hour) — Covers remaining rural localities. - Statutory Base Salary (Mức Lương Cơ Sở): Under Decree No. 161/2026/ND-CP effective 1 July 2026, the statutory base salary is fixed at **2,530,000 VND / month**, which defines the mandatory contribution ceilings for social and health insurance.
6. Employment Contracts
Under Article 20 of the Labour Code 2019, employment contracts in Vietnam are restricted to two statutory forms: 1. Indefinite-Term Contract (Hợp đồng lao động không xác định thời hạn): Contract where the parties do not fix a term or termination date. 2. Definite-Term Contract (Hợp đồng lao động xác định thời hạn): Contract where the term is fixed between the parties for a period of up to 36 months: * Maximum Renewals: An employer may enter into a maximum of two consecutive fixed-term contracts with an employee. Upon the expiration of the second fixed-term contract, if the employee continues working, the contract automatically converts into an indefinite-term contract by law. * Elimination of Seasonal Contracts: The 2019 Labour Code abolished temporary/seasonal contracts under 12 months, categorizing all fixed engagements under the definite-term regime. - Electronic Contracts (Article 14): Employment contracts executed via electronic data messages complying with electronic transaction laws carry the exact same legal validity as written physical contracts.
7. Probation
Probationary periods in Vietnam are strictly regulated under Articles 24 through 27 of the Labour Code 2019: - Maximum Statutory Durations: * Up to 180 Days: For enterprise managerial and executive positions under the Law on Enterprises. * Up to 60 Days: For positions requiring collegial, university, or higher specialized technical qualifications. * Up to 30 Days: For positions requiring intermediate vocational qualifications or technical workers. * Up to 6 Days: For other simple labor positions. - Mandatory Probationary Wage: During probation, the employee's wage must equal at least 85% of the official wage for that position. - Termination of Probation: Either party may cancel the probationary agreement without advance notice and without paying severance compensation if the work fails to meet agreed requirements.
8. Leave & Public Holidays
Statutory leave provisions under the Vietnamese Labour Code include: - Paid Annual Leave (Article 113): Minimum 12 working days of paid annual leave per year under normal working conditions (14 days for minor workers, disabled workers, or heavy/toxic jobs). * Seniority Bonus (Article 114): For every 5 completed years of service with the same employer, annual leave entitlement increases by 1 additional working day. - Public Holidays (Article 112): Vietnam recognizes 11 official paid public holidays: * Gregorian New Year (1 January - 1 day) * Lunar New Year / Tet Holiday (5 days) * Victory Day (30 April - 1 day) * International Labour Day (1 May - 1 day) * National Day (2 September - 2 days) * Hung Kings Commemoration Day (10th day of 3rd lunar month - 1 day) - 13th Month Salary (Tet Bonus): While not codified as a compulsory statute in the Labour Code, payment of a 13th Month Salary prior to Tet is universal commercial practice; omitting the Tet bonus causes severe workforce attrition and union disputes. - Sickness Leave (Article 26 Social Insurance Law): Sickness is funded directly by Vietnam Social Security (VSS) at 75% of the salary on which social insurance was paid for the preceding month, for 30 to 60 days per year based on working conditions. - Maternity Leave (Article 139): 6 months paid maternity leave funded 100% by VSS, plus a lump-sum birth allowance equal to 2 times the base salary (5,060,000 VND in 2026). - Paternity Leave: 5 to 14 working days funded by VSS based on delivery conditions.
9. Payroll & Employer Taxes
Payroll processing in Vietnam involves Vietnam Social Security (VSS) and the General Department of Taxation: - Employer Statutory Contributions: * Social Insurance (SI - Bảo hiểm xã hội): 17.50% (Retirement & Survivorship 14.0%, Sickness & Maternity 3.0%, Occupational Disease & Accidents 0.5%). * Health Insurance (HI - Bảo hiểm y tế): 3.00%. * Unemployment Insurance (UI - Bảo hiểm thất nghiệp): 1.00%. * Trade Union Fee (Kinh phí công đoàn): Mandatory 2.00% employer levy remitted to the local Labour Federation under Decree 191/2013/ND-CP. * Total Employer Statutory Burden: 23.50% of gross payroll. - Statutory Contribution Ceilings: * Social Insurance & Health Insurance (SI/HI): Capped at 20 times the statutory base salary (20 x 2,530,000 VND = **50,600,000 VND / month** in 2026). * Unemployment Insurance (UI): Capped at 20 times the applicable regional minimum wage (e.g., 20 x 5,310,000 VND = **106,200,000 VND / month** in Region I). - Employee Deductions: 10.50% total (SI 8.0%, HI 1.5%, UI 1.0%). - Personal Income Tax (PIT): Withheld monthly under progressive tax brackets: 5% (up to 5M VND), 10% (5M–10M), 15% (10M–18M), 20% (18M–32M), 25% (32M–52M), 30% (52M–80M), and 35% (over 80M VND). Personal tax relief: 11M VND/month for the taxpayer, and 4.4M VND/month per eligible dependent.
11. Statutory Benefits
In addition to VSS social insurance and the universal 13th-month Tet bonus, key employee benefits in Vietnam include: 1. Private Supplementary Health Insurance: Multinationals standardly provide supplementary commercial healthcare policies (e.g., Bao Viet, Liberty Insurance) covering private clinics and direct billing for dependents. 2. Annual Health Checks: Employers are statutorily mandated under Article 21 of the Law on Occupational Safety and Health to provide free annual health checks to all employees (twice a year for female staff or heavy/toxic roles). 3. Company Trips & Team Welfare: Annual company retreats (*du lịch công ty*) and holiday cash gifts are deeply rooted employee expectations.
12. Termination & Severance
Terminating employment in Vietnam requires strict statutory justification under Articles 34 to 47 of the Labour Code 2019: - Permissible Statutory Grounds for Unilateral Employer Termination (Article 36): * Repeated failure to perform work according to contractual standards (documented via internal KPIs). * Prolonged illness (12 consecutive months for indefinite contracts, 6 months for definite contracts). * Natural disasters, fire, or major epidemics compelling production reduction. * Worker reaching retirement age or unexcused absence of 5 consecutive business days without legitimate reasons. - Mandatory Advance Notice: At least 45 days for indefinite contracts; at least 30 days for fixed-term contracts of 12–36 months; at least 3 business days for contracts under 12 months. - Severance Pay (Trợ cấp thôi việc - Article 46): For employees who worked regularly for 12 months or more, the employer must pay 1/2 month's salary for each year of service for periods of employment not covered by compulsory unemployment insurance. - Job-Loss Allowance (Trợ cấp mất việc làm - Article 47): In cases of organizational restructuring, technological change, or economic redundancy, the employer must pay 1 full month's salary for each year of service (minimum 2 months' salary). - Unlawful Termination Liabilities: Reinstatement, payment of full salary and social insurance during unworked days, plus at least 2 months' salary as damages.
13. Contractor Classification & Misclassification Risk
Independent contractor engagements in Vietnam are strictly scrutinized under Article 13 of the Labour Code 2019: - Substance Over Form: If an agreement contains paid work, remuneration, and the management, direction, or supervision of the hiring entity, it is legally deemed an employment contract by law, regardless of whether it is titled an "Independent Contractor Agreement" or "Service Agreement." - Reclassification Consequences: If an individual contractor is found to be performing subordinate work, labor inspectors and tax authorities reclassify the relationship into a formal employment contract, assessing retroactive payment of 23.5% employer VSS contributions, trade union fees, overtime back-pay, and personal income tax penalties.
14. Immigration & Work Authorization
Foreign nationals working in Vietnam are strictly regulated by MOLISA and the Immigration Department under Decree No. 152/2020/ND-CP and Decree No. 70/2023/ND-CP: - Work Permit (Giấy phép lao động): Mandatory for foreign staff. Valid for up to 2 years. Requires university degrees and at least 3 years of verified relevant foreign management or expert work experience. - Mandatory Labor Market Recruitment Advertisement: Under Decree 70/2023, employers MUST publicly advertise the job vacancy for Vietnamese candidates on the portal of the Employment Service Center for at least 15 calendar days before submitting an application for foreign labor approval to DOLISA. - Work Permit Exemption: Available for foreign capital contributors, board members of LLCs/JSCs, and intra-company transferees in specific WTO service sectors. - Temporary Residence Card (TRC): Issued by the Immigration Department upon issuance of the Work Permit, granting multi-entry residence for up to 2 years.
15. Employer of Record (EOR) & PEO Capabilities
CRITICAL STATUTORY FRAMEWORK — Labor Sub-Leasing (Cho thuê lại lao động): In Vietnam, Employer of Record (EOR) services operate under the strict statutory regime of Labor Sub-leasing governed by Articles 52 through 58 of the Labour Code 2019 and Decree No. 145/2020/ND-CP: - Mandatory Labor Sub-Leasing License: An entity cannot provide EOR or staffing services without an official Labor Sub-leasing License issued by the Ministry of Labour, Invalids and Social Affairs (MOLISA). - Statutory Financial Escrow: The sub-leasing enterprise must deposit a mandatory cash escrow guarantee of 2,000,000,000 VND (approximately $80,000 USD) at a commercial bank. - 20 Permitted Occupational Categories: Sub-leasing is restricted exclusively to 20 specific job categories enumerated in Appendix II of Decree 145/2020/ND-CP (including software programming, IT services, translation, administrative support, graphic design, and customer service). Deploying workers outside these 20 categories is illegal. - Maximum Duration: Sub-leased workers can be deployed to a client for a maximum continuous duration of 12 months.
16. Global Payroll
For multinational corporations operating a direct Vietnamese subsidiary (100% Foreign-Owned LLC), running local payroll requires: - Monthly processing of basic salary, allowances, and overtime according to Labour Code multipliers. - Monthly electronic declarations and payments to Vietnam Social Security (via the VSS digital portal) by the last day of each month, managing the 50.6M VND SI/HI cap. - Monthly or quarterly PIT withholding returns filed with the tax office, followed by the mandatory Annual Tax Finalization (*Quyết toán thuế TNCN*) filed by March 31. - Monthly remittance of the mandatory 2% Trade Union Fee to the district Labour Confederation (*Liên đoàn Lao động*). - Administering the annual 13th-month Tet holiday bonus calculation.
17. Hiring Without a Local Entity
Foreign companies seeking to employ talent in Vietnam without incorporating a local LLC evaluate three routes: 1. Licensed Vietnamese Employer of Record (MOLISA-Licensed Sub-Leasing Agency): The legally compliant vehicle for positions within the 20 permitted occupational categories. The EOR acts as the legal employer, managing VSS social charges, 2% trade union fees, PIT withholdings, Tet bonuses, and DOLISA compliance. 2. Independent Contractor Engagement: Viable only for genuine independent consultants operating registered household businesses (*Hộ kinh doanh*) delivering defined deliverables. Engaging full-time workers under client supervision as contractors breaches Article 13 of the Labour Code, incurring heavy tax and labor penalties. 3. Permanent Establishment (PE) Risk: Having personnel in Vietnam who habitually conclude contracts, negotiate commercial terms, or deliver services beyond statutory thresholds creates a Permanent Establishment under the Corporate Income Tax (CIT) Law, subjecting parent company profits to Vietnamese CIT (20%).
18. Country-Specific Risks & Compliance Matrix
Using an EOR lacking an official MOLISA Labor Sub-leasing License or operating outside the 20 permitted categories violates Decree 145/2020/ND-CP, triggering administrative fines and void contracts.
Under the Labour Code, labor sub-leasing is illegal for jobs outside the 20 statutory categories, limiting EOR deployment to tech, administrative, and specialized support roles.
Employers must pay the 2% Trade Union fee on total gross payroll regardless of whether a union exists; failure triggers tax deduction disallowances.
Sponsoring foreign work permits requires advertising the position on the Employment Service Center portal for 15 days; failure invalidates the foreign labor approval.
Terminating an employee without proven statutory justification under Article 36 compels mandatory reinstatement with full backwages plus at least 2 months' damages.
19. EOR Providers & Global Employment Partners
Direct provider capabilities verified against EOR.one's independent provider registry:
19.1 Confirmed EOR Providers (28)
Direct local legal entities or verified full-liability employment capability.19.2 Probable / Aggregator EOR Providers (1)
Providers delivering coverage via local partner networks or umbrella arrangements.
19.3 Global Payroll Specialists (44)
Managed multi-country payroll for organizations with their own legal entity in Vietnam.
19.4 Contractor Management Platforms (32)
Invoicing, compliant contracts, and tax withholding management for independent contractors.
19.5 Immigration & Visa Specialists (8)
Specialized relocation, work authorization, and corporate visa sponsorship counsel.
19.6 Professional Employer Organizations (PEO / Co-Employment) (3)
Co-employment partnerships for businesses maintaining their own domestic entity.
20. Related Expansion Services
21. Official Sources & Legal Citations
Every legal claim and statutory figure is grounded in primary government legislation, official gazettes, or tax regulatory guidance:
22. Frequently Asked Questions
23. Legal Research Version & Verification
Regulatory Notice & Disclaimer: Information provided is compiled by the EOR.one Global Employment Research Desk from primary statutory codes, tax department guidance, and gazette announcements. This guide is for research and general informational purposes only and does not constitute formal legal, payroll, or tax advice. Employers must consult qualified local labor counsel prior to executing binding employment agreements in Vietnam.
24. Take Action: Compliant Hiring in Vietnam
Accelerate your expansion into Vietnam with pre-vetted compliance infrastructure:
10. Social Security
The Vietnam Social Security (VSS - Bảo hiểm Xã hội Việt Nam) system operates mandatory social, health, and unemployment funds: - Social Insurance Fund: Provides pensions, sickness allowances, maternity payments, and work injury compensation. - Health Insurance Fund: Covers public and registered private medical treatment, hospitalization, and pharmaceuticals. - Unemployment Insurance Fund: Provides monthly unemployment allowances (60% of average wage for up to 12 months) and vocational training support.