VietnamAn employer’s guide to employment laws, regulations, and Employer of Record (EOR) in Vietnam.
Looking to hire in Vietnam? An EOR can help.
Thinking of expanding to Vietnam? An Employer of Record (EOR) can help.
An EOR becomes your team’s official employer. They handle employee onboarding, payroll, and benefits while making sure you remain compliant with Vietnamese labor laws. This means you don’t need your own business entity.
Partnering with an EOR can greatly simplify global workforce management. You can navigate international employment laws with ease and stay focused on achieving your core business objectives.
How to hire in Vietnam
Step 1: Choose between setting up a local entity and using an EOR
When hiring in Vietnam, you face the choice of either establishing a local business entity or partnering with an Employer of Record (EOR) service.
Creating a local entity offers complete control over your HR function but requires significant investment in terms of time, money, and resources. The process involves registering with Vietnamese authorities, appointing company directors, and navigating complex tax regulations which can be time-consuming and even delay your hiring efforts.
You will also be directly responsible for ensuring compliance with all Vietnamese employment laws and regulations.
Opting for an EOR means you can avoid dealing with these labor laws. You can onboard employees more quickly and automate key HR functions while still retaining control over your business operations and employees day-to-day.
For those planning to employ a large workforce and establish a notable presence in Vietnam, setting up a local entity might be advantageous. However, if you seek a faster and more streamlined hiring process, an EOR could offer a more efficient alternative.
Step 2: Finding the right EOR
Choosing the right Employer of Record (EOR) for your Vietnamese operations is essential. An unsuitable choice may lead to compliance issues, unexpected costs, and a less-than-ideal experience for your new hires. Consider these important factors:
- Legal compliance. Ensure the EOR is well-versed in Vietnamese labor laws, employee rights, tax obligations, and local benefits. Assess their track record and inquire about their experience with industry-specific cases.
- Customer service. Verify whether the EOR provides ongoing support and assigns dedicated account managers. For instance, Multiplier offers 24/7 personalized support and human account managers (no bots!).
- Transparent pricing. Be cautious of EOR services that advertise low initial costs but hide additional fees or have complex pricing structures. Make sure you understand all potential costs before finalizing your decision.
- Total cost of ownership. The cheapest service might not always be the most cost-effective. Low-cost solutions can sometimes be less efficient and more expensive in the long run. When choosing an EOR, invest in a quality service that fits your budget while offering the necessary features.
Step 3: Employing and onboarding in Vietnam
Send over the contract
Once you’ve selected the right candidate and EOR, the next step is to prepare a locally compliant employment contract. Services like Multiplier can quickly draft contracts in accordance with Vietnamese law.
After this, you can customize the contract to outline job roles, working hours, compensation, and termination terms. After finalizing, the EOR will securely send the contract to the candidate and ensure all necessary signatures are collected.
Enhance compensation with competitive benefits
To create an attractive benefits package, collaborate with a proficient EOR. Instead of you needing to manage local vendors directly, an EOR can seamlessly offer a range of locally administered benefits and ensure employees receive the necessary IT equipment to effectively start their roles.
Get all your documentation in order
Collecting the new hire’s tax and banking details is crucial. With an EOR like Multiplier, this information is gathered automatically to set up payroll. The EOR will handle all necessary documentation, streamlining the process and reducing administrative tasks.
Onboarding in Vietnam might initially seem challenging, but with the support of an EOR, the process can be both smooth and straightforward.
Step 4: Run payroll for employees based in Vietnam
Managing payroll for employees in Vietnam involves adhering to local tax regulations and mandatory contributions. Vietnam’s tax system is progressive, with rates varying from 5% to 35%, depending on income levels.
Employers are also responsible for several mandatory contributions, such as Social Insurance and Health Insurance.
Social Insurance covers retirement pensions, health care, and disability benefits. Employers must contribute a specified percentage of each employee’s salary to Social Insurance to provide these benefits.
Health insurance provides coverage for medical expenses. Employers are required to contribute to this insurance fund, assisting employees during periods of illness.
Utilizing an EOR like Multiplier can support payroll management. They ensure accurate and timely salary payments while handling all local taxes and contributions.
With Multiplier’s global payroll solution, you can manage payroll for your international employees from a single platform, avoiding the complexities associated with using multiple local providers.
Employment laws and regulations in Vietnam
Vietnam’s employment laws are designed to protect employee rights and promote fair labor practices. The Labor Code specifies several aspects that define the employee-employer relationship in the country. Here are some details:
- Employment contracts. Employers in Vietnam can use both fixed-term and indefinite-term contracts. Although written contracts are not legally required, they are highly recommended to avoid legal disputes. Contracts should specify job responsibilities, salary, working hours, and termination conditions.
- Working hours and overtime pay. The standard workweek in Vietnam is 48 hours. Overtime pay is required for hours worked beyond this limit. Employees are entitled to at least 60 minutes of rest for every 6 hours worked consecutively.
- Social security contributions. Employers must contribute to the Social Insurance system, which offers benefits like retirement pensions and health coverage. Both employers and employees contribute a percentage of monthly salaries to Social Insurance.
Employ top talent in Vietnam through an EOR
Onboard, pay, and manage all your international employees
Employee benefits and compensation
Vietnam’s minimum wage is regionally set and reviewed annually. It currently ranges from VND 4,420,000 to VND 5,980,000 per month, depending on the region. Rates are adjusted periodically to reflect economic conditions and living costs.
Vietnamese labor laws also mandate several standard employee benefits including:
- Annual leave. Employees are entitled to a minimum of 12 days of paid annual leave after completing one year of service. This entitlement increases with longer service, providing additional days based on tenure.
- Sick leave. Employees can receive up to 30 days of paid sick leave per year. For absences exceeding this period, employers must provide a medical certificate, and compensation may be covered by the Social Insurance system.
- Parental leave. Vietnam offers 6 months of paid maternity leave, covered by the Social Insurance system, with additional unpaid leave options. Fathers are entitled to 5 days of paid paternity leave, with provisions for additional unpaid parental leave.
- Public holidays. Employees are entitled to paid leave on national public holidays observed throughout Vietnam.
- Retirement benefits and workplace security. Employers must contribute to Social Insurance, which covers retirement pensions and benefits for work-related injuries and illnesses.
Many employers enhance these statutory benefits with additional perks to attract and retain talent. For customized and competitive benefits solutions, consider services like Multiplier’s Global Benefits Administration, which ensures compliance and offers a comprehensive benefits package for your international workforce.
Termination and offboarding procedures
When terminating employment in Vietnam, employers must adhere to regulations regarding notice periods and severance pay.
The standard notice period for terminating an indefinite-term contract is 45 days. For fixed-term contracts exceeding 12 months, the notice period is 30 days. However, for contracts shorter than 12 months, the notice period is generally 3 working days. In specific cases, such as for certain job roles, a 120-day notice period may apply.
Severance pay, mandated by Vietnamese law, is calculated as half a month’s salary for each year of service. The precise amount is determined by the employee’s contract or statutory provisions.
Special procedures apply in redundancy cases, such as during organizational restructuring or economic downturns. Employers may choose to provide payment in lieu of notice, but this must be clearly stipulated in the employment contract.
Navigating these procedures can be complex, especially for international employers unfamiliar with Vietnam’s labor laws.
An EOR, such as Multiplier, can simplify this process. By managing offboarding procedures, an EOR ensures compliance with local regulations and facilitates a smooth transition for both the employer and the departing employee.
Visa and work permit assistance
Employing foreign staff in Vietnam requires obtaining the appropriate visas and work permits. The type of visa required depends on factors like job role, employment duration, and the employee’s nationality.
There are several visa categories for working professionals.
- Work Visa (LD Visa): For foreign employees working in Vietnam, this visa is issued based on the job role and employer’s registration.
- Investor Visa (DT Visa): For investors or senior executives in companies operating in Vietnam.
- Intra-Company Transfer Visa: For employees transferred from a foreign branch of a multinational corporation to a Vietnamese branch.
- Student Work Visa: For students studying in Vietnam to work part-time while completing their studies.
- Professional Work Visa: For foreign professionals in fields like law, medicine, and accounting. Requires recognized international credentials and is usually issued for one year with possible renewal.
- Seasonal Work Visa: For temporary workers in sectors such as agriculture, manufacturing, and construction.
Given the complexities of visa applications and renewals, expert assistance is advisable. Multiplier provides comprehensive work permit and visa support as part of its Employer of Record (EOR) services.
For more details on how we handle global immigration needs, please visit our Global Immigration page.
Get started with Multiplier’s EOR services
Multiplier’s Employer of Record (EOR) services offer an effective solution for expanding your team in Vietnam. Partnering with Multiplier allows you to hire employees without the need for a local entity, streamline HR functions, and enhance the overall employee experience.
Our EOR services seamlessly manage all aspects of employment—from drafting legally compliant contracts to handling payroll and taxes. We also provide a range of customizable benefits that meet local standards, removing the complexities and administrative burdens from your shoulders.
Schedule a demo with us today to learn more.
