Labor Laws In Vietnam [Complete Guide For The Employers]

Vietnam is considered one of the fastest growing labor markets in Southeast Asia. It has clear laws that guide how employers should manage contracts, working hours, salaries, benefits and employee rights. 

As an employer, it is common to face confusion about what is required, what is optional and how to stay fully compliant while managing a growing team.

This guide is created to help you understand the key labor laws in Vietnam in a simple and practical way. It comes from our experience of helping Vietnamese companies streamline their HR and payroll operations using our all in one HR and payroll platform in Vietnam. 

The guide covers employment contracts, working hours, overtime, leave entitlements, payroll compliance, social insurance, personal income tax and important employer obligations.

Overview of Vietnam Labor Code

The Labor Code in Vietnam governs how employers and employees should work together in the private sector. It sets the rules for hiring, managing and compensating employees. It applies to Vietnamese nationals, foreign employees working in Vietnam and companies operating in the country. The law ensures that both employers and employees follow fair and transparent practices.

Here are the key compliance areas you must understand:

• Employment contracts
• Working hours and rest periods
• Overtime rules
• Minimum wage and salary structure
• Taxes and payroll compliance
• Social insurance contributions
• Leave entitlements
• Probation and termination
• Health and safety requirements

Understanding these areas will help you manage your workforce properly and avoid compliance issues.

Types of Employment Contracts in Vietnam

As per the Vietnam Labor Code, employers must use the correct employment contract type depending on the nature and duration of the job. Let us take a look at the types of contracts that are legally recognized today, based on the latest updates in the Labor Code.

1. Indefinite Term Labor Contract

This contract has no end date. It is used when the job is stable and long term. Employees on indefinite term contracts receive the highest level of protection. Termination rules are stricter, and employers must follow proper notice periods and lawful termination grounds.

2. Definite Term Labor Contract (12 to 36 months)

This is the most commonly used contract type in Vietnam. It must have a clear start date and end date and can be signed for a period between 12 and 36 months. A definite term contract can only be renewed once. After the second term, it automatically becomes an indefinite term contract unless specific legal conditions apply.

3. Seasonal or Project-Based Contract

Seasonal or project-based contracts are used for short term jobs that last less than 12 months. These contracts apply only when the work is genuinely seasonal or tied to a specific project with a fixed duration. Employers must not use these contracts to avoid long term obligations.

4. Mandatory Elements in Every Contract

Vietnamese law requires all contracts to include key information such as:

• Job role and responsibilities
• Basic salary and allowances
• Working hours and rest periods
• Social insurance and health insurance details
• Workplace location
• Contract duration
• Terms for salary increases and evaluations
• Conditions for termination

All employment contracts must be signed before work begins and must be provided to the employee in writing.

Working Hours, Rest Periods and Overtime

Like every regulated labor market, Vietnam has clear rules for working hours, rest periods and overtime to protect employees and help employers manage work schedules fairly. Here are the key requirements all employers must follow under the Vietnam Labor Code.

Standard Working Hours

The standard working hours in Vietnam are 8 hours per day and 48 hours per week.
However, employers are encouraged to apply a 40-hour workweek where possible.
For jobs involving heavy, hazardous or dangerous conditions, working hours may be reduced according to sector specific rules.

Overtime Rules

Overtime is allowed, but strict limits apply:

• Maximum 40 overtime hours per month
• Maximum 200 hours per year for most industries
• Up to 300 hours per year only for specific sectors approved by the government

Overtime pay rates:

• 150 percent of the hourly wage for regular overtime
• 200 percent for weekly rest day overtime
• 300 percent for public holiday or Tet overtime (excluding daily wages)

Employers must obtain employee consent before assigning overtime, except in emergency situations allowed by law.

Rest Breaks and Weekly Days Off

Employees working 6 continuous hours must receive a minimum rest break during the shift.
Every employee must also receive at least one day off per week, which can be a Sunday or any other day depending on the company schedule.

For jobs with rotating or shift patterns, weekly rest can be accumulated and arranged according to operational needs.

Night Shift Regulations

Night shift hours in Vietnam are defined as 10:00 PM to 6:00 AM. Employees working during these hours must receive:

• A minimum 30 percent increase on their regular hourly wage
• Additional pay if the night shift includes overtime
• Consideration for health and safety due to the nature of night work

Employers must ensure proper scheduling and compensation to remain compliant with the law.

Managing working hours, overtime and rest periods correctly is essential for staying compliant with Vietnam’s labor laws. Yomly offers an automated payroll and workforce management platform designed for Vietnamese businesses, helping you apply these rules accurately without manual calculations. 

Want to give it a try? Book a free demo to see the entire process in action and learn how Yomly can simplify your HR and payroll operations.

Minimum Wage and Salary Structure (Vietnam-wide + Regional Wages)

When it comes to payroll compliance in Vietnam, salary is one of the most important areas employers must get right. Vietnam follows a region based minimum wage system, and every employer must ensure that employees are paid at or above the legally defined rates. Here are the key details you need to know.

Region-Based Minimum Wages

Vietnam divides its minimum wage into four regions based on economic development levels. Each region has a different minimum wage:

• Region I: Highest minimum wage, covers major cities like Ho Chi Minh City and Hanoi
• Region II: Covers urban districts of medium sized cities
• Region III: Covers provincial towns
• Region IV: Lowest minimum wage, covers rural and less developed areas

The government reviews and updates these rates periodically, usually once a year. Employers must apply the correct regional wage based on the registered workplace location.

Minimum Wage for Employees with Specialized Skills

Employees who perform jobs that require training or technical skills must earn at least 7 percent higher than the standard minimum wage for their region. This applies to positions requiring vocational training, technical certificates or specialized skills.

Salary Structure Requirements

Vietnamese law requires that salaries must be clear, transparent and documented in the employment contract. The salary structure may include:

• Basic salary
• Fixed allowances (such as housing, transport, meal allowance)
• Bonuses and performance incentives
• Overtime payments
• Deductions for insurance and taxes

The basic salary must be high enough to support the calculation of social insurance, health insurance and unemployment insurance contributions.

Mandatory Salary Payment Rules

Employers must:

• Pay salaries monthly through bank transfer or cash
• Ensure payment is not delayed
• Provide clear payslips with all breakdowns
• Apply correct insurance deductions
• Follow regional minimum wage rules at all times

Late payments or incorrect wage structures may lead to compliance penalties.

Payroll Compliance in Vietnam

As an employer in Vietnam, you must follow strict payroll rules to stay compliant with the Labor Code and social insurance regulations. 

If you are setting up payroll for the first time or managing a growing team, understanding these requirements will help you avoid errors and penalties. Here are the key areas of payroll compliance you need to focus on.

Payroll Cycle

Vietnam follows a monthly payroll cycle, which means employers must:

• Calculate salaries once every month
• Record all allowances, overtime and deductions
• Prepare payslips with clear salary breakdowns
• Pay employees on time through bank transfer or cash
• Keep payroll records for audits and inspections

All salary payments must match the amounts stated in the employment contract.

Mandatory Deductions

Vietnam requires three mandatory insurance deductions plus personal income tax (PIT). These must be calculated accurately every month:

• Social Insurance (SI)
• Health Insurance (HI)
• Unemployment Insurance (UI)
• Personal Income Tax (PIT)

Leave Entitlements Under Vietnam Labor Law

Employees need proper rest, recovery time and family support, and Vietnam Labor Law clearly defines the types of leave every employee is entitled to. You can check out the main leave categories below to understand what employers must provide and how they should be managed.

Annual Leave

Employees who complete 12 months of service are entitled to:

• 12 days of paid annual leave for regular jobs
• 14 to 16 days for heavy, hazardous or dangerous jobs

Annual leave increases by one additional day for every five years of service with the same employer.

Sick Leave

Sick leave is covered by the Social Insurance Fund, not the employer.

Entitlement depends on:

• Employee’s working conditions
• Total social insurance contribution years

Employees can receive between 30 to 70 days per year with payment from Social Insurance.

Maternity Leave

Female employees are entitled to 6 months of maternity leave.

If expecting twins or more, an extra 1 month is added for each additional child.

The allowance is paid by Social Insurance, based on the employee’s average salary used for insurance contributions.

Paternity Leave

Male employees receive paternity leave depending on the delivery method:

• 5 days for normal birth
• 7 days for surgical birth or premature birth
• 10 to 14 days for twins or more

Payment is covered by Social Insurance.

Public Holidays

Vietnam has 11 national public holidays, all fully paid.

These include Tet, National Day, Reunification Day and others. You can check out our complete guide on public holidays in Vietnam to find the complete list. If employees work on a public holiday, they must be paid 300 percent of their normal wage.

Personal Leave (Marriage, Funeral)

Employees can take:

• 3 days paid leave for their own marriage
• 1 day paid leave for a child’s marriage
• 3 days paid leave for the death of immediate family members

Unpaid Leave

Employees may request unpaid leave for personal reasons. Approval depends on company policy and must be agreed upon in writing.

How Yomly Helps Companies Stay Compliant in Vietnam

While this guide is only an overview of the key labor laws in Vietnam, there are many other compliance areas you must manage every month. These include tax calculations, social insurance reporting, unemployment insurance contributions, personal income tax rules, contract renewals, attendance tracking and proper payroll documentation. New organizations often find it difficult to manage all these requirements consistently and accurately.

Yomly’s HR and payroll software takes the complexity out of Vietnamese labor compliance. It automates the entire payroll process with built in local rules for social insurance, health insurance, unemployment insurance and PIT. 

Every calculation follows the latest Vietnam regulations, and the platform can be set up according to your salary structure, allowance policies and approval workflows. Yomly keeps your HR data organized, your payroll accurate and your business fully compliant without manual work.

Book a free demo or get in touch with our team to take the next step towards automating your payroll.