Employer of Record in Vietnam

You have a lot of alternatives if you want to develop internationally and consider doing business in Vietnam. You might establish a business in Vietnam, collaborate with a subsidiary, or designate an Employer of Record there.

An alternative is to use a PEO, or professional employer organisation, to help you conduct business overseas. With a deep understanding of Vietnamese labour regulations and the recruiting, boarding, payroll, and taxes procedures, our organisation is among the leading EOR solution providers in the area. Choosing to move forward with our organisation as your EOR can enable you to avoid risks while ensuring compliance with local laws and saving time and money.

Overview of Vietnam

• Estimated Population: 97,338,579
• Currency: Vietnamese Dong (VND)
• Capital: Hanoi
• Number of officially recognized languages spoken: 110 officially recognized dialects
• Languages frequently used: Vietnamese
• GDP:  261.9 Billion

Employment Landscape In Vietnam

Vietnamese labour regulations are renowned for being benevolent toward workers. Although Vietnam has historically been an agrarian nation, there is no denying the nation’s potential as a market for global enterprises. The labour laws have undergone a number of modifications to bring them into compliance with international norms. There are about 58 million individuals working in Vietnam, of which 1 million are young people. With just 12% of the population employed in the skilled or trained sector, there is a shortage of skilled workers in this area.

Foreign workers and native workers are treated equally under Vietnam’s labour regulations. Groups of the society including the elderly, women, and others are given specific protection under the employment regulations of Vietnam.

The laws of Vietnam are well-developed despite the lack of a highly qualified local workforce. Here is a concise overview of the several aspects of work in Vietnam, etc.

Vietnam Labour Laws

2019 Labor Code	Beginning on January 1, 2021, the Employment Contract must be written in Vietnamese. The contract may be multilingual in cases when there are foreign investments in the company. Within 30 days of operations, employees must inform the Labor Authority on the usage of staff.
Decree 152/2020/ND-CP	The Decree provides information regarding foreigner work permits and is primarily intended for foreigners.
Internal Labor Rules (ILR)	ILR is required and must be registered with DOLISA for businesses with 10 or more employees in Vietnam. Particularly when firing employees or enforcing any sort of disciplinary action, the ILR is crucial. Employers may find it challenging to fire an employee for a specific crime if the ILR does not mention it or if it is not recorded.

Different terms of the Vietnamese Labor Code and their explanations are listed here.

Labour Contract	The law acknowledges two different kinds of contracts. The first is a labour contract with a fixed term, which can last up to 36 months. Indefinite labour agreements have no set duration. Work permit rules allow businesses that hire foreign nationals to have contracts that are no longer than 24 months.
Working hours	Employees are limited to a maximum of 48 hours per week and 8 hours per day of labour. The government encourages firms to allow their staff to work 40 hours each week, while it is not required.
Breaks and rest during working hours	A minimum break of 30 minutes during the day and a minimum of 45 minutes during the night.
Overtime	The following is a list of the authorised overtime under Vietnamese labour rules. Overtime is only permitted for a maximum of 12 hours per day, 40 hours per month, or 200 hours per year. The minimum overtime compensation is 150% of the regular working day’s hourly rate. The overtime rate is 200% of the hourly rate if it is a weekly off day. The overtime compensation is 300% of the hourly rate if it falls on a public holiday.
Wages	In Vietnam, there are two different forms of minimum wages: The bare minimum is used to determine how much state employees are paid. Additionally, it serves as the foundation for figuring out state employees’ social and health insurance. Each month, the Basic Minimum Wage in Vietnam is 1,490,000 VND. The Regional Minimum Wage serves as the benchmark for setting the ceiling on unemployment insurance and is used to determine the salaries of non-state workers. It is separated into four groups to account for economic variations and is based on the area’s cost of living. With effect from January 2020, the Regional Minimum Wage ranges from 3.07 million VND to 4.42 million VND.
Regional Minimum Wage Groups	Region Cities Minimum wage (per month) Region 1 Urban Ho Chi Minh City and Hanoi 4,420,000 VND Region 2 Rural areas around Ho Chi Minh City, Hanoi, and Da Nang 3,920,000 VND Region 3 Provincial cities and districts of Bac Giang, Bac Ninh, Phu Tho, Vinh Phuc, Hai Duong, and other areas not included in Regions 1 and 2 3,250,000 VND Region 4 Locations not included in Regions 1, 2 or 3 3,070,000 VND
Bonus	Based on an employee’s performance, companies in Vietnam award bonuses known as Tet Bonuses. Typically, it is the 13th salary. It is well-known that foreign businesses in Vietnam provide local employees with private health insurance. Employers in Vietnam also frequently take their employees on paid excursions and team activities.

Contractors vs. Full-time Employees

In Vietnam, there is a distinction between hiring full-time employees under employment contracts and engaging independent contractors, much like in other countries.

Independent contractors are typically engaged on a project-by-project basis, depending on specific project requirements. They bring their own materials and operate independently to complete the assigned tasks. The compensation for contractors is based on a mutually agreed-upon fee documented in a written agreement. On the other hand, employees in Vietnam are compensated according to the terms outlined in their employment agreements or labour contracts.

One notable difference between contractors and employees in Vietnam lies in the obligations placed on employers. When hiring employees, employers are responsible for providing health insurance, contributing to social security, and paying unemployment taxes. However, when it comes to contractors, the hiring company is not liable for such obligations.

Furthermore, employees in Vietnam are entitled to various benefits and protections, including leaves, minimum wages, overtime pay, probationary periods, and termination notices as stipulated by the country’s employment contract laws

Recruiting in Vietnam

There are multiple approaches to hiring employees in Vietnam. One option is to establish your own company in Vietnam and delegate the recruitment process to local hiring firms. These specialized third-party companies possess expertise in the intricacies of hiring and recruitment within Vietnam. They can assist you in acquiring both local and foreign workers tailored to your specific needs.

Another effective strategy is leveraging the power of social media to connect with potential employees within your industry. Additionally, online job portals such as Vietnam Works, Careerbuilder.vn, CareerLink.vn, Mywork.com.vn, TNH Vietnam, Timviecnhanh, Indeed, Google For Jobs, and Jobsvietnam.org provide valuable platforms for reaching out to prospective candidates.

If establishing a subsidiary or business entity in Vietnam is not a preferred option, you can opt for the services of an Employer of Record (EOR) in Vietnam. As an expert in EOR services in Vietnam, we possess comprehensive knowledge of local labour laws and the intricacies of the hiring process for both native and foreign employees. We offer a comprehensive solution, managing payroll, taxes, employee health benefits in Vietnam, social security, and more. With our support, you can focus on your core business areas without any hassle.

Probation & Termination

In Vietnam, the probationary term may be stipulated in the labour contract or in a separately negotiated probation agreement. Employers are not obligated to make Social Security contributions during the probationary term in the latter scenario. The initial wage and the probationary compensation must both be at least 85% of the same amount.

Vietnam’s Standard Probation Period

• It is a time frame that all parties have agreed upon.
• The probationary term often varies by position, education, and qualifications.
• However, according to the legislation, the probationary term cannot last more than 6, 30, 60, or 180 days.

Employment Termination in Vietnam

In Vietnam, a labour contract may be terminated for the reasons listed below:

• The term of the employment contract expires. No advance warning is necessary.
• completion of the work without notification.
• Both parties must agree to end the agreement for it to be effective without prior notice.
• In the event that a worker is given a prison term or the death penalty. No advance warning is necessary.
• either when an employee passes away or goes missing. No advance warning is necessary.
• if the Employer decides to end the operation. The employees need not be informed in advance in this situation either.
• foreign workers whose employment permits have expired

Period of Statutory Notice

• 45 days for an unlimited-term Contract.
• Three working days for contracts with specified terms of less than 12 months.
• 30 days for contracts with set terms.

EoR Solution

If you’re considering hiring employees in Vietnam, partnering with us as a leading Employer of Record (EOR) company can ensure full compliance with regulations and laws. Our company offers a versatile and adaptable platform that facilitates cost-effective business expansion in Vietnam, giving you a competitive edge in the local hiring landscape.

As your EOR, we take care of the entire recruitment and hiring process from start to finish. Once the employee is onboarded, we seamlessly handle payroll, taxes, salaries, minimum wages, leaves, overtime, probation, termination, and all other employment-related aspects. With us managing these tasks, you can focus on your expansion plans without the burden of administrative complexities.

Our employer of record services are comprehensive, and we provide an online self-service platform available 24/7 to offer professional assistance for seamless expansion. Through our platform, you can easily access the necessary services and support required for your hiring needs in Vietnam.

Types Of Visas In Vietnam

Vietnam’s work visa and work permit are two distinct things. Foreign nationals are able to enter and remain in Vietnam with this visa. The foreigner has the ability to work in Vietnam with a work permit.  In essence, a foreigner must have a visa, a work permit, or a TRC (Temporary Residence Card) in order to work in Vietnam.

Types of Work Visa	Foreign nationals who want to enter Vietnam for employment purposes are granted this sort of visa. The duration of both the work permit and the multiple-entry visa is the same. The length of a work visa for Vietnam is two years at the most.
Vietnam work visa requirements	Application form Passport copy Enterprise registration certificate
Temporary Residence Card or TRC	The TRC is given to immigrants who hold work permits. Foreigners may obtain TRC if they hold a Vietnam Law Practice Registration or an Investment Registration Certification demonstrating investments of 3 billion VND or more. A foreign worker’s TRC may only be extended once they have begun working for the company that initially sponsored their work visa.

Work Permits

In order to work in Vietnam, non-Vietnamese citizens are required to obtain a work permit issued by the Department of Labor, Invalids, and Social Affairs (DOLISA). Prior to employing a foreign national, the employer must apply for the work permit at the local DOLISA office. The work permit is typically valid for a maximum of two years, with the possibility of a one-time renewal.

However, there are certain exceptions to the work permit requirement for foreigners in Vietnam. These exceptions include short-term assignments lasting less than 30 days, internal transfers within eleven service-oriented industries, board members of Vietnamese entities with an investment of over 3 billion VND, individual investors with an investment exceeding three billion VND, lawyers with a Foreign Registration licence, trainees, and foreigners married to Vietnamese citizens who do not require a job offer to work in Vietnam.

The application process for a work permit generally involves the following steps:

• The employer registers the need to employ a foreign national with the local DOLISA office, which approves the request within ten working days.
• Once approved, the employer proceeds with the application for the work permit
• The labour contract between the employer and the foreign employee needs to be submitted as part of the application process.

Payroll & Taxes in Vietnam

It might be challenging for companies setting up a team in Vietnam to understand the complexity of the payroll and tax systems. Although Vietnam has a variety of payroll providers, working with an Employer of Record like us will give your company the finest team-building results there. In addition to serving as your supplier of Vietnam payroll, we offer a unified platform that makes the hiring and onboarding process simple and manages tax and employment law compliance.

Corporate Income Tax Rate

• 20 percent corporate income tax rate
• O&G and natural gas-related businesses are subject to tax rates ranging from 32% to 50%.

Employer Taxation

Tax	Explanation
Compulsory schemes	Vietnam’s mandatory employer payroll taxes for health, social, and unemployment insurance all require contributions from both employers and employees. Employers take the employee contribution out of the employee’s pay and deposit it alongside the employer contribution with the insurance company.
Social insurance	17.5% (In the case of local employees) Earlier, it was 3.5%. In 2022, it will be 17.5%. (In case of a foreign employee)
Health insurance	3% (For native employees) 3% (For foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees
e Union Fee	2% of the salary fund to the Trade Union Fund.

Employee Taxation

Tax	Explanation
Social insurance	8% (applies to local workers) Previously, it was 0%. Currently, it will be 8% after January 1st, 2022. (When referring to a foreign worker)
Health insurance	1.5% (For native employees) 1.5% (For Foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees.

Bonuses

In Vietnam, employers are not required by law to provide their workers bonuses; nonetheless, it is common practice to pay a 13th-month bonus or provide performance-based incentives.

The Enterprise Law and the Investment Law must be complied with in order to establish a successful business in Vietnam. To establish a holding company in Vietnam, you must register your business under the Enterprise Law and make sure you comply with all the criteria of the Investment Law that were made specifically for international investors.

There are many business prospects in Vietnam, therefore you may wish to consult an expert to register your company before starting a business there. Before carrying out a feasibility study, you must obtain the incorporation paperwork for registration. The Provincial People’s Committee or the Industrial and Export Processing Zones Management Authority must receive all of these papers.