What are the statutory contributions for employees and employers in Vietnam?
Employee Income Tax
The Vietnamese tax system applies a progressive tax structure, with rates as follows:
| Taxable Income | Tax Rate |
|---|---|
| up to VND 5,000,000 | 5% |
| VND 5,000,001 – VND 10,000,000 | 10% |
| VND 10,000,001 – VND 18,000,000 | 15% |
| VND 18,000,001 – VND 32,000,000 | 20% |
| VND 32,000,001 – VND 52,000,000 | 25% |
| VND 52,000,001 – VND 80,000,000 | 30% |
| over VND 80,000,001 | 35% |
Employer Payroll Contributions
In Vietnam, employers and employees are required to make statutory contributions towards the SHUI (Social, Health, Unemployment Insurance). It covers sickness benefits, maternity benefits, labor accidents coverage, occupational disease, pension and death benefits.
Employers contribute 17.5% of their employee’s income for Social Insurance and 3% for Health Insurance (capped at VND 29,800,000 VND), and 1% for Unemployment Insurance (capped at VND 93,600,000).
The contribution rate vary, but the total generally ranges up to 21.50%.
Employee Payroll Contributions
Employees are required to contribute to their own social insurance accounts, including the Sickness and Maternity Fund, Health Insurance, as well as the Unemployment Insurance.
Employees contribute 8% of their income for Social Insurance and 1.5% for Health Insurance (capped at VND 29,800,000), and 1% for Unemployment Insurance (capped at VND 93,600,000)
The contribution rate varies, but the total generally ranges up to 10.50%.
What is the minimum wage in Vietnam?
Vietnam sets a daily minimum wage per region/zone designated by the government as follows:
- Zone 1: VND 4,420,000
- Zone 2: VND 3,920,000
- Zone 3: VND 3,430,000
- Zone 4: VND 3,070,000
What is the payroll cycle in Vietnam?
The standard payroll cycle in Vietnam is monthly, with pay dates falling on the last day of the month or as agreed within the employment contract..
Although there is no legislation for it, employers are to pay a 13th month salary equivalent to one month’s pay at the Lunar New Year or at the end of the year.
How long is the working hours in Vietnam?
In Vietnam, a standard work day must not exceed 8 hours a day or 48 hours per week. If employees are required to work outside of these hours, they are entitled to overtime pay with rates differing depending whether the overtime occurs on regular work days or weekends.
Overtimes cannot exceed 50.00% of the total hours worked, which is 30 hours per month or 200 hours per year maximum.
How many leaves are employees entitled to?
- Standard paid time off — employees in Vietnam are entitled to at least 12 days of paid annual leave, which accrues gradually for every five years of service.
- Compulsory annual public holidays — there are 11 public holidays in Vietnam.
- Minimum paid sick leave — employees in Vietnam are entitled to 30 days of paid sick leave, which may increase to a maximum of 60 days depending on the circumstances. The Social Insurance Authority pays the leave at rate of 75.00% of salary received in the month preceding the sickness. All employees must provide a medical certificate within 48 hours of the sickness
What are the public holidays in Vietnam?
Here is the list of public holidays in Vietnam for 2023:
| Date | Name |
| 1 Jan | New Year’s Day |
| 2 Feb | New Year’s Day (in lieu) |
| 21 Jan | Tet Eve |
| 22 Jan | Tet Nguyen Dan |
| 23 Jan | Tet Holiday |
| 24 Jan | Tet Holiday |
| 25 Jan | Tet Holiday |
| 29 Apr | Hung Kings Festival |
| 30 Apr | Reunification Day |
| 1 May | Labor Day |
| 2 May | Reunification Day (in lieu) |
| 3 May | Labor Day (in lieu) |
| 1 Sep | National Day Holiday |
| 2 Sep | National Day |
How long is the maternity and paternity leave in Vietnam?
- Statutory maternity leave — eligible female employees in Vietnam are entitled to 6 months of paid maternity leave plus an additional month for the birth of their second child onwards.
- Statutory paternity leave — male employees in Vietnam are entitled to 5-14 days of paid paternity leave, depending on the number of child birthed as well as the chosen birth method.
- Statutory parental leave — employees are entitled to 20 days of childcare leaves every year until their child reaches the age of 3 and up to 15 days of leave until the child reaches the age of 7. The parental leave is paid at a 75% rate.
- Other leaves — depending on the contract, employees may be allowed the following additional leaves:Bereavement leave: employees are entitled to 3 days of paid leave for the death of a family member.
Marriage leave: employees are entitled to up to 3 days for their marriage and one day for a child’s marriage.
What rights do employees have upon leaving employment due to certain conditions?
Employers can terminate employees for valid reasons such as poor performance or misconduct, but this must be done under the requirements of the Labor Law. When an employee’s service with a company is terminated for certain reasons, they are entitled to certain rights and benefits, including:
- Notice period — employees are entitled to 30-45 days of notice period, varying by the type of their employment contract.
- Severance pay — employees are entitled to mandatory severance pay, which varies based on the length of service and cause for termination. The statutory severance pay in Vietnam amounts to half of an employee’s regular monthly salary rate for each year of service.Based on length of service and overall employment status, termination of employment costs in Vietnam will include one or more of the following items:
- Leave encashment (if applicable),
- Compensation (typically ranging from 4 to 6 months of compensation only on average),
- Severance allowance (calculated as half a month’s salary for each year of work) or redundancy allowance (calculated as one month’s salary for each year of work, with a minimum total of two months’ salary),
- Other relevant components
- Probation period — employees generally have 6-60 days of probation period.
What is the type of visa for employees in Vietnam?
Foreign nationals require a work permit before entering Vietnam for employment. The Vietnamese work permit is a legal document authorizing the person to engage in employment and receive compensation from a company in Vietnam.
A certificate of work permit exemption may be given to a foreign employee under certain circumstances. This certificate is equivalent to the work permit and is valid for up to 2 years, and serves as a basis for applying for a temporary residence card.
Standard VAT Rate
The standard VAT rate in Vietnam is 10%.
Is there a maximum length of contract for employees?
Employees in Vietnam are allowed to sign a maximum of three contracts with one company, with a duration of:
- First and second contract are definite contracts with a period up to 36 months for each,
- Third contract is the contract without any time restriction.
The use of addendum to extend the contract is not viable.
What is the retirement age in Vietnam?
Under the Vietnamese Labor Code, the statutory retirement age for employees is set at 60 years and 9 months old for male employees and 56 years old for female employees. However, from 2028 onwards, the regulation shall be adjusted to 62 years old for male employees and 60 years old for female employees.