Table of Contents
Key Country Facts
Vietnam is a Southeast Asian country located on the easternmost edge of the Indochinese Peninsula. It has a population of over 97 million people and is known for its rich history, stunning natural beauty, and delicious cuisine.
Vietnam has a total land area of 331,212 square kilometers, making it the 65th largest country in the world. It borders China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea to the east and south.
Vietnam has a tropical monsoon climate, which means it has two distinct seasons: the rainy season (from May to October) and the dry season (from November to April). The average temperature in Vietnam ranges from 22 to 27 degrees Celsius, depending on the region.
Vietnamese culture is a blend of Chinese, French, and indigenous influences. Family is highly valued in Vietnamese culture, and there is a strong emphasis on respect for elders and ancestors. Vietnamese cuisine is also renowned around the world, with dishes like pho, banh mi, and spring rolls being popular favorites.
The majority of people in Vietnam follow Vietnamese folk religion, which is a blend of Confucianism, Taoism, and Buddhism. There are also significant numbers of Buddhists, Catholics, and Protestants in the country.
The official language of Vietnam is Vietnamese, which is spoken by the vast majority of the population. There are also several regional dialects spoken throughout the country, including Hanoi dialect, Hue dialect, and Saigon dialect. English is also becoming more widely spoken, especially among younger generations and in major cities.
It's important for employers to ensure compliance with all employment laws and regulations in Vietnam, including those related to payroll and taxation. Working with a local payroll provider or accounting firm can help ensure that all requirements are met and that the payroll process runs smoothly.
The payroll cycle in Vietnam is typically monthly, with employees receiving their salaries at the end of each month. Employers are required to withhold and pay taxes on behalf of their employees to the appropriate government agencies.
Vietnam's Employment Law sets out the legal requirements and obligations for employers and employees. It covers areas such as contracts, working hours, wages and benefits, social insurance, and termination of employment.
Under Vietnamese law, employment contracts must be in writing and must include certain mandatory provisions, such as the job title, working hours, salary, benefits, and term of the contract. Contracts can be for a fixed term or indefinite, and they can be full-time or part-time.
Employers must also provide their employees with a signed copy of their employment contract within five working days of the start of employment. Any changes to the contract must be made in writing and agreed upon by both parties.
Employment contracts can be terminated by either the employer or the employee, but certain procedures and notice periods must be followed depending on the circumstances of the termination.
Probation Period / Trial Period
Under Vietnamese law, employers can have a probation period of up to 180 days for new employees. During this time, either party can terminate the employment contract without notice or payment of compensation.
The maximum working hours in Vietnam are 8 hours per day and 48 hours per week. However, certain industries and jobs may have different working hour requirements. Employees are entitled to at least 1 day off per week.
Employees who work beyond their regular working hours are entitled to overtime pay, which is calculated at 150% of their regular hourly rate for the first 2 hours of overtime and 200% for subsequent hours. Overtime cannot exceed 50% of an employee's regular working hours in a day or 30 hours in a month.
Employers in Vietnam often offer bonuses to their employees, usually in the form of an annual bonus or 13th-month salary. The bonus amount is typically calculated as a percentage of the employee's annual salary and is usually paid in December.
Employment contracts can be terminated by either the employer or the employee, but certain procedures and notice periods must be followed depending on the circumstances of the termination. For example, if an employer terminates an employee without a valid reason, they must provide the employee with 30 days' notice or pay in lieu of notice.
Under Vietnamese law, both employers and employees are required to give notice before terminating an employment contract. The notice period depends on the length of service and the reason for termination, but generally ranges from 30 to 90 days.
Redundancy / Severance Pay
In the event of redundancy, employers in Vietnam must follow specific procedures and pay compensation to affected employees. The amount of compensation depends on the length of service and other factors, and can be up to 12 months' salary for employees who have worked for the company for more than 12 years.
Female employees in Vietnam are entitled to 6 months of maternity leave, with a salary paid by their employer. They can begin their leave up to 1 month before their expected due date and must provide a medical certificate confirming their pregnancy.
Male employees in Vietnam are entitled to 5 days of paternity leave when their child is born or adopted. The leave can be taken consecutively or separately, but must be taken within the first 30 days of the child's birth or adoption.
In addition to maternity and paternity leave, parents in Vietnam are entitled to up to two years of unpaid parental leave to care for their children under the age of 3. The leave can be taken in blocks of at least 1 month and must be agreed upon by the employer.
Vacation and Annual Leaves
Employees in Vietnam are entitled to annual leave, which varies depending on their length of service. The entitlement is typically between 12 and 20 days per year. Employees can accumulate their leave for up to two years, after which they must use it or lose it.
Employees who are unable to work due to illness or injury are entitled to sick leave. The amount of sick leave varies depending on the length of service, but is typically between 10 and 30 days per year. Employees must provide a medical certificate to their employer to qualify for sick leave.
Employees in Vietnam may also be entitled to other types of leave, such as bereavement leave, study leave, and military service leave. The entitlement and conditions for these types of leave vary depending on the specific circumstances.
Employers in Vietnam may offer other benefits to their employees, such as health insurance, life insurance, and retirement plans. These benefits are not mandated by law, but are often provided as part of a competitive compensation package.
There are several public holidays in Vietnam, including Tet (Lunar New Year), Reunification Day, and Independence Day. Employees are entitled to take the day off on these holidays, with pay.
It's important for employers to ensure compliance with all tax and social security regulations in Vietnam. Working with a local accounting firm or tax specialist can help ensure that all requirements are met and that taxes and social security contributions are calculated and paid accurately and on time.
Personal Income Tax
In Vietnam, personal income tax is levied on both local and foreign residents on their worldwide income. The tax rates range from 5% to 35%, depending on the level of income. The tax rates are as follows:
- 5% on income up to VND 60 million per year
- 10% on income between VND 60 million and 120 million per year
- 15% on income between VND 120 million and 216 million per year
- 20% on income between VND 216 million and 384 million per year
- 25% on income between VND 384 million and 624 million per year
- 30% on income between VND 624 million and 960 million per year
- 35% on income over VND 960 million per year
Employers are required to deduct personal income tax from employees' salaries and remit it to the tax authorities on a monthly basis. Employees are also required to file an annual personal income tax return.
Social security contributions are mandatory for both employers and employees in Vietnam. The social security system in Vietnam includes contributions to 2 funds:
Social Insurance Fund
This fund provides benefits such as sickness, maternity, occupational accidents and diseases, and retirement. The contribution rate is 17.5% of an employee's monthly salary, with the employer contributing 3.5% and the employee contributing 14%.
Health Insurance Fund
This fund provides healthcare benefits to employees and their dependents. The contribution rate is 3% of an employee's monthly salary, with the employer contributing 1.5% and the employee contributing 1.5%.
Employers are required to register their employees for social security and make contributions on a monthly basis. Employees who are covered by social security are entitled to benefits such as sick leave, maternity leave, and retirement benefits.
Visas and Foreign Workers
Foreign nationals who wish to work in Vietnam must obtain a work visa. The work visa is issued by the Vietnam Immigration Department and is valid for up to 2 years.
To obtain a work visa, foreign nationals must first obtain a work permit. The work permit is issued by the Department of Labor, Invalids and Social Affairs in the province where the foreign national will be working. The work permit is valid for up to 2 years and can be extended for another 2 years.
Once the work permit has been obtained, the foreign national can apply for a work visa at a Vietnamese embassy or consulate in their home country. The application requirements for a work visa may vary depending on the embassy or consulate, but generally include the following:
- Valid passport with at least 6 months validity remaining
- Work permit issued by the Department of Labor, Invalids and Social Affairs
- Health certificate issued by a competent authority in the foreign national's home country
- Criminal record certificate issued by a competent authority in the foreign national's home country
- Invitation letter from the employer in Vietnam
The processing time for a work visa may vary depending on the embassy or consulate, but generally takes several business days to a week.
It's important for foreign nationals to ensure that they meet all the requirements for obtaining a work permit and work visa in Vietnam. Working with a local immigration specialist or employment law attorney can help ensure that all requirements are met and that the process runs smoothly.