Vietnam Labor Law: Recruitment, Labor Law and Employment Law, and Contract Types

Vietnam’s sustained economic growth has attracted a surge of foreign investment, making Vietnam recruitment and effective workforce management a priority for international companies. Understanding Vietnam labor law—and the interplay between labor law and employment law—is essential to ensure compliance, build employee engagement, and reduce legal risk.

This guide explains key regulations, type of labor contract in Vietnam, recruitment strategies, social insurance obligations, and practical HR tips for foreign companies operating in Vietnam.

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Vietnam Labor Law and Regulatory Framework

Vietnam’s labor relations are governed primarily by the Labor Code 2019, supplemented by various decrees and circulars. The Labor Code emphasizes protection of employee rights, collective bargaining, and social insurance. Key government agencies include the Ministry of Labour–Invalids and Social Affairs (MOLISA) and provincial Labour, Invalids and Social Affairs Departments (DOLISA).

Types of Labor Contracts

Under Vietnamese law, employment contracts are classified as follows:

• Definite-term Contracts: Valid for between 12 and 36 months. They may be renewed once. If extended beyond two renewals or beyond 36 months, the contract automatically becomes indefinite-term.
• Indefinite-term Contracts: No specified end date. Suitable for long-term hires and senior positions.
• Seasonal or Task-based Contracts: Last under 12 months for seasonal or specific projects. These cannot exceed two years in aggregate.

Tip: Use definite-term contracts for mid-level and junior positions to allow flexibility. Reserve indefinite-term contracts for key personnel to enhance retention.

Mandatory Terms in Employment Contracts

As detailed under the Labor Code, Vietnamese employment contracts must include the following information:

• Employer and employee identification
• Job title, description, and place of work
• Contract term and probation period
• Working hours and rest days
• Remuneration structure and payment schedule
• Social insurance, health insurance, and unemployment insurance contributions
• Annual leave, public holidays, and other benefits
• Occupational safety and health provisions

Failure to include these terms can result in administrative fines and render contracts unenforceable.

Probation Periods, Working Hours, Overtime, and Leave

According to Vietnam Labor Law, employers must pay probationers at least 85% of the official salary for the position. Probation may last up to:

• 2 months for positions requiring university degrees or higher
• 1 month for roles requiring vocational training
• 6 days for non-skilled or seasonal positions

Under Vietnam labor law, ensuring adherence to working-hour limits and properly compensating overtime is critical to avoid labor disputes and legal sanctions.

• Working Hours: Standard working hours are 8 hours per day and 48 hours per week (or 40 hours/week for certain industries).
• Overtime: Limited to 50 hours per month and 200 hours per year (up to 300 hours in special circumstances with labor authority approval). Employers must pay overtime at 150–300% of normal wages depending on time of day and weekends.
• Annual Leave: Employees accrue 12 days of paid annual leave per year; this increases to 14 days for hazardous work and up to 16–20 days for high-skill jobs or remote locations.
• Public Holidays: Employees are entitled to 11 public holidays per year with full pay.

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Social Insurance, Health Insurance, and Unemployment Insurance

Contributions to Vietnam’s social security system are mandatory for foreign and local employees working under indefinite or definite-term contracts of at least one month:

• Social Insurance (SI): 17.5% of gross salary (8% employee, 14% employer)
• Health Insurance (HI): 4.5% of gross salary (1.5% employee, 3% employer)
• Unemployment Insurance (UI): 2% of gross salary (1% employee, 1% employer)

Vietnam labor law requires employers to register with the local social insurance authority and remit contributions each month, helping avoid penalties and safeguard benefits.

Read Related: Business Culture in Vietnam: Building Relationships and Trust in the Workplace

Recruitment and Hiring Practices

Under Vietnam labor law, job postings must follow anti discrimination rules. Avoid requesting age, gender, ethnicity, religion, or marital status unless legally justified. Focus on skills, qualifications, and role relevant experience.

Interviews and selection should be fair, transparent, and documented in line with Vietnam labor law. Use structured questions and consistent scoring. For sensitive roles such as finance, consider lawful background checks and certification verification with consent.

Foreign hires need valid status before starting under Vietnam labor law. Obtain work permits and Temporary Residence Cards in advance, ensuring details match the contract. Use trusted HR or immigration providers and track renewals early.

Read More: Temporary Residence Card (TRC) in Vietnam: Definition, Requirements, and Validity

Salary Structure and Payroll Management

• Minimum Wage: Varies by region; ensure monthly salaries meet or exceed government-set regional minimums.
• Paydays: Must be no later than the 7th and 20th of the month.
• Payroll Deductions: Limit lawful deductions to those for social insurance, health insurance, UI, and personal tax as prescribed.

Automated payroll solutions help ensure accuracy, timeliness, and compliance with statutory reporting to tax and social insurance agencies.

Performance Management and Incentives

Set clear KPIs and appraisals aligned with company goals, and run regular reviews to drive engagement and productivity. Offer competitive bonuses and allowances such as productivity bonuses, year-end “13th month” salary, and performance-based allowances to reward results. For senior roles, consider equity and stock options through Long Term Incentive Plans (LTIPs) to attract and retain key talent.

Workplace Health, Safety, and Discipline

Employers must ensure occupational safety by providing PPE, conducting safety training, and complying with the Law on Occupational Health and Safety. Disciplinary actions should follow procedural fairness, with documented warnings, established disciplinary councils, and respect for employees’ rights to representation. Grievance mechanisms should include clear internal channels for complaint resolution to address issues early and reduce escalation to labor authorities.

Termination and Severance

Grounds for lawful termination include mutual agreement, expiry of contract without renewal, resignation, misconduct, and redundancy. Notice periods are:

• 45 days for indefinite-term contracts
• 30 days for definite-term contracts
• 3 days for seasonal or task-based contracts
  

Upon termination, severance pay is required at half a month’s salary per year of service if the employer unilaterally terminates the contract without cause. Employers must settle all outstanding salaries, allowances, and insurance contributions.

Managing Labor Disputes

Early resolution through dialogue and internal mediation is encouraged. Unresolved disputes can be escalated to provincial Labour Mediation Councils and ultimately to labor courts. Maintaining clear documentation of employment records, contracts, and communication reduces litigation risks.

HR Tips for Success

To operate compliantly and attract talent, companies should align policies with Vietnam labor law and current labor laws, while building a robust Vietnam recruitment process that reflects local practices. Clarify employment law wagespolicies, define the type of labor contract in Vietnam used for each role, and document standard Vietnam working hours alongside overtime, leave, and social insurance. Provide managers with training on the relationship between labor law and employment law, and use clear employee communications so pay, benefits, and performance expectations are transparent. This integrated approach strengthens compliance, supports retention, and improves day-to-day execution across HR and operations.

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