Under the Labor Code, a foreign investor may either directly recruit Vietnamese employees or recruit via an authorized labor agency. The foreign investor is then required to register the list of recruited employees with the local labor department and submit reports on the utilization of and changes to staff to the labor department on a periodic basis.
The list of reports would be required to perform for labor utilization:
1. Explanation of demand for utilization of foreign workers/
Explanation of changing in demand for utilization of foreign workers
At least of 30 days from ahead of the expected date of recruitment
Office of Labor, War Invalids and Social Affairs or Provincial People's Committee
2. Monthly notification of labor change
If any, by 3rd day of the following month
Employment service Center where the entity is located
3. Report of labor change
- For the first 6 months of the year: by 25th May
- For the last 6 months of the year: by 25th November
The Labor, War Invalids and Social Affairs Division or Department (for employers operating in industrial parks)
2. Labor contract
According to the Vietnamese Labor Code, labor contracts signed by and between employers and employees must be made in one of the following forms:
An employer will be entitled to sign a maximum two subsequent definite labor contract with an employee. After that, if that employee continues to work for the employer, an indefinite labor contract must be signed.
3. Working Hour
Normal working hours are eight hours per day (or 48 hours per week based on a six-day working week). Enterprises are entitled to schedule the working hours daily or weekly but must notify the employees in advance. For heavy, noxious or dangerous jobs, working hours will be 6 hours per day.
Overtime hours will not exceed 50% of the normal working hours or 30 hours per month or 200 hours per year. In case a company wishes to extent the amount of overtime to more than 200 hours a year, it must seek the approval from the local Department of Labor, Invalids and Social Affairs (“DOLISA”). However, any approval is subject to a cap at 300 hours a year.
The wage costs in Vietnam are generally low. However, the cost of Personal Income Tax (PIT) and other mandatory contributions such as Social Insurance, Health Insurance and Unemployment Insurance as mentioned below may significantly increase total labor costs.
In respect of expatriates, these costs depend on the residency status and the remuneration structure of the expatriates. There are other administrative costs associated with the employment of expatriate staff such as work permits, residency registration and insurance.
The minimum wage of Vietnamese employees working for foreign investment enterprises or other foreign organizations will vary depending on different zone classifications set forth by the Government
An employee who performs overtime work must be paid according to the wage unit or wage for his/her current job as follow
Social, Health, and Unemployment Insurance contributions
Regulations state that both employers in Vietnam and Vietnamese employees with a labor contract of three months or more (this will change to a month effective 1st January 2018) are required to make statutory Social Insurance (“SI”), Health Insurance (“HI”) and Unemployment Insurance (“UI”) contributions.
The rates for statutory SI, HI and UI contributions are as below:
From 01 Dec 2018 to 31 Dec 2021
From 01 Jan 2022