Hiring Talent And Managing Payroll In Vietnam

Agreements

• Employment contracts must be in Vietnamese and include specific information such as job duties, salary, working hours, and duration of employment.
• Employers are required to provide a copy of the contract to the employee within five days of the start of employment.
• Contracts must comply with Vietnamese labor laws, including minimum wage requirements, working hours, and social insurance requirements.
• Employers are required to provide training and safety measures to employees.
• Termination of employment contracts must comply with Vietnamese labor laws and must be done in writing.
• Fixed-term agreements: They are made for a maximum of 36 months, but only two consecutive agreements are allowed. The contract becomes indefinite by default if employment continues even after the contract.
• Any agreements or contracts in a foreign language must be accompanied by a Vietnamese translation to be considered legally valid.

Onboarding Process

Minimum Wage

• Region 1: 4,680,000 VND
• Region 2: 4,160,000 VND
• Region 3: 3,640,000 VND
• Region 4: 3,250,000 VND

Payroll Cycle

Annual Bonus

Health Benefits

• Social insurance: Employers are required to contribute to social insurance funds on behalf of their employees, which provides coverage for health care expenses.
• Health insurance: Employers may also offer health insurance plans that provide additional coverage for medical expenses not covered by social insurance.
• Annual health check-ups: Employers may provide employees with annual health check-ups as a benefit.

Working hours and overtime

• Work-hours: the standard workweek is 40 hours, with a maximum of 8 hours per day.
• Break: Employees are entitled to a minimum of one day off per week. Break time is typically one hour per day for lunch
• Overtime: OPayment for overtime is mandatory in Vietnam. Employees who work beyond the fixed working hours get overtime pay. It is typically 150% of the normal wage for weekdays, 200% for weekends and 300% for public holidays.

Social Security

Taxes for Employees

• Personal income tax (PIT): Employees are responsible for paying PIT on their salary. The PIT rate is progressive, ranging from 5% to 35% depending on the employee's income level.

  • 0-60 million VND: 5%
  • 60-120 million VND: 10%
  • 120-216 million VND: 15%
  • 216-384 million VND: 20%
  • 384-624 million VND: 25%
  • 624-960 million VND: 30%
  • 960+ million VND: 35%
• Social insurance: Employees are required to contribute to the social insurance program, which provides benefits such as sickness, maternity, and retirement benefits. The employee contribution rate is 8% of their salary.
• Health insurance: Employees are required to contribute to the health insurance program, which provides access to medical services and treatments. The employee contribution rate is currently set at 1.5% of their salary.
• Unemployment insurance: Employees contribute 1%. of their salaries towards this fund.

Termination

• Poor performance
• Breach of contract
• Misconduct or violation of company policies
• Redundancy due to business restructuring or closure
• Health reasons or incapacity
• Termination by mutual agreement
• Expiration of a fixed-term contract

Severance Pay

Employees or Contractors

• In Vietnam, misclassifying an employee as an independent contractor can result in penalties for employers, including fines and back pay for missed benefits and entitlements. This is because employees are entitled to additional benefits and protections, such as social security contributions, annual leave, and sick leave, that independent contractors do not receive.
• Misclassifying a contractor as an employee can result in employers being required to pay additional benefits and entitlements, such as overtime pay and health insurance.

Final Words