Vietnam Top Talent
Finding and recruiting top talent in any overseas territory poses many potential issues for companies like yours that are planning to expand their international presence. You need your new staff to be up and running as quickly as possible. This certainly applies to Vietnam where employment is strictly governed by the Labor Code. Additionally, an already multi-layered tax regime was updated with the Tax Administration Law of July 2020 which implemented new regulations for tax filing.
You need a specialist to oversee the practical demands of staffing your new venture – and this is where Bradford Jacobs steps in. Our expertise in international recruitment is indispensable for expansion into the Vietnamese economy.
Bradford Jacobs leads the way with our Professional Employment Organization (PEO) recruitment networks, with a worldwide reach that will find the highest quality staff, managers, and executives for your move into Vietnam.
The Recruitment Process in Vietnam
The first step in the international expansion process is recruitment and putting staff in place. It is vital to know where to locate the best talent who will be a ‘perfect fit’ for your company’s plans.
Vietnam is a leading target for expansion, having enjoyed astonishing growth over the past 30 years and transforming from one of the world’s poorest countries into a lower middle-income nation with a growing consumer base.
Since 2002 Gross Domestic Product (GDP) per capita increased by almost three times, approaching US$ 3,000. Vietnam bucked the global trend in 2020 to increase GDP by 2.9% and it was predicted to grow by 6.6% in 2021.
Vietnam’s rapid economic growth has seen an increased demand for hiring well-educated and motivated local staff. The labor force is boosted annually by close to one million flexible and hard-working young adults.
But while labor-intensive industries drive Vietnam’s economic growth, there is a skill and talent gap for high-tech and developing industrial sectors. International companies can find it hard to recruit top-level staff with the right skills and experience.
Migrating staff into Vietnam faces other barriers as the Labor Code dictates foreigners must have a work permit and a work visa before employment. Also, employers must obtain permission from the Ministry of Labor, Invalids and Social Affairs (MOLISA) to hire a foreigner.
You will have a lot of questions … and the answers do not come easily. Once the right employees are found, employers must fit in with various procedures for their new staff. These include:
- Withholding and remitting deductions to the Vietnam Tax Department (Tong cuc Thue)
- Remitting social security deductions to relevant funds via the Social Insurance Agency (SIA)
- The tax year runs from January 1 until December 31, or 12 months from date of arrival before reverting to the calendar tax year
- Paying provisional employment income tax either monthly (by 20th of following month) or quarterly (by 30th of following month)
- Returns must be filed to the Vietnam Tax Department within four months after end of the chosen tax year
- Compiling annual reports on employees’ working hours
- Creating annual reconciliation reports on personal and corporate tax payments and advise on Business License Tax payment
The recruitment process is time-consuming and requires dedication – a difficult task when faced with a host of other complicated issues involved in international expansion. By engaging Bradford Jacobs as your Employer of Record (EOR) we will provide all the answers. We will convert your expansion blueprint for Vietnam into an action plan with a few simple steps, including:
- Bradford Jacobs locates the ideal employees for your company, then steps in as EOR to ensure they comply with Vietnam’s employment contracts law, payroll, HR, visa requirements and permits (if required)
- We manage all work-related registration formalities and on-going employment issues while you have daily control of your employees
- The employees complete their time sheets, and any expenses claims, and we invoice you, the client. Once paid, we deduct all contributions to the relevant Vietnamese authorities and transfer the balance into the employees’ accounts
Within a few days, your company has international presence in Vietnam – in a prime position to explore further expansion among other European markets without risking the expense or stress of setting up your own subsidiary or branch office in the country.
Legal Checks on Employees in Vietnam
The essential first check for employers is to check their new staff meet all visa and work permit requirements. It is mandatory for foreign workers to hold a valid work permit authorized by the relevant province’s labor authorities. Failure to comply not only risks severe fines – the employer’s business operations could be suspended with the employee facing deportation.
Previously, employers could request information directly relating to the position, including full name and proof of residence, gender, educational qualifications, relevant professional skills, and their health. The Labor Code did not apply specific restrictions on credit or criminal record checks before hiring and it was typically permissible to require this information.
However, the Ministry of Public Security drafted new regulations imposing strict obligations on employers requiring certain information from applicants for new positions or from existing employees.
Employers will have to register with the Personal Data Protection Commission (PDPC), detailing their measures to process and protect the information. This will particularly apply to matters concerning health and any criminal background checks.
- Discrimination: The Labor Code expressly forbids discrimination on the grounds of gender, ethnicity or race, social status, beliefs or religion, age, pregnancy, marital status or family responsibilities, disability, trade union or internal employee organization memberships.
- Health and Criminal Background: Questions on the applicant’s health or any criminal record are permissible only if the individual’s consent is obtained first. The employer should specify the reason for the requested information. Draft proposals from the Ministry of Public Security will require employers to register with the Personal Data Protection Commission (PDPC) before attempting to collect the information.
- Privacy: Employees’ privacy and the protection of their personal data will be strictly governed under proposals to be implemented by the Personal Data Protection Commission (PDPC). Employees must sign a consent form agreeing to the information being collected and the employer must have registered the request with the PDPC.
- Employment History: Collecting this information is allowed, with the applicant’s permission.
Basic Facts on Hiring in Vietnam
- Employers’ interview questions when hiring should always operate within Labor Code guidelines and relate directly to the position being applied for. Proposals from the Ministry of Public Security will require employers to register with the Personal Data Protection Commission (PDPC) before they are allowed to conduct background checks
- Terms and conditions of employment come under the umbrella of the Civil Code and Labor Code, supplemented by government regulations, statutes, and articles
- Employer and employee should each have a signed copy of the contract. The terms should be in Vietnamese for legal purposes, although the employee can request a translated version into a language they understand
- The contract must cover basic information, including full names and addresses of both parties including the position of the individual signing on behalf of the employer; job description and location; salary and payment schedule detailing any extra reimbursements; working hours, breaks and vacations; employee’s social, health and unemployment insurance provisions
- Employer and employees must be registered with the Vietnam Tax Department (Tong cuc Thue) and comply with compulsory procedures imposed by the Vietnam Social Insurance Agency (SIA) via the Ministry of Labor.
Additionally, employers must ensure they comply with employees guaranteed minimum entitlements and benefits. These include:
- Minimum wage: This varies regionally. Regions 1 and 2 (Ho Chi Minh City and Hanoi urban and rural areas) have a monthly minimum of (Vietnamese Dong) VND 4.42million (US$183). Regions 3 and 4 (provincial cities) VND 3.43million (US$150). Remainder of country – VND 3.07million (US$133). The rates apply to all sectors.
- Working hours: The Labor Code 2020 limits working hours to eight per day, 48 per week. Mutually agreed overtime cannot exceed four hours daily, 40 a month or 200 annually. Industries subject to seasonal variations, such as textiles, clothing, and electronics, have a 300-hour annual overtime maximum.
- Paid vacation: January 2021 amendments to the Labor Code guaranteed all employees receive a basic 12 days minimum annually. Employees working in hazardous, dangerous, or toxic surroundings receive either 14 or 16 days. Days are allowed pro rata for less than 12 months’ employment. Workers with same employer for more than five years take an additional day every five years. Workers are also paid for national holidays.
- Maternity allowance and entitlements: Maternity leave is six months for full pregnancy, with between 10 and 50 days for miscarriages or terminations. The Social Insurance Law allows 100% of salary for the six months. After giving birth (or adopting a child less than four months old) the mother is entitled to a lump sum of two months’ average salary. Women into the seventh month of pregnancy cannot work overtime, at night or undertake long-distance business trips. If they undertook heavy work, they should be transferred to lighter duties or work one hour less each day on the same pay. The paternity allowance is for five days paid leave.
- Termination and severance: Notice periods are 45 days for open-ended contracts and 30 days for fixed-term employment. The amended Labor Code of January 2021 stipulates these are the only permitted labor contracts. Employees with more than 12 months’ service have two weeks average salary for each year. If termination is due to business or technological change, severance pay is one month’s salary per year. Employment cannot be terminated during pregnancy or maternity leave.
- Sick Pay: Employees receive sick pay from the Social Insurance Fund, not from the employer, based on 75% of salary from which social insurance premiums were paid during the preceding month. Sick leave allowance per year depends on working days during the year. Workers in regular employment qualify as follows: 30 days after paying 15 years of premiums; 40 days for between 15 and 30 years of payments; 60 days after paying premiums for more than 30 years. Qualification for employees in hazardous, toxic, or heavy industrial occupations, based on the same number of years paying premiums, are 40 days, 50 days, and 70 days.
- Overtime: Overtime can be requested only with the employee’s agreement. The Labor Code stipulates those hours above the norm of eight hours per day and 48 each week are overtime. Compensation rates over and above the normal hourly pay are – weekdays – day time 150%; weekends – day time 200%; public holidays and paid leave days 300%; weekday night work 30% extra over above rates. Overtime cannot exceed 40 hours per month and there are other restrictions. Women into their seventh month of pregnancy or with children under one year old cannot work overtime.