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How to Hire Employees in Vietnam

Key Takeaways

  • When hiring in Vietnam, research the legal requirements —understand Vietnam’s labor laws and regulations, such as the Labor Code, and ensure that your business is compliant.
  • Advertise the job — through vacancies in local newspapers, job websites, and job fairs.
  • Interview and select — Conduct interviews, perform necessary background checks, and select the most suitable candidate in Vietnam.
  • Contract and onboard — Prepare a labor contract following Vietnam’s labor laws and onboard the employee, ensuring they understand their responsibilities, company culture, and benefits.
  • Consider the benefit of a Vietnam Employer of Record (EOR) or Vietnam Professional Employer Organization (PEO) who can help with each step outlined above. 

Vietnam has been consistently heralded as one of the fastest-growing economies worldwide and is an increasingly popular location for global expansion. Key elements such as a youthful, educated workforce proficient in adapting to new technologies have made Vietnam a hotbed for industries like manufacturing, IT, and services. Moreover, the nation has seen remarkable GDP growth rates, averaging around 6-7% annually (pre-pandemic), indicative of a stable economic environment ripe for business investment and growth.

From a strategic standpoint, Vietnam’s geographical placement in Southeast Asia offers unrivaled access to significant shipping routes and proximity to vital markets like China and India.  Furthermore, the Vietnamese government’s substantial investments in infrastructure development and its commitment to improve the business climate through regulatory simplification, corporate tax reductions, and incentives for foreign direct investment are noteworthy. Coupled with political stability, these factors contribute to Vietnam’s increasing attractiveness to global businesses.

Hiring employees in Vietnam — overview

When hiring employees in Vietnam, it’s crucial to be aware of certain factors related to labor laws, cultural practices, and overall business etiquette. Here are some key things to know:

  1. Labor Laws: Vietnam has comprehensive labor laws, with stipulations on matters such as work hours, leave, minimum wage, social insurance, and labor contracts. For instance, the standard work week should not exceed 48 hours, and overtime is limited. The minimum wage varies by region, and social insurance contributions are obligatory for both employer and employee. Note also that employment contracts are mandatory in Vietnam. They can be indefinite or for a fixed term, with a maximum duration of 36 months for the latter. The contract should detail salary, working hours, job description, and termination conditions, among other things.
  2. Cultural Considerations: Vietnamese culture values respect and humility. In a work setting, it’s important to show respect to senior employees and to maintain harmony in the workplace. Communication can often be indirect, and preserving face is important. Also, relationships are highly valued, and networking can play a significant role in business.
  3. Language: While English is increasingly common, particularly among younger Vietnamese and in major cities, not all employees may be fluent. You may need to consider language training or hiring bilingual staff.

What does it cost to hire employees in Vietnam

The cost of hiring employees in Vietnam can vary widely depending on several factors, including the industry, the employee’s role and level of experience, and the location of the job.

Here are some things to consider:

  1. Minimum Wage: The minimum wage in Vietnam depends on the region. As of 2023, it ranges from 3,070,000 VND to 4,420,000 VND per month ($133 to $191), with higher rates in urban areas like Ho Chi Minh City and Hanoi.
  2. Salary: The average salary varies greatly depending on the role and industry. For instance, a software engineer might earn an average salary of around 500 USD per month, while a manager in a multinational corporation might earn several thousand dollars per month.
  3. Social Insurance Contributions: As an employer, you’re obligated to contribute to the social insurance fund, health insurance, and unemployment insurance. As of 2023, the total contribution by the employer is about 17.5% of an employee’s salary.
  4. Recruitment Costs: Advertising job vacancies, working with recruitment agencies, and conducting interviews all add to the cost of hiring. These costs can be quite variable.
  5. Training Costs: New employees may require training, and this can also add to the overall cost of hiring. The cost can depend on the nature of the job and the existing skills of the employee.
  6. Work Permits: If you’re hiring foreign employees, there are additional costs associated with obtaining work permits and related documentation.
  7. Office Space and Equipment: Depending on the job, you may need to provide office space, equipment, and other resources for your employees to do their jobs.

What are the legal requirements for hiring employees in Vietnam?

 Understanding Vietnam labor law is essential when hiring in Vietnam. Here are some key legal requirements for hiring employees in Vietnam:

  1. Labor Contract: An employer must enter into a written labor contract with each employee. The contract should include terms and conditions such as position, working hours, wages, location of work, duration of contract, and conditions for termination. The contract can be indefinite or for a fixed term.
  2. Minimum Working Age: The minimum legal working age in Vietnam is 15 years old. Employers need to ensure that they do not employ underage labor.
  3. Work Permits for Foreign Employees: If you’re hiring non-Vietnamese employees, they typically need to obtain a work permit before starting. There are exceptions for certain categories, such as internal transfers within a company, but this is generally the rule.
  4. Minimum Wage: Employers are required to pay employees at least the minimum wage, which varies depending on the region in Vietnam.
  5. Social, Health, and Unemployment Insurance: Employers are required to contribute to social, health, and unemployment insurance for their employees. As of 2023, the total contribution by the employer is about 17.5% of an employee’s salary.
  6. Working Hours and Overtime: The standard work week in Vietnam is 48 hours, typically 8 hours a day for 6 days a week. Overtime is regulated and is paid at a higher rate, and there is a cap on the number of overtime hours an employee can work in a day, month, and year.
  7. Health and Safety Requirements: Employers are required to provide a safe and healthy working environment. This includes providing necessary protective equipment and conducting regular safety training and drills.
  8. Annual Leave: Employees are entitled to fully paid annual leave. The minimum statutory entitlement is 12 days per year for employees who have completed 12 months of service.
  9. Termination and Severance Pay: Employers are required to provide notice and severance pay when terminating employees, with the specifics depending on the duration of service and the terms of the labor contract.

What are the key ways to hire employees in Vietnam?

Hiring employees in Vietnam can be done through several methods, each with its own benefits and considerations. Here are a few common ways:

  1. Direct Hiring: This is the most traditional way of hiring, where you identify, interview, and hire employees directly. This method requires a good understanding of local labor laws, including contracts, benefits, and terminations. To directly hire in Vietnam you must set up a legal entity in Vietnam, or register a branch there. 
  2. Professional Employer Organization (PEO): A Vietnam PEO is a firm that provides comprehensive HR services for employers, including payroll, benefits administration, and compliance with local labor laws. When you hire through a Vietnam PEO, the PEO takes care of administratative and compliance matters, but you retain day-to-day control over your employees. This model is commonly known as ‘co-employment‘.  This is a popular option for foreign companies that want to hire employees in Vietnam but don’t want to set up a full local office.
  3. Employer of Record (EOR): An EOR is similar to a PEO in that they handle HR functions and compliance, but they also take on legal responsibility for the employees. This is a good option if you want to have employees in Vietnam but don’t want to deal with the administrative and legal complexities of being an employer.
  4. Independent Contractors: You can also hire independent contractors, which can be simpler than hiring employees. However, you need to be careful that your contractors are genuinely independent according to local labor laws, or you could face penalties.

Each of these methods has its own pros and cons, and the best choice depends on your specific needs and circumstances. Factors to consider include the size of your business, the nature of the work to be done, your budget, and your familiarity with Vietnamese labor laws and business practices. It’s always a good idea to consult with a local expert or legal counsel to ensure you’re making the best decision for your business.

What are the steps businesses need to take to hire employees in Vietnam?

Hiring employees in Vietnam involves a series of steps that must be adhered to ensure compliance with local labor laws and regulations. Here is a general outline of the process:

  1. Define the Job and Salary: Clearly define the job role, responsibilities, qualifications, and salary range. Keep in mind the minimum wage rules in Vietnam, which can vary by region.
  2. Advertise the Position: Post the job vacancy on popular job portals, recruitment agencies, newspapers, or your company’s website. Make sure the job advertisement includes all necessary information and complies with local non-discrimination laws.
  3. Screen and Interview Candidates: Review resumes and conduct interviews to select suitable candidates. This process may involve multiple rounds of interviews, skills tests, and background checks.
  4. Offer of Employment: Once a suitable candidate is selected, make a formal job offer. This would generally include information about the job role, salary, benefits, and start date.
  5. Labor Contract: If the offer is accepted, you will need to prepare a labor contract. In Vietnam, labor contracts must be in writing and include specifics such as job description, working hours, salary, and termination conditions. Both the employer and the employee must sign the contract.
  6. Register the Employee: The employer must register the new employee with the local labor authority and with the social insurance agency. The employer is responsible for making social insurance, health insurance, and unemployment insurance contributions for the employee.
  7. Onboarding: Once the employee starts work, they should undergo an onboarding process to familiarize them with the company’s policies and procedures, their job role, and their colleagues.
  8. Work Permit for Foreign Employees: If the new hire is a foreigner, they will generally need a work permit. This involves several steps, including obtaining a health check and a criminal background check, and submitting an application to the Vietnamese labor authorities. The process should ideally start well before the employee’s planned start date, as it can take several weeks.

Remember, these are general steps and the specifics can vary depending on the nature of the job and the employer. Some industries or types of jobs may have additional requirements. It’s always a good idea to consult with a local HR professional or legal counsel to ensure compliance with Vietnamese labor laws and regulations.

How to hire employees in Vietnam — our take

When you hire employees in Vietnam it is crucial to pay attention to the legal, cultural and economic factors that affect hiring in the country. Many global companies find that they would benefit from a leading Vietnam EOR or Vietnam PEO solution to help smooth the hiring and expansion journey. 

FAQs

According to Vietnamese labor law, the maximum probation period is 60 days for jobs that require professional or technical qualifications, and 30 days for most other jobs. The probation period allows both the employer and the employee to assess their suitability for each other. During this period, either party can terminate the employment relationship without notice.

Foreign workers must generally obtain a work permit before they can be employed in Vietnam. The application process involves submitting documents such as a health check, a criminal background check, and proof of qualifications to the Vietnamese labor authorities. The employer is usually responsible for sponsoring the work permit and must demonstrate that they need to hire a foreigner because they can't find a Vietnamese person with the necessary skills. There are exceptions for certain categories of workers, such as internal company transferees.

Terminating an employee in Vietnam can be complex. Employers are required to provide advance notice and, in some cases, severance pay. The specific requirements depend on the reason for termination and the length of service of the employee. Unlawful termination can result in penalties, so it's important to be fully aware of the rules and to follow due process. Always consult with a local HR professional or legal counsel to ensure compliance with Vietnamese labor laws.

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