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Discover everything you need to know about Vietnam

Hire in Vietnam at a glance

Here ares some key facts regarding hiring in Vietnam

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GDP world share
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40 hours/week

Overview in Vietnam

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Vietnam, located in Southeast Asia on the Indochinese Peninsula, shares borders with China, Laos, and Cambodia and has a long coastline along the South China Sea. The country features diverse terrain including coastal lowlands, mountains, and fertile river deltas from the Red and Mekong Rivers. It experiences a tropical climate with regional variations.

Historically, Vietnam has undergone periods of foreign domination, notably by China and later France, leading to a mix of cultural influences. Post-colonial Vietnam saw significant conflict during the Vietnam War, which resulted in devastation and displacement, but ended with reunification under communist rule in 1976. Economic reforms known as Đổi Mới were introduced in 1986, transitioning Vietnam towards a market-oriented economy while maintaining a one-party system.

Economically, Vietnam has evolved from one of the poorest countries to a lower-middle-income nation, driven by manufacturing, exports, and foreign investment. Agriculture remains important, but industrial and service sectors are growing. The country faces challenges such as ensuring job creation for its young population and managing rapid urbanization.

Vietnam's workforce is youthful and increasingly urban. While agriculture continues to employ a significant portion of the population, there is a shift towards industrial and service sectors, with Vietnam becoming a major manufacturing hub. The informal sector is large, and efforts are underway to formalize it for better worker protection.

Culturally, Vietnam values seniority and indirect communication, emphasizing harmony and personal connections in business. Workplaces are hierarchical, and while there is a strong work ethic, there is also a growing desire among younger generations for better work-life balance.

Challenges for Vietnam include aligning education with market needs, expanding the formal economy, and balancing traditional work values with modern expectations. The country is also focusing on reducing reliance on labor-intensive industries and developing higher-value sectors like technology and tourism to sustain economic growth.

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Employer of Record in Vietnam

Rivermate is a global Employer of Record company that helps you hire employees in Vietnam without the need to set up a legal entity. We act as the Employer of Record for your employees in Vietnam, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Vietnam through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationshiop with the employee, you allocate them the work and manage their performance.
Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Vietnam, Rivermate is responsible for:

  • Creating and managing the employment contracts
  • Running the monthly payroll
  • Providing local and global benefits
  • Ensuring 100% local compliance
  • Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

  • Day-to-day management of the employee
  • Work assignments
  • Performance management
  • Training and development

Taxes in Vietnam

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  • Personal Income Tax (PIT): Employers must withhold PIT from employees' salaries at rates from 5% to 35% and pay it monthly by the 20th of the following month. They also handle annual PIT finalization.

  • Social Security Contributions: Employers contribute 17.5% for Social Insurance, 3% for Health Insurance, and 1% for Unemployment Insurance based on the employee's monthly salary.

  • Trade Union Fee: Employers withhold and pay a 1% trade union fee from the salaries of union member employees.

  • Employee Contributions: Employees contribute 8% to Social Insurance, 1.5% to Health Insurance, and 1% to Unemployment Insurance.

  • Personal and Dependent Allowance Deductions: Taxpayers receive a monthly deduction of VND 11 million, and VND 4.4 million for each dependent.

  • Charitable Contributions Deduction: Deductions available for donations to approved charities.

  • Value Added Tax (VAT): Standard rate is 10%, with reduced rates of 5% and 0% for specific services. Certain services are VAT exempt. VAT compliance is mandatory for businesses exceeding specific revenue thresholds.

  • Corporate Income Tax (CIT): Standard rate is 20%, with preferential rates of 10% and 17% for specific sectors and conditions. Tax holidays and reductions are available based on factors like industry, location, and investment size.

  • Incentives: Various incentives include preferential CIT rates, tax holidays, and import duty exemptions for eligible businesses based on location, investment size, and sector.

Leave in Vietnam

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Vietnam's labor laws provide employees with various leave entitlements, ensuring they have time for rest and personal matters. Under the Vietnamese Labor Code (2019), employees with at least a year of service are entitled to a minimum of 12 working days of fully paid annual leave, with additional days for those under 18, with disabilities, or working in hazardous conditions. Leave increases by one day every five years of service. Pro-rated leave is available for those with less than a year of service.

Employers must consult employees on the scheduling of leave to balance individual preferences and business needs. During leave, employees receive their regular wages. Vietnam also celebrates numerous public holidays, including Tết Nguyên Đán (Lunar New Year), Hung Kings Commemoration Day, Reunification Day, International Labor Day, and National Day, among others. Some holidays, like International Women's Day and Vietnamese Teachers' Day, are observed but may not provide a day off for all.

Sick leave entitlements are determined by social insurance contributions, ranging from 30 to 180 days, with varying payment rates. Maternity leave is six months, fully paid by social insurance, with additional time for multiple births. Other types of leave include bereavement and marriage leave. Employers may offer more generous leave policies than the statutory minimums, which should be detailed in the employment contract.

Benefits in Vietnam

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Mandatory Employee Benefits Overview:

  • Social Security: Provides income for retirement, disability, or unemployment with varying contribution rates and eligibility.
  • Healthcare: May involve employer contributions to national health insurance or direct provision of health insurance.
  • Paid Leave: Includes annual leave, public holidays, sick leave, and maternity (sometimes paternity) leave.

Other Mandatory Benefits:

  • Workman's Compensation Insurance: Financial support for work-related injuries or death.
  • Unemployment Insurance: Financial assistance for job loss.
  • Severance Pay: Compensation upon employment termination under certain conditions.

Resources for Compliance:

  • Government Websites: For detailed information on labor regulations.
  • National Social Security Administration: For specifics on social security contributions and benefits.
  • Employer Federation Websites: Resources on compliance with employee benefits.

Vietnam-Specific Benefits:

  • Financial Benefits: Includes 13th-month bonus, performance incentives, housing, and transportation allowances.
  • Health and Wellness Benefits: Options for private health insurance and fitness programs.
  • Work-Life Balance Benefits: Flexible work arrangements and additional paid leave.
  • Other Optional Benefits: Meal allowances, company events, and professional development opportunities.

Vietnam's Health Insurance:

  • Mandatory Social Health Insurance: Required for employees under contracts over three months with a combined contribution rate of 4.5% of salary.
  • Optional Private Health Insurance: Offers broader coverage and access to private healthcare providers.

Vietnam's Retirement Savings:

  • Mandatory Public Scheme (Social Insurance - SI): Provides a basic pension with a combined contribution rate of 22% of salary.
  • Optional Private Pension Plans: Defined-contribution plans offering potentially higher returns and greater investment choice.
  • Personal Pension Plans: Voluntary plans with licensed financial institutions, offering additional retirement savings options.

Choosing the Right Retirement Plan: Depends on individual risk tolerance, desired retirement lifestyle, and investment goals.

Workers Rights in Vietnam

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Vietnam's Labor Code (No. 45/2019/QH14) outlines the regulations for employment termination, discrimination, working conditions, and workplace safety. Employers can dismiss employees for reasons such as poor performance, economic issues, or prolonged illness, with varying notice requirements based on contract type. Discrimination is prohibited on multiple grounds, and employees can seek redress through internal grievance procedures, the Labour Inspectorate, or the courts. The Labor Code also sets a standard workweek and outlines employer obligations for a safe working environment, including risk assessments and providing personal protective equipment. Employees have rights to refuse unsafe work and participate in safety initiatives. Enforcement is primarily managed by the Ministry of Labour, Invalids and Social Affairs (MOLISA) and the social insurance agency.

Agreements in Vietnam

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Vietnam's labor law distinguishes between two primary types of employment contracts: indefinite-term and fixed-term contracts, each with specific characteristics and regulations.

Indefinite-Term Employment Contracts:

  • These contracts do not specify an end date and continue until legally terminated by either party.
  • They require adherence to certain notice periods and may involve severance payments.
  • Employees under these contracts typically enjoy greater job security and comprehensive benefits like social and health insurance, and paid leave.

Fixed-Term Employment Contracts:

  • These are divided into contracts up to 36 months and those for specific jobs or seasonal work.
  • Contracts up to 36 months can be renewed once; a second renewal converts them to indefinite-term contracts.
  • Specific job or seasonal contracts are usually non-renewable and have shorter durations and minimal notice periods for termination.

Core Components of Employment Agreements:

  • Essential elements include identification of parties, job description, compensation and benefits, working hours, leave entitlements, and termination clauses.
  • Additional clauses might cover confidentiality, intellectual property rights, conflict of interest, and dispute resolution.

Probation Periods:

  • The duration of probation periods varies based on the job's complexity, ranging from 6 working days to 180 days.
  • During probation, salaries must be at least 85% of the full wage, and either party can terminate the agreement without notice or compensation.

Confidentiality and Non-Compete Clauses:

  • Confidentiality clauses protect sensitive business information.
  • Non-compete clauses, which are less clearly enforceable under Vietnamese law, aim to prevent employees from joining competitors post-employment. Their reasonableness, the employee's seniority, and potential compensation during the restricted period are key factors in their enforceability.

Remote Work in Vietnam

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Working Hours in Vietnam

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  • Standard Working Hours: Vietnamese labor law limits normal working hours to 8 hours per day and 48 hours per week, with encouragement for a 40-hour workweek to promote work-life balance.

  • Overtime Compensation: Overtime must be compensated at a minimum of 30% above the regular wage rate on normal days and 200% on rest days. The monthly overtime limit is 40 hours, with an annual cap of 200 hours, extendable to 300 hours in certain industries.

  • Youth Labor: Employees aged 15 to under 18 are not allowed to work overtime exceeding standard working hours.

  • Rest Periods: Employees working at least 6 hours a day are entitled to a 30-minute paid rest break. Additionally, all employees must receive at least 24 consecutive hours off per week, or an average of 4 days off per month in certain industries.

  • Night and Weekend Work: Night work (10 PM to 6 AM) qualifies for an additional 30% compensation. Employees working on weekends must receive extra pay, and employers must ensure suitable conditions for night shifts.

Salary in Vietnam

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Vietnam's growing economy necessitates competitive salaries to attract and retain top talent. A market competitive salary aligns with the prevailing market rate based on job title, location, and experience level, considering factors like job responsibilities, industry standards, and cost of living in urban versus rural areas. Larger companies often offer more competitive salaries and benefits.

Resources such as salary surveys, job boards, and recruitment agencies help determine competitive salaries. The National Minimum Wage sets a baseline for salaries in state-owned enterprises, while Regional Minimum Wages vary across different areas, reflecting socio-economic conditions and cost of living.

Employers must comply with minimum wage laws, and violations can lead to fines. Beyond base salaries, employers enhance compensation packages with bonuses and allowances, including the customary 13th-month bonus, performance-based bonuses, and various allowances for housing, transportation, and meals.

Mandatory benefits in Vietnam include social insurance and paid time off, while discretionary bonuses and allowances cater to employee motivation and loyalty. Understanding employee preferences for financial security and professional development is crucial for employers to maintain a competitive edge in the job market.

Payroll practices in Vietnam typically involve monthly payments through electronic fund transfers, with statutory deductions for income tax and social security contributions. Employers must adhere to a payroll processing timeline that includes tracking work hours, calculating salaries, and remitting taxes and social security contributions.

Termination in Vietnam

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In Vietnam, employment termination and severance pay are regulated by the Labor Code of Vietnam (2019). The Code mandates minimum notice periods for both employers and employees, with specific durations based on the type of contract. For indefinite term contracts or fixed-term contracts over 12 months, a 120-day notice is required. Contracts less than 12 months require a notice of at least one quarter of the contract term, while definite term contracts ending naturally require no notice.

Exceptions to these notice periods include immediate dismissal for serious violations such as fraud or work abandonment. Employers may opt for payment in lieu of notice, and written notice must always be provided, detailing the termination reason and effective date.

Severance pay eligibility includes involuntary termination due to organizational changes, economic difficulties, or health issues, and under certain conditions, resignation. However, severance pay is not due for dismissals due to serious disciplinary violations, voluntary resignation without legitimate reason, or the natural expiration of fixed-term contracts. Severance pay calculation is based on half a month's salary for each year of employment, with payment due within seven days of contract termination.

Termination procedures include mutual agreement, termination with notice, summary dismissal, and termination due to force majeure or contract expiry. Proper documentation and adherence to legal requirements, such as consulting labor unions and settling final payments promptly, are crucial. Employees may contest terminations through local labor authorities or courts. Employment contracts and collective labor agreements may provide specific terms but must align with the Labor Code. Legal advice is recommended for complex termination cases.

Freelancing in Vietnam

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  • Control and Supervision: Employees in Vietnam are under the control of their employers, who dictate working conditions and methods. Independent contractors, however, operate with greater autonomy and are not subject to such direct oversight.

  • Contractual Relationship: Employees must have a formal labor contract as per Vietnamese law, detailing employment specifics like salary and working hours. Contracts for contractors are optional but recommended to define work scope and payment terms without implying an employer-employee relationship.

  • Social Insurance and Benefits: Employers must enroll employees in social insurance for various benefits, whereas contractors handle their own social insurance and do not receive benefits like paid leave from the hiring party.

  • Tax Implications: Employers withhold and remit income tax for employees. Contractors manage their own tax filings and receive gross payments.

  • Contract Structures: Different contract types are used depending on project needs, including fixed-price, time and materials, and performance-based contracts.

  • Negotiation Practices: Clear contracts are crucial to distinguish between employees and contractors, with terms that manage payment and dispute resolution effectively.

  • Common Industries for Independent Contractors: Sectors like IT, marketing, professional services, and construction frequently use contractors.

  • Intellectual Property Rights: Under Vietnamese law, contractors generally retain IP rights unless a written agreement specifies transfer to the client. Contracts should clearly address IP ownership and confidentiality.

  • Tax and Social Security for Freelancers: Contractors must file personal income tax and can opt into social insurance programs. They may also choose private health insurance plans, including international options for expatriates.

Health & Safety in Vietnam

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Vietnam's health and safety regulations are primarily outlined in the Labor Code 2019 and the Law on Occupational Safety and Health 2015, supplemented by various decrees and circulars from the Ministry of Labor, Invalids, and Social Affairs (MOLISA). MOLISA is responsible for enforcing these laws, which mandate employers to ensure safe working conditions, conduct risk assessments, provide personal protective equipment, and offer training on workplace hazards. Workers have rights to information, participation in safety matters, and can refuse unsafe work, but must also follow safety procedures and use provided equipment properly.

The regulations cover areas like machine safety, fire prevention, chemical handling, and emergency responses. Enforcement includes inspections, with penalties ranging from warnings to suspension of operations for non-compliance. Despite advancements, challenges remain such as limited enforcement capacity and low awareness, which are being addressed through enhanced enforcement, training, and partnerships. Workplace inspections are crucial, focusing on compliance, hazard control, and training, with frequencies adjusted based on risk assessments. Employers must report accidents promptly and are responsible for investigations to prevent recurrence, while the social insurance system provides compensation for work-related injuries and illnesses.

Dispute Resolution in Vietnam

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Vietnam's labor dispute resolution system is structured across multiple levels, starting from Labor Conciliation Councils (LCCs) at the grassroots level to the Supreme People's Court at the highest level. The system is designed to handle both individual and collective labor disputes, with processes that encourage conciliation initially, followed by arbitration and court proceedings if necessary.

The Labor Code 2019 governs the structure, process, and jurisdiction of this system, emphasizing timely resolution and encouraging amicable settlements. Despite a robust framework, challenges such as resource constraints, access issues for vulnerable workers, and delays remain prevalent.

Additionally, Vietnam conducts compliance audits and inspections across various sectors to ensure adherence to labor laws and other regulations, with the Ministry of Labor, Invalids, and Social Affairs (MOLISA) playing a significant role. Non-compliance can lead to fines, corrective orders, or more severe penalties like suspension or revocation of business operations.

Whistleblower protections are legally established, but practical challenges like retaliation and low public trust in institutional confidentiality hinder effective implementation. Vietnam has ratified several key International Labour Organization (ILO) conventions, influencing its labor laws to incorporate international standards. However, issues like suppression of trade unions and weak enforcement mechanisms highlight ongoing challenges in fully adhering to these standards.

Cultural Considerations in Vietnam

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Understanding communication styles is essential for business success in Vietnam, where indirect communication, formal address, and non-verbal cues are significant. Vietnamese often convey messages subtly, valuing the ability to interpret non-verbal signals and contextual hints to maintain harmony and avoid confrontation. Formality in addressing individuals by titles and last names reflects the deep respect for hierarchical structures in the workplace.

Non-verbal communication is crucial, with gestures like smiling, nodding, and posture providing insights into a person's feelings and intentions. In negotiations, building trust and focusing on long-term relationships are prioritized, with a tendency towards indirect expressions of disagreement and a detailed, slow negotiation process.

Vietnamese business culture is influenced by hierarchical structures, impacting decision-making, team dynamics, and leadership styles. Decisions are typically made top-down with input from senior leaders, promoting a sense of collective responsibility. Team roles are clearly defined, and communication is formal, which can limit cross-functional collaboration. Leadership is often authoritative and paternalistic, emphasizing strong relationships and harmony.

Vietnamese holidays like Tết and National Day significantly affect business operations, with extended closures and reduced productivity during these periods. Awareness of these cultural and statutory observances is crucial for effective business planning and operations in Vietnam.

Frequently Asked Questions for Employer of Record services in Vietnam

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Vietnam?

When using an Employer of Record (EOR) like Rivermate in Vietnam, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes the calculation, withholding, and remittance of personal income tax (PIT) on behalf of the employees, as well as the employer's and employees' contributions to social insurance, health insurance, and unemployment insurance.

The EOR ensures compliance with Vietnamese labor laws and regulations, which can be complex and subject to frequent changes. By managing these responsibilities, the EOR helps mitigate the risk of non-compliance and potential penalties for the client company. This allows the client to focus on their core business activities while ensuring that all statutory obligations related to employment are met accurately and timely.

Is it possible to hire independent contractors in Vietnam?

Yes, it is possible to hire independent contractors in Vietnam. However, there are several important considerations and potential risks associated with this approach:

  1. Legal Classification: In Vietnam, the distinction between an employee and an independent contractor is crucial. Independent contractors are typically engaged for specific projects or tasks and are not subject to the same labor laws as employees. Misclassification can lead to legal issues, including fines and back payments for benefits and taxes.

  2. Contractual Agreement: When hiring an independent contractor, it is essential to have a clear and comprehensive contract that outlines the scope of work, payment terms, duration, and other relevant conditions. This contract should explicitly state that the individual is an independent contractor and not an employee.

  3. Tax Implications: Independent contractors in Vietnam are responsible for their own tax filings, including personal income tax and social insurance contributions. Employers must ensure that contractors are aware of their tax obligations to avoid any legal complications.

  4. Control and Supervision: Employers must be cautious about the level of control and supervision they exert over independent contractors. Excessive control can blur the lines between an employee and a contractor, potentially leading to reclassification as an employee.

  5. Benefits and Protections: Independent contractors are not entitled to the same benefits and protections as employees under Vietnamese labor law. This includes health insurance, social insurance, and other statutory benefits. Employers should be transparent about this distinction to avoid misunderstandings.

  6. Dispute Resolution: Any disputes arising from the contractual relationship with an independent contractor should be addressed through the terms outlined in the contract. It is advisable to include a dispute resolution mechanism, such as arbitration or mediation, to handle any conflicts that may arise.

Given these complexities, many companies opt to use an Employer of Record (EOR) service like Rivermate when expanding into Vietnam. An EOR can help navigate the local labor laws, ensure compliance, and mitigate risks associated with hiring independent contractors. By using an EOR, companies can focus on their core business activities while leaving the administrative and legal responsibilities to the experts.

What is HR compliance in Vietnam, and why is it important?

HR compliance in Vietnam refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes a wide range of legal requirements such as employment contracts, wages, working hours, social insurance, health and safety standards, and termination procedures. Ensuring HR compliance is crucial for several reasons:

  1. Legal Obligations: Vietnam has a comprehensive legal framework governing employment, including the Labor Code, Social Insurance Law, and various decrees and circulars. Companies must comply with these laws to avoid legal penalties, fines, and potential lawsuits.

  2. Employee Rights and Protections: Compliance ensures that employees' rights are protected, including fair wages, safe working conditions, and benefits such as social insurance and health insurance. This helps in maintaining a motivated and productive workforce.

  3. Reputation and Trust: Adhering to HR compliance builds a company's reputation as a fair and responsible employer. This can enhance the company's brand image and make it more attractive to potential employees, customers, and business partners.

  4. Risk Management: Non-compliance can lead to significant risks, including financial penalties, legal disputes, and damage to the company's reputation. By ensuring compliance, companies can mitigate these risks and focus on their core business activities.

  5. Operational Efficiency: Proper HR compliance ensures that employment practices are standardized and streamlined. This can lead to improved operational efficiency, as HR processes are clear, consistent, and legally sound.

  6. Employee Relations: Compliance with labor laws fosters a positive relationship between employers and employees. It helps in resolving disputes amicably and ensures that employees feel valued and respected, which can lead to higher retention rates.

Given the complexity of Vietnam's labor laws, many companies opt to use an Employer of Record (EOR) service like Rivermate. An EOR can handle all aspects of HR compliance, including payroll, tax filings, and benefits administration, ensuring that the company remains compliant with local laws. This allows businesses to focus on their strategic goals while minimizing the risks associated with non-compliance.

What is the timeline for setting up a company in Vietnam?

Setting up a company in Vietnam involves several steps and can take a considerable amount of time due to the various legal and administrative requirements. Here is a detailed timeline for setting up a company in Vietnam:

  1. Pre-Incorporation Phase (1-2 weeks):

    • Market Research and Feasibility Study: Conducting market research and feasibility studies to understand the business environment and potential in Vietnam.
    • Business Plan Preparation: Drafting a comprehensive business plan outlining the business objectives, strategies, and financial projections.
  2. Company Name Registration (1-2 weeks):

    • Name Reservation: Checking the availability of the desired company name and reserving it with the Department of Planning and Investment (DPI).
  3. Investment Registration Certificate (IRC) Application (3-4 weeks):

    • Preparation of Documents: Preparing necessary documents such as the application form, business plan, financial statements, and proof of legal status of the investors.
    • Submission to DPI: Submitting the application to the DPI for the issuance of the Investment Registration Certificate (IRC).
    • IRC Issuance: The DPI reviews the application and issues the IRC if all requirements are met.
  4. Enterprise Registration Certificate (ERC) Application (2-3 weeks):

    • Preparation of Documents: Preparing documents including the application form, company charter, list of founding shareholders, and other required documents.
    • Submission to DPI: Submitting the application to the DPI for the issuance of the Enterprise Registration Certificate (ERC).
    • ERC Issuance: The DPI reviews the application and issues the ERC if all requirements are met.
  5. Post-Incorporation Procedures (2-4 weeks):

    • Seal Carving: Obtaining a company seal from an authorized seal maker.
    • Tax Registration: Registering for tax with the local tax office and obtaining a tax code.
    • Bank Account Opening: Opening a corporate bank account in Vietnam.
    • Social Insurance Registration: Registering for social insurance with the local social insurance agency.
    • Labor Registration: Registering the company with the local labor department.
  6. Operational Setup (Variable):

    • Office Setup: Securing office space and setting up the physical office.
    • Hiring Employees: Recruiting and hiring employees as per the business requirements.
    • Compliance and Reporting: Ensuring compliance with local laws and regulations, including regular reporting to relevant authorities.

Overall, the entire process of setting up a company in Vietnam can take approximately 2-3 months, depending on the complexity of the business and the efficiency of the administrative procedures. However, this timeline can vary based on specific circumstances and the responsiveness of the relevant authorities.

Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process. An EOR can handle many of the administrative and legal requirements on behalf of the company, allowing the business to focus on its core operations and reducing the time and effort needed to establish a presence in Vietnam.

What options are available for hiring a worker in Vietnam?

In Vietnam, employers have several options for hiring workers, each with its own set of legal, administrative, and financial implications. Here are the primary methods:

  1. Direct Employment:

    • Establishing a Legal Entity: Foreign companies can set up a representative office, branch, or subsidiary in Vietnam. This involves registering with the Department of Planning and Investment and obtaining necessary licenses. Once established, the company can directly hire employees.
    • Compliance Requirements: This option requires adherence to Vietnamese labor laws, including contracts, social insurance, health insurance, and personal income tax. Employers must also comply with regulations on working hours, overtime, leave, and termination.
  2. Outsourcing to a Local Agency:

    • Staffing Agencies: Companies can hire workers through local staffing agencies. These agencies handle recruitment, payroll, and compliance with local labor laws. This can be a flexible solution for short-term or project-based needs.
    • Cost and Management: While this can reduce administrative burdens, it may come at a higher cost due to agency fees. Additionally, the company may have less direct control over the employees.
  3. Freelancers and Independent Contractors:

    • Contractual Agreements: Companies can engage freelancers or independent contractors for specific tasks or projects. This requires drafting clear contracts outlining the scope of work, payment terms, and duration.
    • Legal Considerations: It is crucial to ensure that the relationship does not inadvertently classify the freelancer as an employee, which could lead to legal and tax complications.
  4. Employer of Record (EOR) Services:

    • Using an EOR like Rivermate: An EOR can hire employees on behalf of the company, handling all legal, administrative, and HR responsibilities. This includes payroll, benefits, tax compliance, and labor law adherence.
    • Benefits:
      • Speed and Efficiency: EOR services can quickly onboard employees without the need to establish a local entity.
      • Compliance Assurance: EORs are well-versed in local labor laws and ensure full compliance, reducing the risk of legal issues.
      • Cost-Effective: While there is a service fee, the overall cost can be lower than setting up a local entity and managing HR functions independently.
      • Focus on Core Business: Companies can focus on their core operations while the EOR handles HR and administrative tasks.

In summary, while direct employment and outsourcing to local agencies are viable options, using an Employer of Record like Rivermate offers significant advantages in terms of speed, compliance, and administrative ease. This can be particularly beneficial for companies looking to enter the Vietnamese market quickly and efficiently without the complexities of establishing a local entity.

Do employees receive all their rights and benefits when employed through an Employer of Record in Vietnam?

Yes, employees in Vietnam receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Vietnam where labor laws are stringent and complex.

Here are some key points on how an EOR ensures employees receive their rights and benefits in Vietnam:

  1. Compliance with Labor Laws: An EOR like Rivermate ensures that employment contracts comply with Vietnamese labor laws, including the Labor Code. This includes adhering to regulations on working hours, overtime, rest periods, and holidays.

  2. Social Insurance and Health Insurance: In Vietnam, employers are required to contribute to social insurance, health insurance, and unemployment insurance on behalf of their employees. An EOR manages these contributions, ensuring that employees are covered and receive benefits such as medical care, maternity leave, and pensions.

  3. Employment Contracts: The EOR provides legally compliant employment contracts that outline the terms and conditions of employment, including salary, job responsibilities, and termination conditions. This ensures transparency and protects the rights of the employees.

  4. Payroll Management: An EOR handles payroll processing, ensuring that employees are paid accurately and on time. This includes managing deductions for taxes and social contributions, which are mandatory in Vietnam.

  5. Employee Benefits: An EOR can offer additional benefits that are customary in Vietnam, such as health insurance, allowances, and bonuses. This helps in attracting and retaining talent by providing competitive compensation packages.

  6. Dispute Resolution: In case of any employment disputes, an EOR has the expertise to handle them in accordance with Vietnamese labor laws, ensuring that employees' rights are protected.

  7. Termination and Severance: An EOR ensures that any termination of employment is conducted legally and fairly, providing the required notice period and severance pay as mandated by Vietnamese law.

By using an EOR like Rivermate, companies can ensure that their employees in Vietnam receive all their legal rights and benefits, while also mitigating the risks associated with non-compliance. This allows businesses to focus on their core operations while the EOR handles the complexities of local employment regulations.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Vietnam?

When a company uses an Employer of Record (EOR) service like Rivermate in Vietnam, the EOR assumes many of the legal responsibilities associated with employment. Here are the key legal responsibilities that the EOR handles on behalf of the company:

  1. Employment Contracts: The EOR is responsible for drafting, issuing, and managing employment contracts in compliance with Vietnamese labor laws. This includes ensuring that contracts are in the local language and contain all necessary terms and conditions as required by law.

  2. Payroll Management: The EOR manages payroll processing, ensuring that employees are paid accurately and on time. This includes calculating wages, overtime, bonuses, and other compensation in accordance with Vietnamese regulations.

  3. Tax Compliance: The EOR handles the calculation, withholding, and remittance of all required taxes, including personal income tax and social insurance contributions. They ensure compliance with the Vietnamese tax code and submit necessary reports to the tax authorities.

  4. Social Insurance and Benefits: The EOR is responsible for enrolling employees in mandatory social insurance programs, including health insurance, unemployment insurance, and pension schemes. They also manage contributions and ensure compliance with local regulations.

  5. Labor Law Compliance: The EOR ensures that all employment practices comply with Vietnamese labor laws, including working hours, rest periods, leave entitlements, and termination procedures. They stay updated on any changes in legislation and adjust practices accordingly.

  6. Employee Onboarding and Offboarding: The EOR manages the onboarding process, including background checks, document verification, and orientation. They also handle offboarding procedures, ensuring that terminations are conducted legally and that all final payments and entitlements are settled.

  7. Work Permits and Visas: For foreign employees, the EOR assists with obtaining necessary work permits and visas, ensuring compliance with immigration laws and regulations.

  8. Dispute Resolution: The EOR handles any employment-related disputes or grievances, working to resolve issues in accordance with Vietnamese labor laws and regulations. They may also represent the company in legal proceedings if necessary.

  9. Health and Safety Compliance: The EOR ensures that workplace health and safety standards are met, conducting necessary training and implementing policies to protect employees.

  10. Record Keeping: The EOR maintains accurate and up-to-date employment records as required by Vietnamese law, including contracts, payroll records, tax filings, and other relevant documentation.

By using an EOR like Rivermate in Vietnam, companies can mitigate the risks associated with non-compliance and focus on their core business activities. The EOR assumes the burden of navigating the complex legal landscape, ensuring that all employment-related responsibilities are managed efficiently and in accordance with local laws.

What are the costs associated with employing someone in Vietnam?

Employing someone in Vietnam involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, statutory contributions, and other associated expenses. Here is a detailed breakdown:

  1. Direct Compensation:

    • Base Salary: This is the primary component of an employee's compensation. The minimum wage in Vietnam varies by region, with higher rates in urban areas like Hanoi and Ho Chi Minh City. Employers must ensure they comply with the regional minimum wage requirements.
    • Bonuses and Allowances: Many companies in Vietnam offer additional bonuses, such as the 13th-month salary, performance bonuses, and allowances for transportation, meals, and housing.
  2. Statutory Contributions:

    • Social Insurance: Employers are required to contribute to social insurance, which covers sickness, maternity, occupational diseases, and retirement. The employer's contribution rate is 17.5% of the employee's gross salary.
    • Health Insurance: Employers must also contribute to health insurance, which is 3% of the employee's gross salary.
    • Unemployment Insurance: This is another mandatory contribution, with the employer's share being 1% of the employee's gross salary.
    • Trade Union Fees: Employers are required to contribute 2% of the total payroll to the trade union fund.
  3. Other Associated Expenses:

    • Recruitment Costs: These include expenses related to advertising job openings, recruitment agency fees, and the time spent by HR personnel in the hiring process.
    • Training and Development: Employers often invest in training programs to enhance the skills of their employees. This can include both initial onboarding training and ongoing professional development.
    • Work Permits and Visas: For foreign employees, employers must cover the costs of obtaining work permits and visas, which can include application fees and legal services.
    • Office Space and Equipment: Providing a workspace, whether in an office or remotely, involves costs for office rent, utilities, and necessary equipment like computers and software.
    • Compliance and Legal Fees: Ensuring compliance with Vietnamese labor laws may require legal consultation and services, which can add to the overall employment costs.

Using an Employer of Record (EOR) like Rivermate can help manage these costs effectively. An EOR handles payroll, benefits, compliance, and other HR functions, allowing companies to focus on their core business activities. This can be particularly beneficial for companies new to the Vietnamese market, as it reduces the administrative burden and ensures compliance with local regulations.

How does Rivermate, as an Employer of Record in Vietnam, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Vietnam, ensures HR compliance through a comprehensive approach that addresses the unique regulatory and cultural landscape of the country. Here are several ways Rivermate achieves this:

  1. Local Expertise and Knowledge: Rivermate employs local HR professionals who are well-versed in Vietnamese labor laws, regulations, and cultural nuances. This local expertise ensures that all employment practices are compliant with the latest legal requirements and best practices in Vietnam.

  2. Employment Contracts: Rivermate ensures that employment contracts are drafted in accordance with Vietnamese labor laws. This includes adhering to regulations regarding contract types, probation periods, termination clauses, and mandatory benefits. Contracts are typically bilingual (Vietnamese and English) to ensure clarity and compliance.

  3. Payroll Management: Rivermate handles payroll processing in strict compliance with Vietnamese regulations. This includes accurate calculation of salaries, taxes, social insurance contributions, health insurance, and unemployment insurance. Rivermate ensures timely and accurate payroll disbursements, reducing the risk of non-compliance penalties.

  4. Tax Compliance: Rivermate manages all aspects of tax compliance, including the calculation and remittance of personal income tax (PIT) for employees. They stay updated on any changes in tax laws and ensure that all tax filings and payments are made accurately and on time.

  5. Social Insurance and Benefits Administration: In Vietnam, employers are required to contribute to social insurance, health insurance, and unemployment insurance on behalf of their employees. Rivermate ensures that these contributions are calculated correctly and submitted to the relevant authorities. They also manage employee benefits, ensuring compliance with statutory requirements and company policies.

  6. Labor Law Compliance: Rivermate ensures adherence to Vietnamese labor laws, including regulations on working hours, overtime, rest periods, and leave entitlements (such as annual leave, sick leave, and maternity leave). They also ensure compliance with occupational health and safety standards.

  7. Employee Onboarding and Offboarding: Rivermate manages the entire employee lifecycle, from onboarding to offboarding, in compliance with Vietnamese regulations. This includes proper documentation, orientation, and training during onboarding, as well as ensuring that termination processes are handled legally and ethically.

  8. Dispute Resolution and Legal Support: In the event of employment disputes or legal issues, Rivermate provides support and guidance to ensure that matters are resolved in compliance with Vietnamese labor laws. They work with legal experts to navigate complex situations and mitigate risks.

  9. Continuous Monitoring and Updates: Rivermate continuously monitors changes in Vietnamese labor laws and regulations. They proactively update their policies and practices to ensure ongoing compliance, thereby reducing the risk of legal issues and penalties for their clients.

By leveraging Rivermate's expertise as an Employer of Record in Vietnam, companies can focus on their core business activities while ensuring that all HR and employment-related matters are handled in full compliance with local laws and regulations. This not only mitigates legal risks but also enhances the overall employee experience and operational efficiency.

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