Human resources

Human Resources

1. Recruitment

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:

 

Report

Submission timeline

Receiver

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:

  1. Indefinite term;
  2. A definite term; and
  3. Seasonal jobs or specific jobs with a term of less than 12 months.

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.

4. Wage

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

  • On normal days, at least equal to 150%;
  • On weekends, at least equal to 200%;
  • On public holidays and paid leave days, at least equal to 300%, excluding the wage for public holidays and paid leave days of employees who receive daily wages.

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.

  • Expatriates who are not internal transfer have work permits or licenses, and contractually employed by a local entity under labor contract with term of one year or more will be required to make SI contribution effective 1 December 2018.
  • The basis for statutory SI and HI contributions is the contractual salary, allowances and other extra payment but capped at 20 (twenty) times the national statutory minimum monthly salary.
  • The basis for calculating statutory UI contribution is contractual salary, allowances and other extra payment but capped at 20 (twenty) times of the regional statutory minimum monthly salary.
  • Statutory SI, HI and UI contributions should be deducted, withheld and paid to the local social insurance authority on a monthly basis by the employer.

The rates for statutory SI, HI and UI contributions are as below:

Insurance

Vietnamese employee

Foreign employee

Employee’s Contribution

Company’s contribution

From 01 Dec 2018 to 31 Dec 2021

From 01 Jan 2022

Employee’s Contribution

Company’s contribution

Employee’s Contribution

Company’s contribution

Social Insurance

8%

17.5%

-

3.5%

8%

17.5%

Health Insurance

1.5%

3%

1.5%

3%

1.5%

3%

Unemployment Insurance

1%

1%

-

-

-

-

Total

10.5%

21.5%

1.5%

6.5%

9.5%

20.5%