Vietnam Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Vietnam generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Visas and Work Permits for Vietnam

Vietnam Visas, Work Permits and Migration

Companies targeting Vietnam for their next global move face unravelling the streams of red tape surrounding work permit, visa, and immigration laws.

Organising the necessary visa documentation and dealing with Vietnamese bureaucracy, combined with migrating staff across the world, needs a designated in-house department. However, few companies have the time, the resources, or want to invest in such an operation.

Bradford Jacobs has the resources to sidestep all these issues. As an international payroll provider through our Employer of Record (EOR) and Professional Employer Organisation (PEO) global networks we ensure all your employees comply with work permit and visa regulations.

What Types of Work Visas, and Permits for Vietnam are there?

For companies planning expansion into Vietnam, visas and work permits are an essential requirement. There are more than 21 types of visas from tourist to work visas so care must be taken to make the right choice. The main categories are:

Tourist – DL
Business – DN1, DN2 – For companies sending staff to Vietnam, paying them from their home country for short term business trips
Student/Internship – DH
Work Visa – LD1, LD2
Investor Visa – DT1, 2, 3, 4
E-Visa available for around 80 countries for 30 days

There are exemptions for 24 countries not requiring a visa to enter Vietnam for short periods.

Work Visas – there are two categories:

LD1 – foreign nationals looking for work who have a Work Permit exemption
LD2 – foreign nationals who require a Work Permit as a pre-requisite to the visa and who will be working long term in Vietnam as an employee of a locally-registered company. These visas allow stays (with work permitted) for up to two years and can be extended for a further two years. A Temporary Residence Card can be applied for when entering Vietnam and replaces the Work Visa.

Most foreigners require a Work Permit if they work in Vietnam for longer than three months.

Their prospective employer acts as guarantor and applies on their behalf. Those who are exempt still require a Work Permit Exemption Certificate.

Vietnam are looking for highly qualified professionals, those with high technical skills or who have extensive experience. They must be 18 years old and in good health and have the requisite police checks.

People visiting Vietnam, who need a short-term working visa for their company in their home country, may do so on a Business Visa.

Tax Laws in Vietnam

Tax Laws

With more than 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law worldwide. Our ‘know-how’ is vital for foreign companies expanding into Vietnam.

Dealing with tax, payroll, and employment regulations for your staff from overseas is a tricky process. It poses major issues for companies seeking to develop their international profile. Vietnam is no exception. Vietnam’s multi-layered tax system became more complicated after changes to the Law on Tax Administration in 2020.

Also, employees’ entitlements and benefits were updated in the 2021 amended Labor Code. These changes added to an already complex picture.

Overview of Taxes in Vietnam

Tax Type | Percentages
Income Tax:
Individual Annual Taxable (US$)
Up to VDN 60 million (US$2,613): 5%
VDN 60 to 120 million (US$5,226): 10%
VDN 120 to 216 million (US$9,407): 15%
VDN 216 to 384 million (US$16,724): 20%
VDN 384 to 624 million (US$27,176): 25%
VDN 624 to 960 million (US$41,810): 30%
Above VDN 960 million: 35%

Joint tax returns for couples are not permitted in Vietnam.

Value Added Tax: Sales Tax is levied at 5% or 10% depending on goods and services supplied by producers and the sector they operate in but is zero on exported goods.

Business Income Tax: Individuals’ business income exceeding VND 100 million (US$4,400) becomes liable for Corporate Tax.

Corporate Income Tax: Standard Rate – 20% (Can vary between 40% and 50% for certain sectors)

Withholding Tax and Remittance Tax: Does not apply to dividends to foreign corporate investors, but individual investors are taxed at 5%.

Business License Tax (BLT): Indirect taxation via the BLT applies to all organisations, companies, and individuals in business, although exemption applies during the first year of business. Various rates apply:

Registered Capital in billion VND (US$43,960) | Annual Premium
Over 10 billion | 3,000,000 (US$132)
Under 10 billion | 2,000,000 (US$88)
Branches, representative offices, public services | 1,000,000 (US$44)

Foreign Contractors’ Tax (FCT): May apply to some international companies operating in Vietnam, at rates between 0.1% and 10%.

Vietnamese Individual Tax – Single, Married

Vietnam residents are taxed on their worldwide income; foreigners are taxed at a flat rate of 20% on income earned in Vietnam.

The progressive bands on taxable income range from 5% up to 35%. Individuals become tax residents if they reside in-country for 183 days or more between January 1 and December 31 or for 12 months continuously after arriving in Vietnam.

Residences for foreigners include homes that are owned or leased for 183 days or more, hotel rooms, guest houses etc. that are covered by a Resident’s Card issued by the Ministry for Public Security.

Employment income is generally deducted at source by employers for remitting to the Vietnam Tax Agency. Generally, all types of income and remuneration – including benefits and payment in kind – are considered taxable. This would include royalties, commission, bonuses paid in stocks or shares for example.

Employers are also required to make declarations on behalf of their staff. Declarations must be made by the 20^th of the following month, or the end of the next month following a quarter, or 90 days after the year end. Joint tax returns for married couples are not permitted.

Personal tax rates for residents

Income in Vietnamese Dong VDN (US$) in 2021

Annual taxable income | Tax rate
Up to VDN 60 million (US$2,613): 5%
VDN 60 to 120 million (US$5,226): 10%
VDN 120 to 216 million (US$9,407): 15%
VDN 216 to 384 million (US$16,724): 20%
VDN 384 to 624 million (US$27,176): 25%
VDN 624 to 960 million (US$41,810): 30%
Above VDN 960 million: 35%

Exemptions include:

These are covered by the Labour Code and the Social Insurance Law and include such as:

Overtime and night work pay which is higher than the normal daily rate
Compensation for work-related accidents or illness and unemployment benefits
Foreigners can claim one-off payments for such as relocation costs, school tuition fees and one annual return trip to their home country, not including family members
VND 3.6 million per month (US$ 160) for each qualifying dependent
Donations to approved charities, human aid organisations, approved education funds
Compulsory insurance and social security contributions

Subsidiary Entity Set Up in Vietnam

Vietnam Entity Set Up

Launching a subsidiary overseas will take more time than you imagined and eat up funds in a venture that has no guarantee of success. Vietnam is no exception, with procedural barriers in the way of making a swift and successful international expansion. The World Bank rates Vietnam 70^th out of 190 nations for ‘ease of doing businesses, but outside the top 100 in four categories, including paying taxes.

Incoming businesses typically choose a Limited Liability Company (LLC), known as a Wholly Foreign-Owned Enterprise (WFOE).The subsidiary operates within Vietnamese Companies Law and must comply with registration legalities before being allowed to onboard staff and run payroll.

Expanding overseas is a major step. If the move fails, companies face the extra expenditure and stress of closing the business, selling property, and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while moving into a new territory, maybe thousands of miles overseas.

How to set up a Vietnam Subsidiary

A Wholly Foreign-Owned Enterprise in Vietnam is typically set up as a Limited Liability Company (LLC) subsidiary and it should be established through capital investment from its founders or ‘members’, as the term shareholder is not used in this company context.

The founders have similar rights and responsibilities to shareholders with their liability restricted to their capital contribution recorded in the LLC’s company charter.

An LLC subsidiary needs to obtain licenses for its respective business activities either before or after registration, but all capital must be lodged within 90 days of the business registration certificate being issued.

Setting up a Wholly Foreign-Owned Enterprise (WFOE) as a limited liability company in Vietnam requires:

A minimum one ‘member’ shareholder
One resident director as the company’s legal representative
A local business bank account
Approval for a Foreign Investment Certificate (FIC) with a minimum investment, typically
US$ 10,000
Bank document certifying deposit of capital
Registered Vietnam address

The company also needs to have applied for:

An Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI). If the company’s business falls outside World Trade Organization agreements, registration will take longer than the usual month and will involve applying for extra licenses
A Business Registration Certificate (BRC) / Enterprise Registration Certificate (ERC) from the DPI. The certificate acts as the company’s tax number with the Vietnam Tax Department (Tong cuc Thue) and for mandatory procedures with the Vietnam Social Insurance Agency (SIA) and the Ministry of Labor

Benefits of setting up a Subsidiary in Vietnam

Foreign companies attracted by moving into Vietnam will be moving into one of the world’s fastest-growing economies, but one with administrative bureaucracy which is still catching up. This is a combination that requires expert advice and guidance when setting up a subsidiary, which is the preferred route for entering Vietnam’s thriving, but demanding, economy. Operating as a Wholly Foreign-Owned Enterprise (WFOE), the subsidiary comes under Vietnamese Companies Law.

Operating a subsidiary in Vietnam boosts the foreign parent company’s international profile and emphasizes its global reach. Plus, the foreign company can test the market with a ‘toe in the water’ approach and without major capital investment. Other advantages attaching to a subsidiary:

The parent company has no responsibility for the subsidiary’s debts or liabilities beyond the initial investment of the shareholders
Subsidiaries can have a totally different name from the parent company, pursue the same or different business activities and form their own contracts

Entering the Vietnamese Market

Vietnamese Market

Vietnam’s astonishing growth over the last 30 years has made the southeastern Asian nation an attractive and compelling target for international companies expanding into the region. From being one of the world’s poorest countries, Vietnam now ranks 38^th globally with Gross Domestic Product of 340 billion US dollars. Vietnam shook off the global trend in 2020 to increase GDP by 2.9% and it is expected to grow to 6.6% through 2021.

Vietnam’s transformation from a closed to a thriving low to middle-income economy has seen GDP per capita increase threefold over the last 20 years to almost US$ 3,000.

The country has become a leading economic force among the Association of Southeast Asian Nations (ASEAN) with Japan, China and South Korea being Vietnam’s leading trading partners in the region, from a list topped by the USA.

Vietnam’s rapid economic development has, however, seen some aspects slow to keep up with the pace, particularly regarding paying taxes and dealing with official and financial institutions, although the government is taking steps to improve these concerns.

Balancing these issues against the plusses means Vietnam remains a challenge for foreign companies planning an international expansion by establishing a subsidiary. Attempting to recruit staff in-country from thousands of miles away is hazardous. Migrating staff from the home country brings into play masses of red tape surrounding work permits and work visas.

Starting a Business into Vietnam

All companies starting a business in Vietnam – local or foreign – operate under the Companies Law, the amended Law on Investment, implemented from January 2021, and the Law on Enterprises. Foreign companies setting up branches or representative offices must comply with the Law on Commerce.

International companies moving into Vietnam typically choose a limited liability entity operating as a Wholly Foreign-Owned Enterprise (WFOE). Registration procedures include:

Applying for an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI). If business activities fall outside World Trade Organization agreements, obtaining extra licenses will prolong registration
Obtaining a Business Registration Certificate (BRC) / Enterprise Registration Certificate (ERC) from the DPI. The certificate acts as the company’s tax number with the Vietnam Tax Department (Tong cuc Thue) and for following mandatory procedures with the Vietnam Social Insurance Agency (SIA) and the Ministry of Labor
Complying with the 90-day limit to contribute capital

Foreign companies founding the subsidiary must supply their incorporation certificate, Articles of Association, list of directors and two of their most recent annual financial statements.

Setting up a WFOE as a limited liability in Vietnam requires:

A minimum one ‘member’ or founder – as the term ‘shareholder’ is not used
One resident director as the company’s legal representative
A business bank account
Approval for a Foreign Investment Certificate (FIC) with a minimum investment, typically
US$ 10,000
Bank document certifying deposit of capital
Registered Vietnam address

Expanding Business into Vietnam

Opening a business in Vietnam brings issues. Moving staff across the word means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?

Drawing up your expansion blueprint is not enough. Your business plan will have to answer all these questions.

In Vietnam issues surround not just the work culture, but also strictly applied taxation and employment laws, which can also be subject to collective bargaining, workers’ council, and trade union agreements. In this complex geographical and economic landscape where will you find distributors, manufacturers, and offices?

Vietnam Business Facts

Capital – Hanoi
Population – 98 million
Regions – Mekong Delta; Northeast; Northwest; Red River Delta; North Central Coast; Central Highlands; South Central Coast and Southeast
Official Language – Vietnamese
Economy and world ranking – US$340 billion ranked 38th in the world
Leading sectors – Service (41.6% GDP), industrial sector (34.5% GDP), agriculture (14% GDP)
Main exports – Telephones, mobiles (21%), textiles (12%), computers/electrical equipment (12%), footwear (7%), machinery and instruments (6%)
Main imports – Computers, electrical items, and parts (18%), machinery and accessories (16%), telephones/mobiles and components (8%), fabrics (5%), iron and steel (4%)
Main trading partners – China, USA, South Korea, Japan
Government – Socialist / communist and one-party, unitary state
Currency – Vietnamese Dong VND

Advantages and Challenges of the Vietnamese Market

Advantages of expanding into the Vietnam economy include:

Economics: Steadily growing GDP is highlighting Vietnam as an emerging market and open economy, welcoming foreign investment
International Trade: Developing trade agreements with fellow Trans-Pacific Partnership nations and increasing cooperation with the USA
Foreign Investment: The Laws on Enterprise and Investment favor influx of Foreign Direct Investment with the addition of tax incentives
Young Employees: Youthful entrepreneurial population ideal for small and medium start-ups and hi-tech developments
Expansion: A gateway for international companies eyeing further expansion into southeast Asian nations
Business Practices: The World Bank marks Vietnam as improving in ease of doing business
Payroll: Vietnam has low labor costs

Challenges of expanding into the Vietnam economy include:

Government Restrictions: Foreign involvement in some sectors requires forming a joint venture partnership with a local company
Red Tape: Registering a business can take up to four months
Business Operations: World Bank ranks Vietnam outside the top 100 nations for ease of paying taxes and three other categories in their ‘ease of doing business’ report
Taxation: The standard Corporate Tax rate of 20% can rise to between 32% and 50% for some sectors involving mining, mineral resources

Limited Company / Subsidiary or Branch in Vietnam?

International organizations expanding into Vietnam typically choose to operate a limited liability subsidiary as a Wholly Foreign-Owned Enterprise (WFOE) rather than a branch. Different rules and registration requirements apply.

A branch is registered with the Department of Industry and Trade; subsidiaries register with the Department of Planning and Investment
A branch is not an independent legal entity and remains subject to the parent company; a subsidiary is a Vietnamese legal entity independent from the parent company
A Vietnamese branch is restricted to five years of operation; subsidiaries can operate indefinitely
Companies applying to open a branch must have been operating for at least five years; no such requirement for a subsidiary
Start-ups can apply to operate a subsidiary, but cannot operate a branch
Branches and subsidiaries are both Vietnamese tax residents and must follow full accounting requirements. Subsidiaries are taxed on their worldwide income

Subsidiaries can operate under a different name to the parent company and follow independent business activities.

Vietnamese Employment Contracts

Vietnam Contracts

International companies hiring employees for their expansion into Vietnam must comply with many layers of complex tax, employment, and social insurance regulations. Failure to comply risks fines, sanctions, and the possibility your staff could be deported, or business operations suspended.

The employer-employee relationship in Vietnam is governed by the Civil Code and Labor Code, which was amended in 2021 to bring in new worker guarantees. Additionally, proposals from the Ministry of Public Security will impose stricter obligations on employers regarding privacy and data protection.

Amendments to the Labor Code stipulated that contract can either be open-ended (indefinite) or fixed term, with no other options allowed, apart from probationary contracts.

When hiring new staff and drawing up their contracts, specific requirements from the Labor Code apply and must be considered. These include:

Contractual terms and conditions come under the Labor Code, supplemented by government decrees, articles and statutes.
Employer and employee should each have a signed copy of the contract.
The terms should be in Vietnamese for legal verification and to guard against inconsistencies in translation. The employee can request a copy in a language they understand.
By law, contracts must cover basic information. This includes the full names and addresses of both parties, specifying the position of the individual signing on behalf of the employer; job location and details of role; salary and payment schedule covering any extra reimbursements; working hours, breaks and vacation allowance; details of provisions for employee’s social, health and unemployment insurance.
The new Labor Code accepts the validity of e-contracts related by data messaging.
Employees’ roles must be declared to the labor authority within 30 days along with any subsequent changes to their role, within six months of coming into effect.
Local employees must be paid in Vietnamese Dong; foreigners, whether resident or non-resident, can be paid in another currency.

Employment Contracts in Vietnam

Generally, a labor contract in Vietnam is effective from the date it is signed, not from when it is lodged with the labor authorities. The Labor Code, as amended in 2019 and coming into force from January 2021, recognizes two types of contracts, plus probationary agreements.

Open-ended, indefinite employment contracts: These are the most common type of contract and are terminated by agreement between the parties or resignation by the employee.

Fixed-term, definite employment contracts: These can be agreed for up to a 36-month period, but only two consecutive contracts are permitted. If employment continues after this the contract automatically becomes indefinite.

Probation or trial period employment contracts: Probationary or trial periods are agreed on a case-by-case basis depending on the type of job and the qualifications or experience of the new employee. The Labor Code allows for probation periods of six, 30, 60 or 180 days as agreed by the contract.

Foreigner employment contracts: These are generally for a maximum of 24 months, due to visa and work permit regulations.

Seasonal employment contracts: There is no specific contract type for seasonal workers as the amended Labor Code eliminated the categories of ‘seasonal or specific employment’ workers. Seasonal, temporary, or part-time workers are now treated as workers on a fixed-term contract, which has no minimum period but must not last longer than 36 months. Workers with these contracts now have the same benefits and entitlements as employees on indefinite contracts.

Collective and trade union agreements: The Vietnam General Confederation of Labor (VGCL) is the only employment group that can represent employee bodies in collective bargaining negotiations or agreements.

Employee Benefits in Vietnam

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Vietnam might not all be familiar to you yet. By using our PEO and Employer of Record(EOR) service we can provide compliant labor contracts for employees in Vietnam including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.

What are the Employee Benefits in Vietnam?

Companies making their move into a new territory must ensure they comply with employees’ guarantees, benefits, compensation, and entitlements when they draw up contracts for their new staff members. Mandatory entitlements typically cover social insurance, unemployment support, paid vacations, termination and notice periods, maternity leave, and severance payments.

In Vietnam, employee benefits are governed by a range of laws, statutes, articles, and amendments drawn together under the umbrella of Vietnam’s Labor Code. Companies employing staff in Vietnam must comply with the complex regulations of the Vietnam Tax Department (Tong cuc Thue) and compulsory procedures imposed by the Vietnam Social Insurance Agency (SIA) via the Ministry of Labor.

The Tax Administration Law of July 2020 implemented new regulations for filing returns. Overseas companies must comply with the Foreign Contractor Tax (FCT) in addition to personal, corporate and sales tax rates and withholding deductions from employees’ salaries.

What Compensation Laws exist in Vietnam?

In Vietnam a framework of employment laws and regulations guarantee employees are protected in various areas. Legislation covers such as minimum wages, social insurance, redundancy, termination and severance, discrimination, working hours, vacation leave, maternity, and paternity issues and more. Statutory and mandatory minimums cannot be undercut by collective agreements negotiated by the Vietnam General Confederation of Labor (VGCL), although they can improve entitlements for employees.

Employees’ guaranteed benefits and compensation include:

Minimum wage: The minimum wage rates are regionally based. 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) apply VND 3.43million (US$150) as the minimum. Remainder of country – VND 3.07million (US$133). The rates apply across all sectors of commerce and industry.
Working hours: The amended Labor Code limits working hours to eight per day and 48 per week. Overtime, by mutual agreement, cannot exceed four hours per day, 40 a month or 200 each year. Industries subject to seasonal variations, such as textiles, clothing, and electronics, have an annual overtime maximum of 300 hours.
Paid vacation: Amendments to the Labor Code stipulate all employees receive a basic 12 days minimum per year. Employees working in hazardous, dangerous, or toxic environments receive either 14, 15 or 16 days. Leave is allowed pro rata for less than 12 months’ employment. Workers with the same employer for more than five years receive an additional day every five years. Workers are also paid for national holidays.
Maternity allowance and entitlements: Maternity leave is six months for a full pregnancy, with days off varying between 10 and 50 days in the case of miscarriage or termination. 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 or at night and cannot undertake long distance business trips. If their job entailed heavy work, they should be transferred to lighter duties or work one hour less each day on the same pay.
Paternity Leave: The paternity allowance is for five to 14 days paid leave depending on the type of birth, number of children and if the child is adopted.
Termination and severance: An open-ended contract require 45 days’ notice, with 30 days for fixed-term employment. The Labor Code lays down that these are now the only permitted labor contracts in Vietnam. Workers employed with their company for more than 12 months receive two weeks average salary for each year. Termination due to business or technological change brings severance pay of one month’s salary per year served. Employment cannot be terminated during pregnancy or maternity leave. Under the amended Labor Code, employees can terminate their contract immediately for mistreatment, becoming pregnant or if they are not paid on time.
Discrimination: Vietnam’s amended Labor Code introduced stronger safeguards regarding discrimination over sexual harassment, race or nationality, ethnic group, gender, marital status, pregnancy, political views, disability or membership of trade unions or labor groups. These will be enforced further by Ministry of Public Security regulations imposing strict obligations on employers asking for certain information from applicants for new positions or from existing staff. 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.
Sick Pay: Employees receive sick pay from the Social Insurance Fund, not from the employer, and it is based on 75% of salary from which social insurance premiums were paid during the preceding month. 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. Employees in hazardous, toxic, or heavy industrial occupations are receiving an extra 10 days’ sick leave for each of the qualifying years’ bands.
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:

Type of overtime | Compensation
Weekdays, daytime: 150%
Weekends, daytime: 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.

Recruiting Top Talent in Vietnam

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 Organisation (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 20^th of following month) or quarterly (by 30^th 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.

Vietnamese Work Culture

Vietnam Work Culture

To succeed in business in Vietnam, it is vital for both employers and employees to have a strong understanding of the business culture.

As a global PEO (Professional Employment Organisation) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Vietnamese work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Thailand to start your expansion well-informed.

Work Culture in Vietnam

International companies expanding into Vietnam will be taking part in one of the most remarkable economic stories of the last 30 years. Vietnam has left behind the world’s poorest nations and been transformed from a closed economy into an open one and a lower to middle income nation.

Since 2002 Gross Domestic Product (GDP) per capita has increased by almost three times, approaching US$ 3,000. Vietnam bucked the global trend in 2020 to increase GDP by 2.9% and it is predicted to grow by 6.6% in 2021.

This transformation has made Vietnam a driving force among the Association of Southeast Asian Nations (ASEAN) and an attractive target for Foreign Direct Investment (FDI) and multinationals including IBM, Microsoft, PepsiCo, Samsung, and Honda.

However, adjustments must be made. Dealing with financial institutions and tax authorities can be challenging, especially as there have been changes to tax filing, employment, and social security regulations since 2020. Western incomers also must deal with a vastly different workplace culture.

It’s time to ‘get down to business’! Our guide to work culture, business etiquette and employment requirements will help you take those important first steps.

Punctuality: Being on time is important in building a business relationship, as being late is considered rude. After arranging the meeting by a phone call, be sure to confirm in advance. If the first contact was by email, promptly follow up with a call to show respect and that you value the relationship. Unfamiliarity with the location makes it essential to allow plenty of time through the traffic in one of the larger cities.
Language: Business will likely be conducted in Vietnamese; if not fluent, interpreters are essential.
Business Relationships: Be prepared to deal with a hierarchical business structure where responsibility and decision-making filters down from the top. Respect for seniority is as common in business life as in the social world. Always be respectful and follow certain protocols; being too frank or argumentative might cause your counterpart to ‘lose face’ with their peers. If managing a team of Vietnamese, take the time to get to know them.
Introductions and Greetings: Exchanging bi-lingual business cards is an important ritual and offer your card to the senior member first with the Vietnamese side facing up, using both hands. Vietnamese appreciate being addressed initially in their own language, coupled with a handshake and slight bow.
Allow a female member of the other team to offer her hand first and if it is not offered, a slight bow will suffice. Play safe and address your counterpart by their title and surname. Once the ‘getting to know you’ stage has been reached Vietnamese enjoy exchanging small talk about families and life in general.
Gift-giving: Exchanging small ‘token’ gifts such as pens is common during the first meeting of a developing business relationship.
Dress Code: Business attire tends to be more formal in the north of Vietnam. But in the hot months, shirtsleeves are acceptable anywhere.
Negotiating the deal: Protracted discussion can be lengthened by periods of silence – a sign your opposite number is carefully considering the proposal, so don’t interrupt. Confusingly, a silence may be a polite, face-saving way of saving ‘No’. When your counterpart says ‘Yes’ it may simply mean they understand what you are saying and not necessarily agreeing. Avoid misunderstandings by following up meetings in writing.
Business Meals: Sometimes opposite numbers would like to suggest dining out as a way to get to know you and build trust. Be sure to have a toast ready – and direct yours at the head of their team.

Vietnam’s Minimum Wage

The national minimum wage rates are region-based.

Regions 1 and 2 (covering 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 across all sectors of commerce and industry.

Probation Periods in Vietnam

Probationary or trial periods are agreed on a case-by-case basis, depending on the type of job and the qualifications or experience of the new employee.

The Labor Code allows for probation periods of six, 30, 60 or 180 days as agreed by the contract.

Working Hours in Vietnam

The Labor Code of 2020 stipulates working hours should not exceed eight per day and no more than 48 per week. Overtime, by mutual agreement, is restricted to four hours per day, 40 a month or 200 in 12 months.

Industries subject to seasonal variations, such as textiles and clothing, have an annual overtime maximum of 300 hours. Normal working hours are generally from 7.30am till 4.30pm, with a minimum of one free day per week. Workers should have at least one 30-minute break or a 45-minute break for night work.

Shift work is defined as where two people or two groups of workers share the same position in rotation for a period of 24 consecutive hours with a transition of up to 45 minutes between shifts

Overtime in Vietnam

Any time worked over the agreed hours is overtime and should not exceed 50% of normal working hours to a total of 12 hours per day or 40 per month and 200 in the year.

Remuneration is paid at 150% above the hourly rate during a working day and 200% during days off, 300% for working during a public holiday or the following day off. Consent for overtime must be given by the employee.

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