Global Employment

Hiring in Vietnam: 10 Must-Know Compliance Facts

Hiring remote employees in Vietnam? Discover key compliance facts (employment contract, probation rules, taxation, etc.) + tips for global employment.
Last updated on
July 9, 2024 8:00 AM
10
min read
hiring-in-vietnam-compliance-guide
Wendy Ru
Wendy Ru
Content Lead for Global Hiring and EOR, FlexOS
A Global Hiring Content Lead who dedicates to technologies and practices that enable remote work excellence.

Remote work opens many opportunities for everyone, one of which is the ability to hire from anywhere in the world. 

This means you can tap into a broader talent pool from even the other side of the globe or expand your global footprint quickly with the support of emerging remote hiring solutions.

Especially in IT and technology, Vietnam shines, with around 80,000 IT graduates entering the job market each year. This provides access to a wealth of affordable yet highly skilled professionals. 

Vietnamese individuals are known for their conscientiousness, responsibility, and improving English proficiency. Beyond tech fields, many remote jobs now target Vietnamese talent for roles in operations, digital marketing, and graphic design.

If you’re considering hiring a remote employee in Vietnam, you must put the local regulations and nuances in consideration to ensure a smooth operation and compliance. 

To help you get started on the right food, here are 10 crucial compliance facts you need to know when hiring in Vietnam.

#1. Working Hours and Salary Expectations

When hiring in Vietnam, familiarize yourself with the 2019 Labor Code. It’s the uniform regulation framework that includes essential provisions for working hours, contracts, overtime, termination, payroll, and employee benefits across the entire country.

Standard Working Hours

In Vietnam, the standard working hours are 8 hours per day and 48 hours per week. It’s quite common for people there to have to work on Saturdays or Saturday mornings, even though the government encourages a 5-day workweek. Hence, offering a flexible work schedule is a plus for attracting Vietnamese talents.

If employees have to work 8-hour shifts, they must have a minimum of 30 minutes of break. For night shifts, a longer break of at least 45 minutes is mandated.

Currency & Minimum Wages

Vietnam's minimum wage system is region-specific, reflecting the varying cost of living in different areas. 

As of 2024, the monthly minimum wage ranges from VND 3,250,000 (USD 133) in rural areas to VND 4,680,000 (USD 192.33) in urban centers, including Ho Chi Minh City and Hanoi

The minimum wage for Vietnamese workers in Da Nang, the growing remote work hub, is VND 4,160,000 (USD 163.66).

Please note that the minimum wage figures represent the general labor market standard in Vietnam and do not reflect the salaries for remote professionals in specialized fields like IT and tech. 

For example, according to Arc, most remote developers in Vietnam expect to earn between $25,000 and $34,000 per year.

By default, salaries in Vietnam must be paid in Vietnamese Dong (VND) to standardize payroll practices across the country. 

However, if both parties agree and explicitly state in the employment contract, salaries can be paid in a foreign currency, such as USD.

In such cases, you’ll need to ensure compliance with Vietnamese foreign exchange regulations. The State Bank of Vietnam governs these rules, and approval might be required for such arrangements.

Even if salaries are agreed upon in USD, all tax calculations and social insurance contributions must still be reported and paid in VND (with different tax rates). This means you’ll have to convert the salary amounts to VND using the official exchange rate published by the State Bank of Vietnam.

In Vietnam, employees are generally paid on a monthly basis. The typical payday falls on the last working day of the month or within the first week of the following month.

Managing payroll and tax deductions in Vietnam is challenging due to the complicated legal requirements, including these currency regulations and tax obligations, which we will discuss below.

That’s why even though there's a few options to hire foreign employees, it’s easier for companies to partner with a global employment partner, like EOR services, to legally hire international employees and outsource many HR administration duties from payroll and tax deductions to benefits management.

For example, Deel is one of the leading EOR services with a strong global payroll engine and expertise.

Overtime Pay

Overtime work is strictly regulated to protect employees from excessive working hours. The maximum allowable overtime is 12 hours per day, including regular hours, and 30 hours per month. 

Annually, the total overtime should not exceed 200 hours, though in special cases, it can be extended to 300 hours. 

Employees are entitled to higher rates of overtime:

  • 150% of the regular hourly wage for weekdays,
  • 200% for weekends, and
  • 300% for public holidays. 

Employees must be paid an additional 30% of their regular hourly rate for any work done during night hours (10 pm to 6 am).

#2. 13th Month Salary and Bonuses

The 13th-month salary, often called the "Tet bonus," is a common practice in Vietnam. It’s a bonus given to employees at the end of the year, typically before the Lunar New Year (Tet holiday). While not legally required, it is a deeply ingrained tradition and widely expected by Vietnamese employees.

The 13th-month salary is generally equivalent to one month’s basic salary. The exact amount may vary based on company policy and the employee’s length of service during the year.

Besides, many companies in Vietnam, especially government-owned ones and large corporations, also provide performance-based bonuses, quarterly bonuses, holiday bonuses, and project completion bonuses to their teams.  

If you want to attract and retain your Vietnamese remote talents, think about offering these kinds of benefits in addition to the mandatory ones. 

Just remember, all these bonuses are subject to Personal Income Tax (PIT) and count towards the total annual income, which determines the applicable tax bracket.

#3. Employment Contract in Vietnam

Employment contracts in Vietnam can be in Vietnamese or any foreign language you prefer. 

However, if there is a dispute and it goes to a legal authority, the contract must be translated into Vietnamese and notarized according to the law.

There are two main types of labor contracts in Vietnam: indefinite term contracts (no duration and termination time) and definite term contracts (also called fixed-term contracts, which last for a specific duration).

People often use fixed-term contracts when hiring for project-based and occasional roles or for full-time employees with one-year contracts. However, by law, these contracts cannot exceed 36 months and can only be renewed once.

If an employee continues working after the contract's expiration without renewal within 30 days, it automatically converts to an indefinite-term contract. And if you use one-year contracts for employees, on the third time (third year), it must turn into indefinite-term ones.

E-contracts are officially recognized in Vietnam and hold the same legal validity as written contracts. 

Verbal contracts are also valid, but only for employment agreements lasting less than one month, providing flexibility for short-term arrangements.

E-contracts are officially recognized in Vietnam and hold the same legal validity as written contracts. Verbal contracts are also valid but only for employment agreements with a duration of less than one month, providing flexibility for short-term arrangements.

#4. Regulations on Probation

In Vietnam, probation is common but not mandatory by law. 

Whether to require a probation period before signing an employment contract depends on the agreement between the employee and the company. If both parties agree, you can skip probation and directly sign the employment contract.

However, if you need a probation period to assess the candidate’s fit for the role, it's essential to follow the regulations on probation duration. 

The probation period is based on mutual agreement and depends on the job's complexity but cannot exceed the following timeframe. The probation period for managerial positions is capped at 180 days. For specialized roles that require a junior college degree and above, it can be up to 60 days; for most other jobs, up to 30 days; and for seasonal or temporary work, up to 6 working days.

A written probationary agreement is required, detailing the job, duration, and salary, which must be at least 85% of the regular wage. Either party can terminate the probation without notice or compensation.

You can also sign a single employment contract that includes the probation terms rather than having two separate contracts for probation and official employment.

Probation is not applicable for contracts of less than one month, as per Article 24, Clause 3 of the Vietnamese Labor Code.

#5. Termination Rules for Vietnam-Based Remote Employees

It’s crucial to note that having a defined or indefinite-term contract doesn’t mean that both parties are obligated to commit for the entire period or indefinitely.

Employees can resign by providing advance notice as stipulated in their contract, and the companies can also terminate employees for reasons such as redundancy, performance issues, or disciplinary reasons.

The required notice period depends on the type of employment contract and the reason for termination:

  • Indefinite-term contracts: 45-day notice in advance 
  • Definite-term contracts (12-36 months): 30-day notice in advance 
  • Definite-term contracts (less than 12 months): 3-working-day notice in advance 

Immediate termination is allowed for severe misconduct, such as theft or fraud, or repeated violations after multiple warnings and disciplinary actions.

Termination must be documented in writing, stating the reasons and the effective date. Employees have the right to be informed of the reasons for termination and to respond or contest the decision. Clear documentation helps avoid potential disputes and ensures a transparent process.

You also have to settle all outstanding payments, including salary, unused leave, and severance pay, within seven working days from the termination date. The employees must return any company-provided equipment, such as laptops or phones. 

Severance Pay

Employees with at least 12 months of service are entitled to severance pay unless terminated for misconduct. Severance pay is calculated as half a month’s salary for each year of service. 

For example, if an employee worked for three years and their monthly salary is $1,000, the severance pay would be $1,500 (3 years * $500).

#6. Statutory Time Off

Vietnamese labor law provides annual leave based on the duration of service and working conditions:

  • Standard Leave: 12 working days for employees in normal conditions.
  • Additional Leave: Employees in hazardous or dangerous conditions are entitled to 14 days, and those in extremely hazardous conditions get 16 days.
  • Incremental Leave: Employees receive an additional day of leave for every five years of service with the same employer.

Besides, there are several public holidays where Vietnamese people are entitled to fully paid days off:

  • New Year's Day: January 1
  • Lunar New Year (Tet): By law, employees must receive at least five days off for Tet. However, in practice, the holiday often extends from 9 days to 2 weeks, incorporating weekends and additional days provided by the company. This extended break allows employees to spend significant time with their families and engage in traditional celebrations.
  • Hung Kings Commemoration Day: Celebrated on the 10th day of the third lunar month.
  • Victory Day: April 30
  • International Labor Day: May 1
  • National Day: September 2, plus either the preceding or the following day.

#7. Other Leave Entitlements

Apart from statutory time off, employees in Vietnam have several other leave entitlements for personal and family matters, as well as for health reasons.

Personal Leave: Employees can take leave for significant personal events, which include:

  • Marriage: 3 days.
  • Child’s Marriage: 1 day.
  • Death in the Family: 3 days for the death of a parent (including in-laws), spouse, or child; 1 day for the death of a grandparent or sibling.

Sick Leave: Employees are entitled to sick leave, which is covered by the social insurance scheme. 

The duration of sick leave varies based on the nature of the illness and the working conditions. For example, employees with less than 15 years of contribution get 30 days of sick leave per year.

Maternity Leave: Female employees can take up to 6 months of maternity leave, with an additional month for each additional child in the case of multiple births.

Paternity Leave: Male employees are entitled to paternity leave ranging from 5 to 14 days, depending on the type of birth (normal or surgical) and whether it is a single or multiple birth​.

Maternity and paternity leave are also covered by the social insurance scheme. Hence, you need to ensure your employees are registered for social insurance and support the paperwork for their leaves.

#8. Working Culture in Vietnam

Traditional Vietnamese workplaces emphasize respect for titles and hierarchy, with senior members making key decisions. Maintaining dignity and being diplomatic is also deeply rooted in Vietnamese culture. 

Young Vietnamese professionals might be used to traditional norms from how they were raised, even if they prefer modern work practices. They might need some support to get comfortable with the remote work culture that values independence, personal responsibility, and proactive collaboration. 

For example, your Vietnamese remote team members might need encouragement and psychological safety to take the initiative, make independent decisions, or engage in open communication.

Understanding these nuances helps in designing better strategies for managing remote teams in Vietnam and developing stronger team dynamics.

#9. Income Tax Obligations

Vietnamese employees are subject to Personal Income Tax (PIT), which applies to their worldwide income if they are residents. 

For residents, Vietnam’s PIT rates are progressive, ranging from 5% to 35% depending on monthly taxable income:

  • Up to VND 5 million: 5%
  • Over VND 5 million to VND 10 million: 10%
  • Over VND 10 million to VND 18 million: 15%
  • Over VND 18 million to VND 32 million: 20%
  • Over VND 32 million to VND 52 million: 25%
  • Over VND 52 million to VND 80 million: 30%
  • Over VND 80 million: 35%

Non-residents are only taxed on their Vietnam-sourced income. An individual is considered a tax resident in Vietnam if they:

  • Stay in Vietnam for 183 days or more within a calendar year.
  • Have a permanent residence in Vietnam, such as a registered abode available for their stay.

Non-residents have it simpler with a flat 20% tax on their Vietnam-sourced income​.

When hiring and paying remote employees in Vietnam, you also have the following responsibilities:

  • Registration: Make sure your employees are registered with the Vietnamese tax authorities.
  • Tax Withholding: Withhold the appropriate amount of PIT from your employees' salaries and remit it to the authorities. This includes any bonuses or additional income.
  • Monthly and Annual Tax Filings: Submit monthly tax declarations and pay the withheld tax to the authorities. Also, handle the annual PIT finalization by March 31st of the following year.
  • Documentation: Keep accurate records of all payments and tax withholdings. Ensure employees receive their tax deduction certificates for their annual tax returns.

#10. Social Insurance Contributions

Besides PIT, you’re also responsible for contributing to some mandatory insurance for remote employees in Vietnam:

Social Insurance (BHXH)

Social insurance provides employees with coverage for various life events and risks, including sickness, maternity, work-related accidents, occupational diseases, retirement, and death. This insurance ensures long-term security for employees and their families. 

As an employer, you must contribute 17.5% of the employee's gross monthly salary, while the employee contributes 8%.

Health Insurance (BHYT)

Health insurance covers medical expenses for employees, ensuring they have access to necessary medical care for illnesses, injuries, and preventative services. 

It aims to protect employees' health and well-being. The employer's contribution to health insurance is 3% of the employee's gross monthly salary, and the employee contributes 1.5%.

Unemployment Insurance (BHTN)

Unemployment insurance provides financial support and job training for employees who lose their jobs. It helps employees manage periods of unemployment and transition back into the workforce. 

For unemployment insurance, both the employer and the employee contribute 1% of the employee's gross monthly salary.

In total, your contribution as an employer will be 21.5% of each employee's gross monthly salary. Employees will contribute 10.5% of their gross monthly salary towards these insurances. Foreigners in Vietnam must also pay insurance based on the regulations mentioned above, except for unemployment insurance.

It should be noted that Vietnamese employees often appreciate extra insurance coverage since mandatory insurance offers limited protection in many cases. 

Premium healthcare insurance is a popular choice, giving employees access to private hospitals, advanced treatments, and even international care. 

Life insurance is also valued as it ensures financial security for their families, covering expenses like funeral costs, debts, and education.

Offering these additional benefits can make your company more attractive in Vietnam’s job market.

Final Thoughts

Hiring remote employees in Vietnam offers numerous benefits, including access to a large pool of skilled and affordable talent, particularly in the IT and technology sectors.

Understanding payment methods, currency and taxation, salary components, payroll deductions, labor laws, and employee benefits in Vietnam is crucial for businesses to effectively navigate the complexities of hiring. And I hope this roundup of 10 facts gives you a better glimpse into these aspects!

Remember, you don’t have to do this all alone!

If you’re not ready to set up a subsidiary in Vietnam and handle employment-related administrative tasks on your own, partnering with an Employer of Record is the simplest way to hire international employees and manage compliance aspects there. 

Check out my curated list of the Best Employer of Record Services in 2024 and guide to choose the right EOR partner

Disclaimer: This article is here to provide some helpful information, but it is not a substitute for professional tax, accounting, or legal advice. Be sure to consult with your tax, accounting, and legal advisors before engaging in any related activities or transactions.

Remote work opens many opportunities for everyone, one of which is the ability to hire from anywhere in the world. 

This means you can tap into a broader talent pool from even the other side of the globe or expand your global footprint quickly with the support of emerging remote hiring solutions.

Especially in IT and technology, Vietnam shines, with around 80,000 IT graduates entering the job market each year. This provides access to a wealth of affordable yet highly skilled professionals. 

Vietnamese individuals are known for their conscientiousness, responsibility, and improving English proficiency. Beyond tech fields, many remote jobs now target Vietnamese talent for roles in operations, digital marketing, and graphic design.

If you’re considering hiring a remote employee in Vietnam, you must put the local regulations and nuances in consideration to ensure a smooth operation and compliance. 

To help you get started on the right food, here are 10 crucial compliance facts you need to know when hiring in Vietnam.

#1. Working Hours and Salary Expectations

When hiring in Vietnam, familiarize yourself with the 2019 Labor Code. It’s the uniform regulation framework that includes essential provisions for working hours, contracts, overtime, termination, payroll, and employee benefits across the entire country.

Standard Working Hours

In Vietnam, the standard working hours are 8 hours per day and 48 hours per week. It’s quite common for people there to have to work on Saturdays or Saturday mornings, even though the government encourages a 5-day workweek. Hence, offering a flexible work schedule is a plus for attracting Vietnamese talents.

If employees have to work 8-hour shifts, they must have a minimum of 30 minutes of break. For night shifts, a longer break of at least 45 minutes is mandated.

Currency & Minimum Wages

Vietnam's minimum wage system is region-specific, reflecting the varying cost of living in different areas. 

As of 2024, the monthly minimum wage ranges from VND 3,250,000 (USD 133) in rural areas to VND 4,680,000 (USD 192.33) in urban centers, including Ho Chi Minh City and Hanoi

The minimum wage for Vietnamese workers in Da Nang, the growing remote work hub, is VND 4,160,000 (USD 163.66).

Please note that the minimum wage figures represent the general labor market standard in Vietnam and do not reflect the salaries for remote professionals in specialized fields like IT and tech. 

For example, according to Arc, most remote developers in Vietnam expect to earn between $25,000 and $34,000 per year.

By default, salaries in Vietnam must be paid in Vietnamese Dong (VND) to standardize payroll practices across the country. 

However, if both parties agree and explicitly state in the employment contract, salaries can be paid in a foreign currency, such as USD.

In such cases, you’ll need to ensure compliance with Vietnamese foreign exchange regulations. The State Bank of Vietnam governs these rules, and approval might be required for such arrangements.

Even if salaries are agreed upon in USD, all tax calculations and social insurance contributions must still be reported and paid in VND (with different tax rates). This means you’ll have to convert the salary amounts to VND using the official exchange rate published by the State Bank of Vietnam.

In Vietnam, employees are generally paid on a monthly basis. The typical payday falls on the last working day of the month or within the first week of the following month.

Managing payroll and tax deductions in Vietnam is challenging due to the complicated legal requirements, including these currency regulations and tax obligations, which we will discuss below.

That’s why even though there's a few options to hire foreign employees, it’s easier for companies to partner with a global employment partner, like EOR services, to legally hire international employees and outsource many HR administration duties from payroll and tax deductions to benefits management.

For example, Deel is one of the leading EOR services with a strong global payroll engine and expertise.

Overtime Pay

Overtime work is strictly regulated to protect employees from excessive working hours. The maximum allowable overtime is 12 hours per day, including regular hours, and 30 hours per month. 

Annually, the total overtime should not exceed 200 hours, though in special cases, it can be extended to 300 hours. 

Employees are entitled to higher rates of overtime:

  • 150% of the regular hourly wage for weekdays,
  • 200% for weekends, and
  • 300% for public holidays. 

Employees must be paid an additional 30% of their regular hourly rate for any work done during night hours (10 pm to 6 am).

#2. 13th Month Salary and Bonuses

The 13th-month salary, often called the "Tet bonus," is a common practice in Vietnam. It’s a bonus given to employees at the end of the year, typically before the Lunar New Year (Tet holiday). While not legally required, it is a deeply ingrained tradition and widely expected by Vietnamese employees.

The 13th-month salary is generally equivalent to one month’s basic salary. The exact amount may vary based on company policy and the employee’s length of service during the year.

Besides, many companies in Vietnam, especially government-owned ones and large corporations, also provide performance-based bonuses, quarterly bonuses, holiday bonuses, and project completion bonuses to their teams.  

If you want to attract and retain your Vietnamese remote talents, think about offering these kinds of benefits in addition to the mandatory ones. 

Just remember, all these bonuses are subject to Personal Income Tax (PIT) and count towards the total annual income, which determines the applicable tax bracket.

#3. Employment Contract in Vietnam

Employment contracts in Vietnam can be in Vietnamese or any foreign language you prefer. 

However, if there is a dispute and it goes to a legal authority, the contract must be translated into Vietnamese and notarized according to the law.

There are two main types of labor contracts in Vietnam: indefinite term contracts (no duration and termination time) and definite term contracts (also called fixed-term contracts, which last for a specific duration).

People often use fixed-term contracts when hiring for project-based and occasional roles or for full-time employees with one-year contracts. However, by law, these contracts cannot exceed 36 months and can only be renewed once.

If an employee continues working after the contract's expiration without renewal within 30 days, it automatically converts to an indefinite-term contract. And if you use one-year contracts for employees, on the third time (third year), it must turn into indefinite-term ones.

E-contracts are officially recognized in Vietnam and hold the same legal validity as written contracts. 

Verbal contracts are also valid, but only for employment agreements lasting less than one month, providing flexibility for short-term arrangements.

E-contracts are officially recognized in Vietnam and hold the same legal validity as written contracts. Verbal contracts are also valid but only for employment agreements with a duration of less than one month, providing flexibility for short-term arrangements.

#4. Regulations on Probation

In Vietnam, probation is common but not mandatory by law. 

Whether to require a probation period before signing an employment contract depends on the agreement between the employee and the company. If both parties agree, you can skip probation and directly sign the employment contract.

However, if you need a probation period to assess the candidate’s fit for the role, it's essential to follow the regulations on probation duration. 

The probation period is based on mutual agreement and depends on the job's complexity but cannot exceed the following timeframe. The probation period for managerial positions is capped at 180 days. For specialized roles that require a junior college degree and above, it can be up to 60 days; for most other jobs, up to 30 days; and for seasonal or temporary work, up to 6 working days.

A written probationary agreement is required, detailing the job, duration, and salary, which must be at least 85% of the regular wage. Either party can terminate the probation without notice or compensation.

You can also sign a single employment contract that includes the probation terms rather than having two separate contracts for probation and official employment.

Probation is not applicable for contracts of less than one month, as per Article 24, Clause 3 of the Vietnamese Labor Code.

#5. Termination Rules for Vietnam-Based Remote Employees

It’s crucial to note that having a defined or indefinite-term contract doesn’t mean that both parties are obligated to commit for the entire period or indefinitely.

Employees can resign by providing advance notice as stipulated in their contract, and the companies can also terminate employees for reasons such as redundancy, performance issues, or disciplinary reasons.

The required notice period depends on the type of employment contract and the reason for termination:

  • Indefinite-term contracts: 45-day notice in advance 
  • Definite-term contracts (12-36 months): 30-day notice in advance 
  • Definite-term contracts (less than 12 months): 3-working-day notice in advance 

Immediate termination is allowed for severe misconduct, such as theft or fraud, or repeated violations after multiple warnings and disciplinary actions.

Termination must be documented in writing, stating the reasons and the effective date. Employees have the right to be informed of the reasons for termination and to respond or contest the decision. Clear documentation helps avoid potential disputes and ensures a transparent process.

You also have to settle all outstanding payments, including salary, unused leave, and severance pay, within seven working days from the termination date. The employees must return any company-provided equipment, such as laptops or phones. 

Severance Pay

Employees with at least 12 months of service are entitled to severance pay unless terminated for misconduct. Severance pay is calculated as half a month’s salary for each year of service. 

For example, if an employee worked for three years and their monthly salary is $1,000, the severance pay would be $1,500 (3 years * $500).

#6. Statutory Time Off

Vietnamese labor law provides annual leave based on the duration of service and working conditions:

  • Standard Leave: 12 working days for employees in normal conditions.
  • Additional Leave: Employees in hazardous or dangerous conditions are entitled to 14 days, and those in extremely hazardous conditions get 16 days.
  • Incremental Leave: Employees receive an additional day of leave for every five years of service with the same employer.

Besides, there are several public holidays where Vietnamese people are entitled to fully paid days off:

  • New Year's Day: January 1
  • Lunar New Year (Tet): By law, employees must receive at least five days off for Tet. However, in practice, the holiday often extends from 9 days to 2 weeks, incorporating weekends and additional days provided by the company. This extended break allows employees to spend significant time with their families and engage in traditional celebrations.
  • Hung Kings Commemoration Day: Celebrated on the 10th day of the third lunar month.
  • Victory Day: April 30
  • International Labor Day: May 1
  • National Day: September 2, plus either the preceding or the following day.

#7. Other Leave Entitlements

Apart from statutory time off, employees in Vietnam have several other leave entitlements for personal and family matters, as well as for health reasons.

Personal Leave: Employees can take leave for significant personal events, which include:

  • Marriage: 3 days.
  • Child’s Marriage: 1 day.
  • Death in the Family: 3 days for the death of a parent (including in-laws), spouse, or child; 1 day for the death of a grandparent or sibling.

Sick Leave: Employees are entitled to sick leave, which is covered by the social insurance scheme. 

The duration of sick leave varies based on the nature of the illness and the working conditions. For example, employees with less than 15 years of contribution get 30 days of sick leave per year.

Maternity Leave: Female employees can take up to 6 months of maternity leave, with an additional month for each additional child in the case of multiple births.

Paternity Leave: Male employees are entitled to paternity leave ranging from 5 to 14 days, depending on the type of birth (normal or surgical) and whether it is a single or multiple birth​.

Maternity and paternity leave are also covered by the social insurance scheme. Hence, you need to ensure your employees are registered for social insurance and support the paperwork for their leaves.

#8. Working Culture in Vietnam

Traditional Vietnamese workplaces emphasize respect for titles and hierarchy, with senior members making key decisions. Maintaining dignity and being diplomatic is also deeply rooted in Vietnamese culture. 

Young Vietnamese professionals might be used to traditional norms from how they were raised, even if they prefer modern work practices. They might need some support to get comfortable with the remote work culture that values independence, personal responsibility, and proactive collaboration. 

For example, your Vietnamese remote team members might need encouragement and psychological safety to take the initiative, make independent decisions, or engage in open communication.

Understanding these nuances helps in designing better strategies for managing remote teams in Vietnam and developing stronger team dynamics.

#9. Income Tax Obligations

Vietnamese employees are subject to Personal Income Tax (PIT), which applies to their worldwide income if they are residents. 

For residents, Vietnam’s PIT rates are progressive, ranging from 5% to 35% depending on monthly taxable income:

  • Up to VND 5 million: 5%
  • Over VND 5 million to VND 10 million: 10%
  • Over VND 10 million to VND 18 million: 15%
  • Over VND 18 million to VND 32 million: 20%
  • Over VND 32 million to VND 52 million: 25%
  • Over VND 52 million to VND 80 million: 30%
  • Over VND 80 million: 35%

Non-residents are only taxed on their Vietnam-sourced income. An individual is considered a tax resident in Vietnam if they:

  • Stay in Vietnam for 183 days or more within a calendar year.
  • Have a permanent residence in Vietnam, such as a registered abode available for their stay.

Non-residents have it simpler with a flat 20% tax on their Vietnam-sourced income​.

When hiring and paying remote employees in Vietnam, you also have the following responsibilities:

  • Registration: Make sure your employees are registered with the Vietnamese tax authorities.
  • Tax Withholding: Withhold the appropriate amount of PIT from your employees' salaries and remit it to the authorities. This includes any bonuses or additional income.
  • Monthly and Annual Tax Filings: Submit monthly tax declarations and pay the withheld tax to the authorities. Also, handle the annual PIT finalization by March 31st of the following year.
  • Documentation: Keep accurate records of all payments and tax withholdings. Ensure employees receive their tax deduction certificates for their annual tax returns.

#10. Social Insurance Contributions

Besides PIT, you’re also responsible for contributing to some mandatory insurance for remote employees in Vietnam:

Social Insurance (BHXH)

Social insurance provides employees with coverage for various life events and risks, including sickness, maternity, work-related accidents, occupational diseases, retirement, and death. This insurance ensures long-term security for employees and their families. 

As an employer, you must contribute 17.5% of the employee's gross monthly salary, while the employee contributes 8%.

Health Insurance (BHYT)

Health insurance covers medical expenses for employees, ensuring they have access to necessary medical care for illnesses, injuries, and preventative services. 

It aims to protect employees' health and well-being. The employer's contribution to health insurance is 3% of the employee's gross monthly salary, and the employee contributes 1.5%.

Unemployment Insurance (BHTN)

Unemployment insurance provides financial support and job training for employees who lose their jobs. It helps employees manage periods of unemployment and transition back into the workforce. 

For unemployment insurance, both the employer and the employee contribute 1% of the employee's gross monthly salary.

In total, your contribution as an employer will be 21.5% of each employee's gross monthly salary. Employees will contribute 10.5% of their gross monthly salary towards these insurances. Foreigners in Vietnam must also pay insurance based on the regulations mentioned above, except for unemployment insurance.

It should be noted that Vietnamese employees often appreciate extra insurance coverage since mandatory insurance offers limited protection in many cases. 

Premium healthcare insurance is a popular choice, giving employees access to private hospitals, advanced treatments, and even international care. 

Life insurance is also valued as it ensures financial security for their families, covering expenses like funeral costs, debts, and education.

Offering these additional benefits can make your company more attractive in Vietnam’s job market.

Final Thoughts

Hiring remote employees in Vietnam offers numerous benefits, including access to a large pool of skilled and affordable talent, particularly in the IT and technology sectors.

Understanding payment methods, currency and taxation, salary components, payroll deductions, labor laws, and employee benefits in Vietnam is crucial for businesses to effectively navigate the complexities of hiring. And I hope this roundup of 10 facts gives you a better glimpse into these aspects!

Remember, you don’t have to do this all alone!

If you’re not ready to set up a subsidiary in Vietnam and handle employment-related administrative tasks on your own, partnering with an Employer of Record is the simplest way to hire international employees and manage compliance aspects there. 

Check out my curated list of the Best Employer of Record Services in 2024 and guide to choose the right EOR partner

Disclaimer: This article is here to provide some helpful information, but it is not a substitute for professional tax, accounting, or legal advice. Be sure to consult with your tax, accounting, and legal advisors before engaging in any related activities or transactions.

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Global Employment

Employer of Record allows you to legally hire people from anywhere. Explore remote hiring strategies and how EOR global employment solutions facilitate cross-border operational success with full compliance.