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Compliance
Published:
January 13, 2026
Last updated:
January 13, 2026
For regional HR leaders expanding into Vietnam, understanding the country's employment law framework is essential for compliant hiring and payroll management. Vietnam represents a strategic APAC market with competitive labor costs, young workforce, rapidly developing manufacturing and technology sectors, and favorable trade agreements. However, employment regulations require attention to written contract requirements, strict working hour limits, social insurance obligations, and foreign worker permit procedures.
Organizations managing 100–300 employees across 3–7 APAC markets benefit from Vietnam's relatively straightforward framework. However, specific areas require attention: mandatory written contracts, regional minimum wage variations, strict overtime caps (40 hours/month, 200 hours/year), and comprehensive social insurance registration.
Vietnam's employment legal framework is built around the Labor Code (amended 2019), effective January 2021, governing rights, responsibilities, and obligations in all employment relationships.
Regulatory oversight: Ministry of Labour, Invalids and Social Affairs (MOLISA) enforces compliance through regional Departments of Labour (DOLISA).
Key legislation:
Regulatory bodies: MOLISA (policy and enforcement), regional DOLISA (local enforcement, inspections, dispute resolution).
Employment contracts must be in writing except for contracts under 1 month duration.
Mandatory provisions: Employee/employer identification, job title and duties, work location, working hours and rest periods, salary structure (base, allowances, bonuses, payment schedule), duration (definite-term vs. indefinite-term), social insurance coverage, labor protection, termination conditions.
Contract amendments: Any changes require written consent from both parties.
Indefinite-term contracts: Standard relationship without end date. Provides strongest protections.
Definite-term contracts: Maximum duration 36 months. After one renewal or continued employment beyond 36 months, automatically converts to indefinite-term.
Seasonal/job-based contracts: For work under 12 months.
Probation periods: Maximum 180 days for managers, 60 days for technical/professional positions, 30 days for others, 6 days for jobs under 1 month.
Legal limits: Maximum 8 hours per day or 48 hours per week.
Flexible arrangements: May implement flexible schedules provided weekly total doesn't exceed 48 hours and daily hours don't exceed 12.
Rest periods: Minimum 30-minute break for work exceeding 6 hours daily.
Weekly rest: Minimum 1 rest day per week.
Overtime caps:
Overtime consent: Requires employee consent except emergencies.
Overtime compensation:
Example: Employee earning VND 10,000,000/month (VND 57,471/hour) works 10 hours normal overtime, 4 hours rest day, 3 hours night:
Penalties: Fines VND 5-75 million for exceeding caps.
For organizations managing Vietnam operations, strict 40-hour monthly and 200/300-hour annual overtime caps are among APAC's strictest—requiring careful monitoring.
Regional minimum wages (four regions by development level):
2024 rates (verify 2025 updates):
Payment frequency: At least monthly (or semi-monthly/every 15 days as agreed). Maximum interval: 15 days.
Payslip requirements: Must show basic salary, allowances, overtime, bonuses, deductions (social insurance, health insurance, unemployment insurance, income tax), net salary.
Must register employees within 30 days of employment commencement.
Record retention: Minimum 5 years (practical recommendation: 10 years for tax and social insurance audits).
Penalties: Fines VND 5-75 million for non-compliance, back payments plus interest, potential business license suspension.
Explore payroll compliance across APAC markets.
Social Insurance: Retirement, sickness, maternity, occupational accident, death benefits
Health Insurance: Medical coverage
Unemployment Insurance: Unemployment benefits
Combined: Approximately 21.5% of monthly salary (social 17.5%, health 3%, unemployment 1%).
Example - VND 10,000,000/month employee:
Registration: Within 30 days of employment.
Remittance: By 20th of following month.
Foreign workers employed 3+ months require work permit (unless exempt).
Exemptions: Company owners/shareholders managing business less than 3 months, intra-company transferees working less than 30 days, experts performing urgent work less than 30 days. Even exempt workers must obtain Work Permit Exemption Certificate.
Labor demand report: Report explaining why foreign expertise required, inability to fill with Vietnamese workers.
Work permit application: Submit to DOLISA with business documents, job description, candidate credentials, employment contract, health certificate, passport/visa.
Processing: Typically 1-2 months.
Validity: Maximum 2 years, renewable once (4 years total). After 4 years, new application required with gap.
Salary requirements: Must align with "market norms" (significantly above minimum wage expected).
Illegal employment: Fines VND 20-75 million per illegal worker, business license suspension; foreign workers face fines, deportation, entry bans.
Employer-initiated termination permitted for: Regular contract violations after warnings, employee often sick (over 12 months working less than 50% due to illness), force majeure, business restructuring/economic recession/technology changes, retirement age.
Notice requirements:
Eligibility: Employees terminated due to employer reasons (restructuring, technology changes, economic recession) with 12+ months service.
Calculation: One-half month average salary per year of service (for post-2021 service).
Average salary: Based on last 6 months before termination.
Example: Employee with 5 years (all post-2021) earning VND 10,000,000/month terminated for redundancy:
If found unlawful: reinstatement, back wages, compensation for damages.
Learn more about employee termination challenges across APAC.
Inspections monitor compliance with labor laws, wage payment, working hours, safety, social insurance enrollment, foreign worker documentation.
Violations result in: Fines VND 5-75 million, business license revocation, public blacklisting, back payments plus interest.
Best practices: Maintain proper documentation, accurate attendance records, timely social insurance registration, valid work permits, internal compliance audits.
Mandatory written contracts: More stringent than markets allowing oral contracts (Hong Kong, Thailand).
Strict overtime caps: 40 hours/month and 200/300 hours/year among APAC's strictest—significantly lower than 72-hour monthly caps (Singapore, Japan) or no caps (Hong Kong).
Automatic contract conversion: Definite-term exceeding 36 months or renewed once converts to indefinite-term.
Higher social insurance: 21.5% employer higher than Hong Kong MPF (5% capped), Singapore CPF (17%), Malaysia (~15%), comparable to South Korea (10-15%), lower than mainland China (30-37%).
Work permit 2-year validity: 4-year maximum total with one renewal.
Half-month severance formula: One-half month per year similar to Taiwan, lower than South Korea/Japan (one month per year), Thailand (varies up to 300 days for 10+ years).
Planning to hire in Vietnam? Let AYP manage employment compliance and mitigate your regulatory risks. Explore AYP's EOR services across APAC markets, or learn about compliance challenges when hiring across Asia.
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