Vietnam has become one of Asia's most compelling destinations for American companies building international teams, thanks to a young, fast-upskilling workforce, competitive labor costs, and a manufacturing and technology economy that continues to expand. The work culture rewards diligence, relationship-building, and loyalty, and employees increasingly bring strong English and digital skills to global roles. For any business considering hiring in Vietnam, it is important to understand that the country operates under a codified labor system anchored by the Labour Code of 2019, with significant 2026 updates to the minimum wage in Vietnam, personal income tax, and social insurance rules.
Key Facts About Employment in Vietnam
Information Category | Details |
Minimum Wage in Vietnam | VND 3,700,000 to VND 5,310,000 per month. |
Standard Workweek | 48 hours standard. |
Payroll Frequency | Monthly processing. |
Fiscal Year | Calendar year (January-December). |
Main Employment Laws | Labour Code of 2019. |
Employment Contracts in Vietnam
Employment law in Vietnam recognizes a limited set of contract types under the Labour Code of 2019, and choosing the correct one is central to compliance. The two principal categories are described below.
- An indefinite-term contract has no fixed end date and offers the employee the greatest job security, making it the most common choice for permanent staff.
- A fixed-term (definite-term) contract runs for a specified period of up to 36 months, and it may be renewed only once before it automatically converts into an indefinite-term contract.
A contract for work lasting under one month may be agreed verbally, but every other employment relationship must be set out in a signed written agreement.
Vietnamese law also permits a probationary period that is agreed separately or written into the contract. Probation may last up to 180 days for enterprise managers, up to 60 days for roles requiring a college-level qualification, up to 30 days for technical and intermediate positions, and no more than six working days for other jobs. Every written employment contract must clearly state the job title and description, the salary and payment method, the work location, working hours and rest periods, the contract term, the probation terms, the notice period, and the social insurance and benefit arrangements that apply to the employee.
Payroll, Taxes, and Social Security in Vietnam
Payroll in Vietnam runs on a monthly cycle, and the employer is responsible for withholding personal income tax and both parties' social insurance contributions before paying the net salary. The mandatory social, health, and unemployment insurance (commonly abbreviated SHUI) contributions for 2026 are split between employer and employee as shown below, applied to the contractual salary subject to statutory caps.
Employer Contributions
Contribution Type | Rate |
Social insurance (including occupational accident and disease fund) | 17.5% |
Health insurance | 3% |
Unemployment insurance | 1% |
Trade union fund | 2% |
Total employer cost | 23.5% |
Employee Contributions
Contribution Type | Rate |
Social insurance | 8% |
Health insurance | 1.5% |
Unemployment insurance | 1% |
Total employee deduction | 10.5% |
Income Tax Brackets
Monthly taxable income (VND) | Tax rate |
0 – 10 million | 5% |
10 – 30 million | 10% |
30 – 60 million | 20% |
60 – 100 million | 30% |
Over 100 million | 35% |
Vietnam also offers a special incentive scheme that grants qualifying high-tech, semiconductor, and artificial intelligence professionals a full personal income tax exemption for five years and a 50% reduction for related digital-transformation roles.
Compensation and Benefits in Vietnam
The minimum wage in Vietnam is set regionally, and the figures below took effect on January 1, 2026, under Decree 293/2025/ND-CP, representing an average increase of about 7.2% over the previous year. Beyond the wage floor, several benefits are either mandatory or strongly customary, and employers should budget for them when modeling total employment cost.
Benefit Type | Details |
Region I minimum wage (Hanoi, Ho Chi Minh City, key urban districts) | VND 5,310,000 per month (about US$210) |
Region II minimum wage | VND 4,730,000 per month (about US$187) |
Region III minimum wage | VND 4,140,000 per month (about US$164) |
Region IV minimum wage | VND 3,700,000 per month (about US$142) |
Health insurance | Funded through mandatory SHUI contributions, with many employers adding private cover for senior staff |
Allowances | Common allowances cover meals, transport, phone, and housing, and several may be partly tax-exempt |
Bonuses | Performance and project bonuses are widely used to stay competitive in a tight talent market |
13th-month salary | Not legally required but a near-universal practice, usually paid before the Tet (Lunar New Year) holiday |
Working Hours and Overtime in Vietnam
The labor code defines normal working time and places firm limits on overtime, all of which an employer must respect when setting schedules.
Item | Rule |
Normal daily hours | Up to 8 hours per day |
Normal weekly hours | Up to 48 hours per week (a 40-hour week is officially encouraged) |
Overtime limits | No more than 12 total hours in a day, 40 hours in a month, and 200 hours in a year (up to 300 hours annually in eligible sectors) |
Overtime pay | At least 150% of the normal hourly rate on regular days, 200% on weekly rest days, and 300% on public holidays and paid leave days |
Night work | Work between 10:00 p.m. and 6:00 a.m. is paid at least 30% more than the normal wage. If overtime is performed at night, additional overtime/night-work rules apply. |
Leave and Statutory Time Off in Vietnam
Employees in Vietnam are entitled to a defined set of paid leave and statutory time off, summarized in the table below.
Leave type | Details |
Paid annual leave | At least 12 working days per year for employees working under normal conditions after 12 months with the employer; 14 working days for minor employees, disabled employees, or employees doing heavy, hazardous, or dangerous work; and 16 working days for employees doing especially heavy, hazardous, or dangerous work. Annual leave increases by one day for every five years with the same employer |
Sick leave | Paid through the Social Insurance Fund at 75% of the contribution salary, with the annual allowance scaled by years of contribution and job conditions |
Maternity leave | Generally six months for the first child and seven months for the second child, funded by social insurance where eligibility conditions are met. The maternity allowance is generally 100% of the average salary used for compulsory social insurance contributions for the six months before leave. For multiple births, additional leave applies for each child from the second child onward. |
Paternity leave | Between 5 and 14 days of paid leave, depending on the type of birth and the number of children |
The full list of public holidays in Vietnam is as follows.
- New Year's Day
- Lunar New Year, known as Tet (five statutory days, observed approximately February 16–20; with adjacent weekends, the national break runs February 14–22)
- Hung Kings' Commemoration Day
- Reunification Day
- International Labor Day
- National Day
Hiring and Onboarding Process in Vietnam
- Decide on a hiring structure, which is typically establishing a local entity such as a limited liability company, engaging an Employer of Record (EOR) that hires the worker on your behalf, or contracting the individual as an independent contractor while carefully avoiding misclassification.
- Where you use your own entity, register the company, obtain a tax code, and register as an employer with the local social insurance authority to receive an employer code before the first payroll run.
- Sign a written labor contract in Vietnamese (a bilingual version is good practice) that contains every mandatory term, and register the new employee for social, health, and unemployment insurance.
- Collect onboarding documents, including the employee's identity card or citizen identification, tax code, bank account details, and dependent information needed for accurate tax deductions.
- Invest in a structured first week that explains company policies, benefits, and the 13th-month salary practice, since clear communication strongly supports retention in Vietnam's competitive market.
Termination and Notice Periods in Vietnam
Ending an employment relationship in Vietnam is closely regulated, and an employer that disregards the rules risks reinstatement orders and compensation claims. The key requirements are summarized below.
- Notice periods depend on the contract type, requiring at least 45 days for an indefinite-term contract, 30 days for a fixed-term contract of 12 to 36 months, and 3 working days for a contract under 12 months.
- Valid grounds for employer-initiated dismissal are limited and include repeated failure to perform the job, prolonged illness, serious disciplinary breaches, economic or restructuring reasons, and force-majeure situations defined in the labor code.
- Severance allowance is generally owed to employees with at least 12 months of service when a contract ends for qualifying reasons, calculated at half a month's salary for each year worked, based on the average salary of the final six months and reduced by any period covered by unemployment insurance.
- A separate job-loss allowance of one month's salary per year of service, subject to a minimum of two months' salary, applies where the role is eliminated due to restructuring or technological change.
Useful Resources
Disclaimer: This article is provided for informational purposes only and should not be relied on as legal advice or used as a substitute for advice from qualified legal counsel.
