Focusing your hiring in Vietnam has many advantages. With a large, relatively young workforce and low labor costs, expanding your business into Vietnam can be a cost-effective step for your business while gaining access to a new pool of talented workers. 

However, you must ensure that your new employees receive the mandatory benefits they’re entitled to, and ensure your hiring process is tip-top.

This guide will provide you with information on the advantages of the Vietnamese market, the key steps to hiring in Vietnam, and an overview of Vietnamese labor laws and mandatory benefits.

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Why Expand Your Business to Vietnam

Strategic Advantages of the Vietnamese Market

Doing business in Vietnam can be highly lucrative, with the country having a strategic position in Southeast Asia, allowing well-connected shipping routes into the US and European markets. 

They have a stable government and a growing economy, making it popular for employers looking to expand. There is also a growing desire for high-quality education, with many students choosing to attend university, which leads to a more highly educated workforce.

Importance of Being Aware of Vietnamese Labor Laws

Employers should educate themselves on Vietnamese labor laws to ensure they’re aware of rules around contracts, leave, retirement, and severance. 

Vietnam introduced an amended version of its Labor Code in 2019, which informs employees and employers of the latest labor laws and obligations that must be fulfilled.

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Step 1: Define Your Hiring Needs

The types of roles that you need should be considered closely when hiring. It’s best to hire fewer, more qualified people than large groups of unqualified people to ensure that you maintain the best standards within your establishment.

It’s also important to think about your long-term business objectives to ensure that your hiring strategy aligns with your future goals.

Step 2: Understand Compliance Requirements

As with any country, Vietnam has many compliance requirements for hiring new employees.

Familiarize yourself with the mandatory benefits you must offer employees, such as paid leave, the right to a minimum wage, overtime compensation, and maternity/paternity leave.

As an employer, you must also understand the tax obligations relevant to hiring in Vietnam and the social security contributions you need to organize on behalf of your workers.

Step 3: Choose Your Hiring Method

There is a range of hiring methods that can work for you depending on your hiring goals and needs.

Establishing a Legal Entity

Establishing a legal entity in Vietnam gives you full control over your business and employees.

This involves choosing a business structure, registering with the relevant authorities, and obtaining licenses/registration certificates.

It’s important to remember that while establishing a legal entity gives you more control, it does come with high levels of administration, which may not be suitable for smaller business types. 

Using an Employer of Record (EOR)

An Employer of Record can help streamline the hiring process, handling processes such as payroll, taxes, and compliance to allow businesses to focus more on day-to-day tasks.

However, there can be limitations to this method due to Vietnam’s lack of a formally established EOR model.

To learn more about how an Employer of Record works in Vietnam, check out our full guide.

Hiring Independent Contractors

Hiring independent contractors instead of contracted employees can be advantageous to companies looking for a quicker, more flexible route to hiring in Vietnam.

Companies must be aware of worker misclassification, ensuring that employees are correctly classified as either independent contractors or contracted employees to avoid penalties or legal problems.

Step 4: Develop a Recruitment Strategy

A successful recruitment strategy prioritizes a strong job advert placed in a space where prospective applicants will see it.

Make sure you include all relevant information within your job description, bearing in mind anti-discrimination laws to avoid ruling out potential applicants.

Post your job advert on local job boards, professional networks, and online job sites, including the following:

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Want to learn more about effective recruitment methods? Check out our research on strategies for successful hiring, which provide tips for drawing in top-tier candidates.

Our top tip for hiring in Vietnam? Work with a Vietnamese recruitment agency or partner with an EOR experienced in Vietnam. EORs bring local expertise to the table—helping you identify candidates who meet your exact needs. An experienced EOR can also guide you through typical salary benchmarks, hiring trends, and employee benefits that appeal to local talent, ensuring your offers are competitive and aligned with market expectations.

Step 5: Conduct Interviews and Assessments

Establishing a clear interview and assessment process can boost your recruitment efforts and yield great results.

Think about cultural norms in Vietnam when speaking to prospective employees; respect, social harmony, and a strong sense of family/community are important to Vietnamese workers, so consider how you can envelop these values within your interview process.

Step 6: Perform Background Checks

Background checks are highly important when hiring, but carry them out with caution. You should always obtain consent before doing background checks or requesting references, and make sure your checks are relevant while also complying with data protection laws.

Step 7: Draft Employment Contracts

Curating a thorough employment contract can save you time in the future on revisions and queries.

Think carefully about your job title and job description to accurately determine and put in writing exactly what an employee’s role will be. An employment contract should also explain the length of notice periods, probationary periods, and any leave your employees are entitled to take.

It’s recommended that companies have their employment contracts reviewed by a legal professional to prevent any issues from cropping up in future.

Step 8: Register with Authorities and Set Up Payroll

Registering with local Vietnamese authorities and setting up payroll systems is the next integral step when hiring in Vietnam.

You need to know your employees’ tax numbers and social security IDs to ensure they’re signed up to these systems, and register with the following authorities to ensure full compliance:

It’s also worth signing up your employees for any insurance plans you’re offering at this point.

Step 9: Onboard Your New Employees

Lastly, you’ll want to welcome your new employees to your establishment with open arms. Make sure you’ve introduced them to your team and have provided them with all relevant training and resources they’ll need to do their jobs.

Give new employees a thorough explanation of your company’s policies and procedures, reducing the chances of issues in the future.

Key Employment Laws and Regulations

The Vietnamese Labor Code

Vietnamese labor laws are largely informed by the Labour Code No. 45 of 2019, an act created by the Constitution of the Socialist Republic of Vietnam.

The labor code explains working hours, wages, and leave that employees are entitled to, safeguarding employees from exploitation and dictating the obligations that employers must adhere to when hiring in Vietnam.

Social Security Regulations

Vietnam operates under a social security system that collects contributions from both employers and employees to fund social insurance, health insurance, and unemployment insurance premiums.

This provides workers in Vietnam with financial protection in certain situations, such as sickness, invalidity, or unemployment.

The rates of social security are currently 17.5% for employers and 8% for employees.

Employment Standards and Employee Rights

Unions and Works Council

There is one national trade union center in Vietnam, which is the Vietnam General Confederation of Labour (VGCL). They are responsible for representing workers, operating under the guidance of the communist party in Vietnam. All trade unions in Vietnam must register with the VGCL.

Workplaces can instigate a Work Council, which represents all employees in a company, including managerial roles.

Types of Employment Contracts

Employers need to take some time to understand the different types of employment contracts that should be considered when hiring in Vietnam.

Fixed-Term Contracts

Fixed-term employment contracts include a set term. This term can be no longer than 36 months from the start date.

Indefinite-Term Contract

An indefinite-term employment contract is one where there is no fixed term. An employee would work for an employer indefinitely in this case.

Working Hours and Overtime

Standard Working Hours

Normal working hours in Vietnam are 8 hours per day, or 48 hours per week.

Employees should receive a weekly break of at least 24 consecutive hours. Night hours consist of hours completed between 10 pm – 6 am.

Overtime Regulations

Overtime hours worked must be paid at the rate of 150% of the employee’s regular wage on normal work days, or 200% on weekly days off. Employees must not work more than 200 overtime hours in 1 year.

Leave Entitlements

There are various leave entitlements for employees in Vietnam. These are detailed below:

Annual Leave

Workers in Vietnam are entitled to annual leave once they have carried out 12 months of work. This is calculated as follows:

Employee CategoryMinimum Annual Leave
Employees working in normal conditions12 days
Minors, disabled, or those in laborious, toxic, or dangerous roles14 days
Employees in highly laborious, toxic, or dangerous roles16 days

Sick Leave

Sick leave in Vietnam varies depending on social security contributions – it usually sits between 30 – 60 days of paid leave per year. Pay is calculated at 75% of an employee’s wage.

Maternity and Paternity Leave

Female employees in Vietnam are entitled to 6 months of prenatal and postnatal leave. A maximum of 2 months of leave can be taken before birth.

An employee’s full salary is covered during maternity leave and is paid by the social security fund.

Fathers must receive a minimum of 5 days of paid paternity leave if their spouse/partner has a baby.

Termination and Severance

Notice Periods

Notice periods in Vietnam vary depending on the type of employment contract. Employees on indefinite contracts must provide notice of 45 days, while employees on fixed-term contracts must provide 30 days of notice.

Severance Pay

Severance pay is applicable if an employment contract is terminated due to a reason beyond the employee’s control.

This is payable at half a month’s salary for each year of work completed. Employees must have worked for the company for a minimum of 12 months to be considered eligible for severance pay.

Mandatory Contributions

Social Security Contributions

Employers and employees must pay contributions towards social security as per the following:

Contribution TypeEmployer RateEmployee Rate
Sickness/Maternity3%0%
Occupational Diseases and Accidents0.5%0%
Retirement and Death14%8%

Health Insurance and Pension

Vietnam is in the process of moving towards a universal health system.

Currently, the most vulnerable in society are covered by the social security system, including the financially vulnerable, ethic minorities, children under 6, and people over 80 years old. Other people in Vietnam are required to pay towards private healthcare.

The pension system in Vietnam consists of three types:

  • The Compulsory Pension Plan: Both employers and employees must join and contribute 
  • The Voluntary Pension Plan: Vietnamese citizens aged 15+ can participate
  • Supplementary Pension Plans: Employers, employees, and people aged 15+ can participate

Optional Benefits

Employers in Vietnam are encouraged to consider optional benefits for employees to help attract and retain talent in an often competitive recruitment market. Some examples of optional benefits include:

  • Performance bonuses
  • Social insurances
  • Private health insurance
  • Advanced training
  • Meal vouchers
  • Enhanced maternity/paternity leave

How to Hire Employees in Vietnam – Our Take

If you’re looking to hire employees in Vietnam, it’s super important to consider all of the above steps and mandatory employee benefits to ensure you’re compliant with local labor laws and offer your employees exactly what they’re entitled to.

Hiring a qualified Employer of Record (EOR) provider can take the pressure off when expanding abroad. Remote People simplifies this process by delivering tailored EOR solutions that handle payroll, employee benefits, and tax compliance—so you can focus on growing your business with confidence.

We can also help your business employ directly with our team that is experienced in the Vietnam recruitment space, as well as assisting you with hiring contractors in Vietnam if you’d prefer flexibility when hiring.

You could even use our PEO broker service to hire a Vietnam PEO to cover hiring, payroll processing, employee onboarding, and fast market entry.