Hiring Employees in Vietnam in 2025: What You Need to Know

Vietnam has rapidly emerged as one of Asia’s most promising destinations for international talent. 

With a robust economy, steadily improving infrastructure, and a young, well-educated workforce, the country attracts multinational companies seeking to expand their global reach. 

Vietnam’s pro-investment policies, burgeoning tech sector, and competitive labor market have placed it squarely on the talent hiring map, particularly for organizations looking to build distributed teams in Asia.

For U.S. companies, Vietnam represents a strategic opportunity. Not only does it offer access to highly skilled professionals at a fraction of the cost of traditional Western markets, but it also boasts a remote-friendly environment and growing English proficiency. 

By leveraging Vietnam’s talent pool, U.S. businesses can enhance operational efficiency, tap into new regional markets, and maintain a competitive edge in a fast-evolving global landscape.

How to Hire Employees in Vietnam

Assess Your Hiring Needs

• Full-time vs. project-based support: Determine whether you require ongoing, long-term staff (ideal for core business functions) or project-based contractors for specific, short-term needs. Full-time hiring is better for sustained growth, while contractors provide flexibility without long-term commitments.
• Local compliance requirements: Vietnam has strict labor regulations, including mandatory employment contracts, statutory benefits, and payroll contributions. Ensure you understand these requirements before hiring.
• Onboarding speed vs. long-term control: Setting up your own entity offers maximum control but takes time. EOR solutions provide rapid onboarding but with less direct oversight.

Hiring Options in Vietnam

Set Up a Legal Entity:

• Best suited for companies planning a significant, long-term presence.
• Allows direct hiring, payroll management, and control over all employment matters.
• Requires extensive knowledge of local laws, time, and financial investment.

Partner with an Employer of Record (EOR):

• An EOR acts as the legal employer in Vietnam on your behalf.
• Handles payroll, tax withholding, statutory benefits, and compliance.
• Enables quick market entry and reduces legal risk.

EOR vs. Legal Entity Comparison

Aspect	Employer of Record (EOR)	Legal Entity
Pros	Fast onboardingNo need for local entityMitigated compliance risk	Full operational controlDirect market presenceSuitable for large teams
Cons	Less direct oversightMonthly service feesLimited to EOR’s service offering	High setup costsTime-consuming incorporationComplex ongoing compliance
Cost	Fixed service fee + payroll contributions	Entity setup, legal fees, local payroll costs
Implementation Time	1-2 weeks	2-6 months
Compliance, Payroll, Benefits	EOR manages all statutory requirementsHandles payroll, tax, social securityEnsures labor law compliance	Company responsible for all complianceMust implement payroll systemDirectly administers benefits

Understanding Worker Classification in Vietnam

Employees vs. Contractors

Aspect	Employee	Contractor
Contract Type	Fixed-term or indefinite employment contract	Service or project contract
Statutory Benefits	Full statutory benefits (social security, health, paid leave, etc.)	No statutory benefits; self-managed
Tax Withholding	Employer withholds and remits taxes	Contractor pays own taxes
Control & Supervision	Employer controls work hours, processes, and provides equipment	Contractor controls how and when work is done
Termination	Subject to labor law protections and notice	Based on contract terms

• Legal and tax implications: Misclassifying employees as contractors can result in fines, back pay, and retroactive benefit contributions. Employees are entitled to social security, health insurance, and unemployment insurance, while contractors are responsible for their own taxes and do not receive statutory benefits.

• Hire and pay contractors: For short-term or project-based work, engaging Vietnamese contractors is possible, but requires careful contract drafting to avoid misclassification. Ensure contractors invoice for services and operate independently.

Hiring Costs and Payroll in Vietnam

Hiring Costs Overview

• Employers contribute approximately 23.5% of the employee’s base salary for social security (17.5%), health insurance (3%), unemployment insurance (1%), and the trade union fund (2%).
• Employees contribute 10.5% of their salary to social security, health, and unemployment.
• Minimum wage varies by region, ranging from VND 3,445,000 to VND 4,960,800 per month.
• 13th-month pay (\”Tet bonus\”) is customary though not mandatory.

Payroll Setup Steps

• Register with local authorities for social insurance, health insurance, and unemployment insurance.
• Obtain tax identification numbers for employees.
• Establish payroll cycle, typically monthly, with payment on the last working day.
• Ensure compliance with payroll reporting and remittances to authorities.

Income Tax Rates

• Personal income tax rates in Vietnam are progressive, ranging from 5% to 35% for residents, depending on income brackets.
• Employers are responsible for withholding and remitting employee income tax.

Payment Methods (Direct Deposit, Transfers, EOR Payroll)

• Direct deposit into Vietnamese bank accounts is standard for employees.
• International wire transfers are possible for contractors, though may incur additional fees.
• EOR solutions offer integrated payroll and payment management, ensuring timely, compliant payments.

Using Global Payroll Services

• Streamlines payment, reporting, and compliance across multiple countries.
• Reduces administrative burden and risk of errors.
• Ensures accurate, on-time salary disbursements and statutory contributions.

Simplify Global Payroll with Tarmack

Paying international employees doesn’t have to be complex. Tarmack makes it seamless, compliant, and hassle-free.

Compliance Risks When Hiring Employees in Vietnam

Incorrect Payroll Contributions

• Failure to correctly calculate and remit social insurance, health insurance, and unemployment contributions can result in back pay, fines, and reputational damage.

Permanent Establishment Risk

• If your business maintains a fixed presence or generates revenue in Vietnam, you may trigger permanent establishment status and become liable for local corporate taxes. This risk is minimized by using an EOR.

Statutory Benefits

• Employers must provide statutory benefits, including annual leave, maternity/paternity leave, sick leave, and severance, as outlined in local labor laws.

Misclassification Risks

• Engaging contractors where the relationship is effectively one of employment can lead to claims for unpaid benefits, back taxes, and penalties.

Provincial/Regional Law Variances (if applicable)

• Minimum wage and some employment conditions differ by region (Zones 1-4), so always verify local regulations.

Onboarding New Employees in Vietnam

Before Their First Day

• Draft and sign a compliant employment contract (fixed-term or indefinite-term).
• Collect identification documents and tax registration details.
• Register the employee for social and health insurance benefits.

On Day 1

• Provide orientation on company policies and workplace safety.
• Issue necessary work equipment and grant access to required systems.
• Review job responsibilities and probation terms.

During Their First 90 Days

• Monitor performance during the probationary period (6-60 days as per contract).
• Provide feedback, training, and support as needed.
• Confirm employment status at probation’s end, issuing an official outcome letter.

Offer Letter Essentials

• Job title and description
• Compensation package, including base salary and bonuses
• Employment type and contract duration
• Working hours, leave entitlements, and statutory benefits

NDAs and Confidentiality

• Include non-disclosure and confidentiality clauses in employment contracts to protect business interests and intellectual property.

Running Background Checks

• Background checks are permissible with candidate consent and are commonly conducted for sensitive roles.

Managing Remote Employees in Vietnam

Computer and App Access

• Set up secure remote access to company systems, email, and collaboration tools.
• Provide necessary hardware (laptops, peripherals) or stipends for home office setup.
• Implement clear IT and cybersecurity policies.

Intellectual Property Protections

• Clearly define IP ownership in employment contracts and NDAs.
• Take steps to secure sensitive data through secure file sharing and access controls.

Types of IP rights: Copyright, trademarks, patents, and trade secrets may be relevant depending on the role and industry. Ensure employees acknowledge all work products belong to the company, as per local laws.

Complying with Vietnam Labor Laws

Working Conditions by Employment Type

• Full-time employees: Maximum 48 hours per week, recommended 40 hours. Overtime paid as per law.
• Part-time/contractors: Terms governed by contract, but subject to minimum legal protections if deemed employment relationships.

No At-Will Employment (if applicable)

• Vietnam does not recognize at-will employment. Termination must follow legal processes and valid grounds, with notice and, in some cases, severance.

Trade Unions and Collective Bargaining

• Employers must contribute to the Trade Union Fund (2% of salary).
• Employees have the right to join trade unions and participate in collective bargaining.

Terminating Employees in Vietnam

Acceptable Termination Reasons

• Mutual agreement
• End of contract term (if fixed-term)
• Performance issues (with documented evidence)
• Redundancy or business closure
• Misconduct or violation of company policy (must be proven)

Notice Periods and Legal Protections

• Minimum notice period is 45 days for indefinite-term contracts; 30 days for fixed-term contracts.
• Written notice is mandatory.
• Severance pay is required, based on length of service.
• Unlawful termination can lead to reinstatement orders and back pay.

Why U.S. Companies Can Consider Hiring in Vietnam

Access to Skilled Talent

• Vietnam produces a large number of STEM graduates each year, with strong representation in IT, engineering, and business administration.
• English proficiency is rising, especially in major cities and among younger professionals.
• In-demand roles include software developers, QA engineers, digital marketers, and customer support specialists.

Cost Efficiency

• Salary expectations are significantly lower than in the U.S. or Western Europe for similar skill sets.
• Lower cost of living translates to affordable compensation packages and reduced operating overhead.
• Using an EOR or remote-first approach further reduces upfront investment and recurring expenses.

Time Zone Overlap

• Vietnam’s time zone (GMT+7) allows partial overlap with U.S. West Coast business hours and full overlap with other APAC markets.
• Ideal for distributed teams, enabling 24/7 customer support, development cycles, and global project coverage.

Growing Remote-Friendly Infrastructure

• High-speed internet penetration and widespread availability of coworking spaces in major cities.
• Remote work culture is growing, especially among tech startups and multinational companies.
• Vietnam’s startup ecosystem is vibrant, fostering innovation and a tech-savvy workforce.

Leverage Proven Strategies  to Hire Talent in Vietnam 

Vietnam’s rise as a global talent destination is underpinned by its skilled workforce, cost advantages, and supportive business environment. 

For U.S. companies, hiring in Vietnam offers a compelling blend of strategic benefits: access to highly educated professionals, operational savings, and a remote-ready infrastructure. 

By understanding local compliance, leveraging EOR solutions, and following best practices in onboarding and management, organizations can build high-performing teams in Vietnam while minimizing risk and complexity.