Hire in Vietnam through our Employer of Record (EOR)

Vietnam's employment landscape is a dynamic blend of tradition and modernity, shaped by a young, ambitious workforce and a rapidly evolving economy. The country's labor market is characterized by a shift from agriculture to manufacturing and services, with a growing emphasis on skills development to meet the demands of an increasingly globalized economy.

Overview of Labor Laws

Vietnam's labor laws aim to protect workers' rights while fostering economic growth. Key aspects include:

• A standard workweek of 48 hours
• Mandatory social insurance contributions
• Provisions for annual leave and public holidays
• Regulations on overtime and night work
• Protections against discrimination and unfair dismissal

These laws are regularly updated to align with international standards and address emerging workplace issues.

Cultural Considerations

Understanding Vietnamese work culture is crucial for successful employment relationships:

• Respect for hierarchy and seniority is paramount
• Indirect communication is preferred to maintain harmony
• Building personal relationships is essential for business success
• Long working hours are common, reflecting a strong work ethic
• Family obligations are highly valued and may influence work schedules

Employers should be mindful of these cultural nuances to foster a positive work environment.

Challenges of Direct Hiring

Direct hiring in Vietnam can present several challenges:

1. Complex labor laws and regulations that require local expertise
2. Language barriers that may complicate recruitment and onboarding
3. Difficulty in verifying qualifications and work experience
4. Cultural differences that can lead to misunderstandings in expectations
5. Administrative burdens related to payroll, taxes, and social insurance
6. Potential legal risks associated with non-compliance with local laws

These challenges underscore the importance of thorough preparation and local support when engaging in direct hiring in Vietnam.

Vietnam's payroll and tax system is a complex structure that involves various contributions and deductions for both employers and employees. This system is designed to support social welfare programs, healthcare, and unemployment benefits while ensuring fair taxation. Understanding these regulations is crucial for businesses operating in Vietnam to maintain compliance and manage their workforce effectively.

Employer Contributions

Personal Income Tax (PIT) Withholding

Employers in Vietnam are responsible for withholding Personal Income Tax (PIT) from their employees' salaries. This tax follows a progressive rate structure, ranging from 5% to 35%. It's important to note that employers must not only withhold this tax but also declare and pay it to the tax authorities on a monthly basis. The deadline for this payment is the 20th day of the following month. Additionally, employers are tasked with conducting annual PIT finalization for their employees.

Social Security Contributions

Employers play a significant role in contributing to the social security system on behalf of their employees. These contributions are divided into three main categories:

1. Social Insurance: Employers contribute 17.5% of the employee's monthly salary.
2. Health Insurance: A contribution of 3% of the employee's monthly salary is required.
3. Unemployment Insurance: Employers must pay 1% of the employee's monthly salary.

These contributions are crucial for maintaining a comprehensive social security net for employees in Vietnam.

Trade Union Fee

For employees who are members of a trade union, employers are required to withhold a 1% trade union fee from their salaries. This fee is then remitted to the appropriate trade union organization.

Employee Contributions

Social Insurance Deduction

Employees in Vietnam are required to contribute 8% of their monthly salary to the social insurance fund. This contribution covers a wide range of benefits, including pensions, sickness, maternity leave, occupational accidents, diseases, and death benefits.

Health Insurance Deduction

To ensure adequate health coverage, employees must contribute 1.5% of their monthly salary towards health insurance.

Unemployment Insurance Deduction

Employees are also responsible for contributing 1% of their monthly salary to the unemployment insurance fund, providing a safety net in case of job loss.

Personal Allowance Deduction

The Vietnamese tax system provides a monthly personal allowance deduction of VND 11 million (approximately USD 478) for each taxpayer. This deduction helps to reduce the overall tax burden on individuals.

Dependent Allowance Deduction

Employees with dependents can benefit from an additional monthly deduction of VND 4.4 million (approximately USD 174) for each qualifying dependent. This can include a spouse, children, or parents, provided they meet specific criteria set by the tax authorities.

Charitable Contributions Deduction

The tax system in Vietnam also encourages charitable giving by allowing deductions for donations made to approved charities and humanitarian organizations.

Understanding these various contributions and deductions is essential for both employers and employees in Vietnam. For employers, it ensures compliance with local regulations and accurate payroll management. For employees, it provides clarity on their take-home pay and the benefits they're entitled to. As Vietnam's economy continues to grow and evolve, staying informed about these payroll and tax regulations will remain crucial for businesses operating in the country.

Vietnam offers a comprehensive set of employee benefits, both mandatory and optional, designed to support workers and enhance their overall well-being. As an Employer of Record (EOR), Rivermate manages these benefits, ensuring compliance with local regulations while also helping companies offer competitive packages to attract and retain top talent. Let's explore the various benefits available in Vietnam.

Mandatory Benefits

In Vietnam, employers are required to provide the following benefits:

• Social Insurance (SI): Covers retirement, disability, and survivor benefits
• Health Insurance (HI): Provides access to medical care and treatments
• Unemployment Insurance (UI): Offers financial support during periods of unemployment
• Annual leave: Minimum of 12 days per year for employees working in normal conditions
• Public holidays: 11 days of paid public holidays annually
• Sick leave: Paid leave for illness or injury, with the duration depending on the employee's years of service
• Maternity leave: 6 months of paid leave for female employees
• Paternity leave: 5-14 days of paid leave for male employees, depending on the circumstances
• Work injury and occupational disease benefits: Compensation for work-related injuries or illnesses

Optional Benefits

To remain competitive and attract top talent, many employers in Vietnam offer additional benefits beyond the mandatory requirements:

• 13th-month bonus (Tet bonus): An extra month's salary typically paid during the Lunar New Year
• Performance-based incentives: Bonuses or commissions tied to individual or company performance
• Private health insurance: Supplementary coverage for enhanced medical care
• Housing allowances: Financial assistance for accommodation expenses
• Transportation allowances: Subsidies for commuting costs
• Meal allowances: Stipends or vouchers for daily meals
• Flexible work arrangements: Options for remote work or flexible hours
• Additional paid leave: Extra vacation days or personal time off
• Professional development opportunities: Training programs, workshops, or educational stipends
• Gym memberships or wellness programs: Support for employees' physical health and well-being
• Company events and team-building activities: Social gatherings to foster a positive work environment

By offering a mix of mandatory and optional benefits, employers in Vietnam can create attractive compensation packages that support employee satisfaction and retention. As an EOR, Rivermate ensures that companies comply with local regulations while also helping them implement competitive benefit strategies tailored to the Vietnamese market.

The process of termination and offboarding in Vietnam is a crucial aspect of employment relationships, governed by specific legal requirements and best practices. Understanding these procedures is essential for both employers and employees to ensure a smooth transition and compliance with local labor laws.

Termination Process

In Vietnam, the Labor Code (No. 45/2019/QH14) outlines the legal framework for employment termination. Employers can lawfully end employment contracts for various reasons, including:

• Disciplinary issues (e.g., repeated policy violations)
• Poor performance
• Economic circumstances (e.g., business restructuring)
• Prolonged illness or injury affecting work capacity

When terminating an employee, employers must adhere to specific notice periods:

• Indefinite-term contracts: 45 days' notice
• Fixed-term contracts over 12 months: 30 days' notice
• Fixed-term contracts under 12 months: As specified in the contract
• Probationary contracts: 3 days' notice

Severance Pay

Employees with at least one year of service are entitled to severance pay upon termination. The calculation is based on the employee's salary and years of service, typically half a month's salary for each year worked.

Offboarding Process

The offboarding process involves several steps to ensure a smooth transition:

1. Communicate the decision clearly and professionally
2. Provide necessary documentation (e.g., termination letter)
3. Conduct an exit interview
4. Retrieve company property (e.g., equipment, access cards)
5. Transfer knowledge and responsibilities
6. Process final payments, including severance if applicable
7. Update internal systems and records

By following these guidelines, companies can navigate the termination and offboarding process in Vietnam effectively, maintaining compliance with local regulations and fostering positive relationships with departing employees.

Vietnam's vibrant economy and growing job market have made it an attractive destination for foreign workers. However, navigating the visa and work permit requirements can be complex. Here's a concise overview of what foreign workers need to know about working legally in Vietnam.

Visa Requirements

Foreign nationals intending to work in Vietnam typically need to obtain a business visa (also known as a DN visa) before entering the country. The process usually involves:

1. Securing a job offer from a Vietnamese employer
2. Obtaining a visa approval letter from the Vietnamese Immigration Department
3. Applying for the visa at a Vietnamese embassy or consulate in their home country

Business visas are generally valid for 1-12 months and can be single or multiple entry.

Work Permit Process

Once in Vietnam, foreign workers must obtain a work permit. The main steps include:

1. Health check at an approved medical facility in Vietnam
2. Criminal record check from the worker's home country
3. Proof of qualifications and work experience
4. Employer's application to the Department of Labor

Work permits are typically valid for up to two years and can be renewed.

Temporary Exemptions

Some categories of workers may be exempt from work permit requirements, including:

• Intra-company transferees for short-term assignments
• Highly skilled workers entering for less than 30 days
• Foreign students studying in Vietnam

However, these exemptions are subject to specific conditions and time limits.

Recent Changes

Vietnam has been working to streamline its work permit process in recent years. Some notable changes include:

• Introduction of online application systems
• Reduced processing times for work permit applications
• Simplified requirements for certain categories of skilled workers

It's important to note that regulations can change, and the process can vary depending on the specific circumstances of the worker and employer. Working with a knowledgeable local partner or legal advisor can help ensure compliance with all necessary requirements.