GUIDE TO VIETNAM LABOUR REGULATIONS | NuSmart HRMS
 

GUIDE TO VIETNAM LABOUR REGULATIONS | NuSmart HRMS

Introduction

The purpose of this guide is to provide general information about the statutory requirements as per the labour regulations and common practices on employment in Vietnam. The guide tries to explain the different laws and regulations concerning employment and should be taken for reference only. 

When in doubt or if further clarification is required, please refer to or contact the relevant Government authority for assistance. 

Vietnam Labour Regulations

The main sources of labour regulation in Vietnam are:

  • Labour Code
  • Social Insuranc

Labour Code

The Labour Code (2012) is the main legislation that govern the employment of people in Vietnam.

  • Coverage

The Labour Code covers all employees and workers regardless of their wages or salaries as well as job grades/levels or types of employment, that is, permanent or temporary.

  • Hours of Work

Under the Labour Code, the normal working hours must not exceed 8 hours a day or more than 48 hours a week. The daily working hours in a day must not exceed 10 hours and 48 hours a week.

An employee must not work overtime for more than 4 hours on a normal working day or 200 hours in a year.

For every 6 consecutive hours of work, an employee must be entitled to a break of 30 minutes and 45 minutes for those working on the night shift.  The rest break is included in the daily working hours.

  • Rest Day and Public Holidays

All employees must have at least 1 rest day per week on a Sunday or any other fixed day of the week.

There are 6 gazetted National public holidays in Vietnam. When a public holiday falls on a rest day, employees shall be entitled to the next day off in compensation thereof.

  • Probation Period

An employer and employee may include a probationary period into the employment contract. No probation period is allowed if the fixed term employment contract is less than 1 month.

Only 1 probationary period is allowed, and the probationary period must not exceed:

Level of Position Length of Probation Period
Senior management 180 days
Professionals with degree & above 60 days
Skilled workers with vocational or secondary Certificate 30 days
Any other jobs or positions 6 working days

 

The salary during may be negotiated by both parties but should not be lower than 85% of the salary offered.

  • Overtime

Workers performing overtime work must be paid as follow:

Day Overtime Rate
Normal working days 150% of the daily salary
Off and rest days 200% of the daily salary
Public holidays 300% of the daily salary

 

Workers performing night shift must be paid an additional wage of 30% of the daily salary.

Workers who work overtime at night must be paid an additional wage at least 20% of the daily salary

  • Leaves

Annual Leave

Employees who have completed 12 months of consecutive service with an employer are entitled to the following days of annual leave.

Type of Working Condition Number of Days
Normal working conditions 12
Hard, harm or dangerous work or hard living conditions 14
Especially hard, harm or dangerous work or hard living conditions 16

 

Annual leave shall be increased by 1 day for every 5 years of service with the same employer. For any incomplete year of service, the annual leave of entitlement will be pro-rated in accordance with the number of completed months of service.

Employees are allowed to accumulate 2 years’ leaves to be taken at one time. For accumulation of 3 years’ leave, the approval of the employer is required.

 Sick Leave

Employees are entitled to sick leave if they have contributed to the social insurance fund and are able to produce a medical certificate issued by a doctor from a competent health establishment. The maximum sick leave entitlement is as follow:

Years of Contribution Number of Days Per Year
Contribute to social insurance for less than 15 years 30 days
Contribute to social insurance between 15 and 30 years 40 days
Contribute to social insurance for more than 30 years 60 days

 

The sick leave is paid by the Social Insurance authority at 75% of the monthly salary on which the premium is based on.

 Maternity Leave

All female employees are entitled to 4 months paid maternity leave regardless of her length of service with the employer. For female employees performing hard and harmful work or at remote area may be entitled to apply up to 6 months of maternity leave.

A female employee who gives birth to twin or multiple births is entitled to additional 30 days of maternity leave for each child.

The maternity leave is paid by the Social Insurance authority during her maternity leave at 100% of the monthly salary on which the premium is based on.

Paternity Leave

Male employees whose wives gave birth are entitled to paternity leave as follow:

            Type of Birth Number of Days
Single birth 5 working days
Wife gives birth before 32 weeks pregnancy or undergo surgical 7 working days
Wife gives birth to twin or multiple birth 10 working days

 

The paternity leave is paid by the Social Insurance authority during her maternity leave at 100% of the monthly salary on which the premium is based on.

Childcare Leave

Both female and male employees are entitled to childcare leave to take care of their sick child as follow:

            Type of Birth Number of Days
Child is below 3 years old 20 working days
Child is between 3 and 7 years old 15 working days

 

The childcare leave is paid by the Social Insurance authority at 75% of the monthly salary on which the premium is based on.

The employee must produce medical certificate of the child’s illness in order to claim for the childcare care leave.

Other Leaves

Under the Labour Code, an employee is entitled to take paid leave for the following reasons:

Type of Occasion Number of Days
Marriage 3 days
Marriage of employee’s child 1 day
Death of spouse, parents, parents-in-law or child 3 days

 

  • Termination

Both parties may terminate the employment contract by giving the following required notice to the other party:

Type of Employment Contract Number of Days
Indefinite term or opened contract 45 days
Fixed term contract between 12 months to 36 months 30 days
Fixed term contract less than 12 months 3 days

 

An employer who wants to terminate the employment contract must ensure proper legal grounds or reasons exist before the termination such as performance issue, prolonged illness, a force majeure event, or winding up of the company.

Either party may terminate the employment contract without notice or waiting for the expiry of the notice by paying the other party a sum equal to the wages or salary of the notice period.

  • Severance Payments

Employers must pay an employee severance pay or redundancy pay if they terminate an employee who has worked t lest 12 months with them:

Length of Service Amount
Severance Pay
Each year of service 0.5 month’s salary
Redundancy Pay
Each year of service 1 month

 

The minimum total amount of the redundancy payment must not be less than 2 months.

The salary used to calculate both the severance and redundancy pays shall be the average salary of the last 6 months of the employment before the termination.

  • Retirement Age

With effect from 1 January 2021, the retirement age in Vietnam is as follow:

Gender Retirement Age
Male 60 years and 3 months
Female 55 years and 4 months

 

The retirement age for both male and female will increase by 3 months for males and 4 months for females after every year until it reaches the target retirement age of 62 years for male and 60 years for female.

  • Minimum Wage

With effect from 1 July 2022, the minimum wage of Vietnam is as follow:

Zone Region Minimum Monthly Wage (VND)
Before 1 July 2022 From 1 July 2022
1 Urban Ho Chi Minh City, Hanoi and Hai Phong with certain industrial areas of Binh Duong, Dong Nai and Ba Ria – Vung Tau 4,420,000 4,680,000
2 Rural Ho Chi Minh City and Hanoi, and Da Nanang 3,920,000 4,160,000
3 Provincial cities and districts of Bac Giang, Bac Ninh, Phu Tho, Vinh Phuc, Hai Duong and other provinces not included in Zones 1 and 2 3,420,000 3,620,000
4 All other areas 3,070,000 3,250,000

Social Security

The Social Security system comprises of the following programs to all employees:

  • Social Insurance
  • Sickness
  • Maternity
  • Work accident and occupational disease
  • Retirement
  • Survivor allowance – Death
  • Health Insurance
  • Unemployment Insurance

All employers and employees including foreigners with valid work permits are required to make monthly contribution to the Social Insurance Fund for all the different insurance schemes.

The monthly contribution is based on the regular monthly salary or wages including all fixed allowances or benefits of the employee and are as follow:

Type of Social Security Contribution – % of Monthly Salary
Employer Employee Total
Social Insurance – capped at 20 times the minimum wage
Retirement & Death 14.0% 8.0% 22.0%
Sickness & Maternity 3.0% 0% 3.0%
Occupational Diseases & Accidents 0.5% 0% 0.5%
Sub-Total 17.5% 8.0% 25.5%
Health Insurance – capped at 20 times the minimum wage
Hospitalisation 3.0% 1.5% 4.5%
Unemployment Insurance – capped at 20 times the minimum wage
Unemployment 1.0% 1.0% 2.0%
Total Monthly Contributions 21.5% 10.5% 32.0%

The monthly contribution is based on employee’s salary and all fixed allowances and is capped at 20 times the basic salary of the minimum wage for each of the scheme.            The current monthly basic salary of the minimum wage is VND1,600,000 and 20 times the base salary of minimum wage is VND32,000,000.

Income Tax

All employees are required to pay income tax based on their taxable income. The tax rates in Indonesia are progressive based on the annual taxable income.

The income tax rates are as follow:

Taxable Income (VND) Tax Rate
Annual Income (million) Monthly Income
0 to 60 0 to 5,000,000 5%
60 to 120 5,000,001 to 10,000,000 10%
120 to 216 10,000,001 to 18,000,000 15%
216 to 384 18,000,001 to 32,000,000 2-%
384 to 624 32,000,001 to 52,000,000 25%
624 to 960 52,000,001 to 80,000,000 30%
Above 960 80,000,001 and above 35%

 

The tax reliefs or deductibles for individual are as follow:

 Type of Relief Amount (VND)
Individual 11,000,000 per month
Each Dependent – spouse, unmarried child, or parent 4,400,000 per month
Social Insurance – Employee Contribution Actual amount of contribution
Health Insurance – Employee Contribution Actual amount of contribution
Unemployment Insurance – Employee Contribution Actual amount of contribution

Vietnam practices withholding tax, that is, the employee’s annual income is estimated or calculated at the beginning of the year and the annual tax is divided over 12 months and paid monthly by the employer.

The amounts paid are reconciled to the total tax liability at the end of the year and an annual tax return must be submitted.

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NuSmart is Oracle NetSuite SDN Partner, and Product Development Company focused on developing HRMS on NetSuite Cloud Platform. NuSmart is a very powerful Cloud-based HRMS software, with a vision to solve the challenges of HR processes from talent management to performance management, time management, payroll management, on boarding and exit formalities. We have it all in one HRMS software.

We understand the changing needs of the workforce so we provide an easy-to-use mobile application for employees so that they can apply leave, expenses and check their salary slip anytime on their mobile phone. With NuSmart all the information is readily available to the employees even when they are not in the office.

Our mission is to ease out the complications of HR processes.

Besides offering a complete cloud-based employee life-cycle management software, we do offer the following services:

  • Payroll Outsourcing
  • HR Consulting

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