Exceeding 50 million people, Vietnam has a solid workforce of skilled and educated talent that can aid your company in success as you expand internationally. Mostly concentrated in metropolitan regions, this strong labor force is currently most interested in agriculture, services, and industry, with the field of technology rising as well. If you want to form successful working relationships with Vietnamese employees, you must understand local laws and cultural differences well. With that in mind, here is everything you need to know about employing in Vietnam:
Languages used in Vietnam
The official language of Vietnam is Vietnamese, with moderate proficiency in English according to the global index. Other languages you could hear or notice in formal documents here include Chinese, French, and Khmer, as well as some smaller local languages. Hiring a professional translator and written interpreter is recommended if you’re unfamiliar with the languages in Vietnam. Copies of all important documents and other critical information, such as employment contracts, should be provided in both languages.
Hiring local employees
When employing local or foreign workers in Vietnam, all engagements have to be in accordance with the local minimum wage and employment laws. If your company doesn’t have a business entity or other formal presence in Vietnam, you might want to consider partnering with a third-party provider to aid in talent engagement and management. If you have an established company in Vietnam, however, you could decide to outsource your HR responsibilities as well. In either case, working with an experienced employer of record from Vietnam is the best solution. This organization will act on behalf of your business to onboard local and foreign employees, perform background checks and vetting, and ensure compliance with local laws.
Working hours and time off
Vietnam celebrates eleven public holidays, including the Tet Lunar New Year. All Vietnamese workers expect to have these holidays off, along with vacation days and unpaid or paid leave. All employees have the legal right to at least one whole day off work per week, usually a Sunday. Work shifts are typically around 40 hours a week and eight hours a day, with those hours generally, but not necessarily, being 8-5 Monday to Friday. All workers also have the right to a minimum of 12 days of paid annual leave. Women are entitled to six months of paid maternity leave, with men being eligible to get 5-14 days of paid leave, although paternity leave depends on the company.
Benefits and compensation
Vietnam defines two forms of the minimum wage: the common minimum salary for workers in state-owned companies and the regional minimum wage for all employees in non-state businesses and organizations. These rates can vary between regions, but your company has to follow the local minimum wage laws. As the employer, you will also need to provide health insurance to your employees that include regular yearly health checks. Other types of compulsory employer contributions are also social and unemployment insurance. Additional options such as transportation allowance, housing assistance, and similar benefits can help to create more attractive employment packages.
Employment contracts
Your business is legally required to have written employment contracts with each employee, including copies in Vietnamese as well as the individual’s native language. The contract can either come with an infinite duration or a fixed term, with both being eligible for renewal or termination as specified and needed. These contracts should incorporate all relevant information regarding the working partnerships, such as salary and compensation, insurance and benefits, employer and employee rights, health and safety, etc. If you’re not working with an employer of record, consider hiring a Vietnamese legal professional to ensure compliance when drawing up employment contracts.
Taxation laws
In Vietnam, employees have to pay individual income tax, with salaries and bonuses being subject to personal income tax. Employers are obligated to pay for a percentage of employee social security costs, business taxes, withholding taxes, Value Added Tax (VAT) on any purchases, and any taxes associated with the building or physical location in the country. While there are no payroll taxes or income taxes to contend with, all employers in Vietnam have to pay a 20% rate for Corporate Income Tax. Companies are also responsible for covering 3% of health insurance and 1% of unemployment insurance. All necessary federal and employee taxes need to be reported to the Vietnamese tax authority monthly or quarterly.
The process of employment in Vietnam requires careful consideration and extensive knowledge of regional business and employment laws, along with deep cultural understanding. If you decide to hire in Vietnam, make sure to have skilled experts by your side.
