Vietnam’s employment laws are shaped by the Labor Code No. 45/2019/QH14, known as the Labor Code 2019, which came into effect on January 1, 2021. This law sets clear rules for employers and employees, balancing workplace rights and responsibilities. For companies operating in Vietnam, especially foreign businesses, understanding these five major kinds of employment laws is vital to stay compliant and maintain good employee relations.
1. Termination Due to Poor Performance
Vietnam does not allow employers to fire employees freely like in some countries. The Labor Code 2019 provides specific reasons and steps for termination. For poor performance, employers can end a contract legally, but they must follow strict rules. The law permits termination if an employee “repeatedly fails to perform his/her work according to the criteria for assessment of employees’ fulfillment of duties established by the employer,” as stated in Article 36(1)(a). These criteria must be clear and set in advance. This ensures fairness and transparency.
Employers need solid proof of poor performance. The law does not require a formal improvement plan, but documenting issues and offering support like training or warnings is wise. Courts expect employers to show that standards were fair and shared with the employee.
Notice and Payments:
- Notice Period: Required notice (under Article 36(2)) differs by contract type:
- 45 days for indefinite-term contracts
- 30 days for 12–36-month contracts
- 3 working days for contracts under 12 months
- Severance Pay: If the employee worked 12 months or more, Article 46 requires half a month’s salary per year of service as severance, unless the firing is for serious misconduct.
If termination breaks the rules, the employer may need to rehire the employee, pay lost wages and insurance contributions, and add at least two months’ salary as compensation. If rehiring isn’t possible, a higher severance package is required.
2. Wages and Hours Laws
Vietnam’s laws set firm limits on working hours and ensure fair pay. These rules protect employees and guide employers on wages, overtime, and rest.
Working Hours
Article 105 caps regular hours at 8 per day or 48 per week. Employers can set schedules, like six 8-hour days or five longer days, but must tell employees. Overtime needs employee agreement and has limits under Article 107. It cannot exceed 50% of daily hours (e.g., 4 extra hours on an 8-hour day), 40 hours monthly, or 200 hours yearly. Some industries, like manufacturing, can go up to 300 hours per year with approval, per Resolution 17/2022/UBTVQH15.
Overtime Pay
Article 98 sets minimum rates for overtime work:
- 150% of the normal hourly wage on regular days.
- 200% on weekly rest days.
- 300% on holidays or paid leave days, plus regular holiday pay if applicable. Night work (10:00 PM–6:00 AM) adds a 30% bonus, and overtime at night gets an extra 20%. For example, night overtime on a normal day pays 200% of the regular rate.
Minimum Wage
Article 90 requires salaries to meet or exceed the regional minimum wage, updated yearly. As of July 1, 2024, Decree 73/2024/NĐ-CP lists rates from VND 4.96 million/month in urban areas (Region I) to VND 3.45 million/month in rural areas (Region IV). Equal pay for equal work is mandatory under Article 90(2), banning gender-based wage gaps. Wages must be paid fully and on time in VND for local staff, though foreign employees can agree to foreign currency (Article 94). Payslips, required by Article 96, show wages, overtime, and deductions like insurance or taxes. Late payments over 15 days owe interest, per Article 97.
Rest Time
Labor law mandates breaks of at least 30 minutes for an 8-hour daytime shift (45 minutes for night shifts). Workers must also receive at least one full day off per week, though some firms arrange rotating rest days to meet operational needs. Maintaining accurate time-tracking records is essential, since labor inspections frequently review compliance with rest-day rules.
- Non-Disclosure Agreements in Labor Laws
Vietnam’s laws allow employers to protect sensitive information through non-disclosure agreements (NDAs). These agreements keep business secrets safe and set rules for employees.
Article 21(2) states employers can “sign a written agreement with the employee on the content and duration of the protection of the business secret [and] technological know-how, and on the benefits and compensation in case of violation.” NDAs can be part of a labor contract or separate. They must list what’s confidential (e.g., client lists, trade secrets), how long the secrecy lasts, and penalties for breaking it.
NDAs cover “business secrets” and “technological know-how,” terms supported by the Law on Intellectual Property 2005. The agreement should be specific to avoid confusion. A reasonable secrecy period after employment, like 1–3 years, is enforceable, but overly long terms might not hold up. NDAs work alongside Internal Labor Regulations (Article 118), which must address confidentiality for firms with 10+ staff.
If an employee leaks secrets, Article 125(1)(c) allows dismissal for “disclosing technological or business secrets or infringing the intellectual property rights of the employer.” This requires a formal meeting and proof (Article 122). Employers can also seek civil damages, though criminal penalties are rare unless other crimes occur.
4. Family and Medical Leave Laws
Vietnam provides strong support for family and health needs through leave laws. These rules help employees balance work and personal life while protecting their jobs.
Maternity Leave
Vietnam’s maternity policies are comprehensive:
- Duration: A female employee is entitled to 6 months of leave, with up to 2 months taken before the expected birth date.
- Extended Leave: For multiple births (twins, triplets), an extra month is added for each additional child beyond the first.
- Payment: Maternity benefits are paid through the social insurance fund at 100% of the employee’s contributory wage if she has contributed for the required period (commonly 6 months within the 12 months before delivery).
During late pregnancy (from the 7th month, or 6th in remote areas) and for 12 months postpartum, an employer may not force a woman to do night work or overtime. Termination of a pregnant or nursing employee is prohibited unless the company ceases operations entirely. If a contract expires while an employee is on maternity leave, many interpretations of the law suggest extending the contract until her leave ends.
Other Parental Leave
Male employees also have entitlements:
- 5 working days for a normal birth
- 7 working days if the birth is surgical or the wife has twins
- 10 working days for surgical delivery with twins, plus 3 more days per additional child beyond twins
These paternity leaves are funded by social insurance, emphasizing the principle of shared parental responsibility.
Adoptive parents of a child under 6 months old can take the remainder of maternity leave until the child reaches 6 months of age. A parent with a sick child under 7 may also take social insurance–covered leave to care for the child (e.g., 30 days/year for <15 years of contribution) with a doctor’s note (Article 141).
Personal Leave
Article 115 offers paid days for family events:
- 3 days for the employee’s marriage.
- 1 day for a child’s marriage.
- 3 days for the death of a parent, spouse, or child. One unpaid day is allowed for events like a grandparent’s death.
Article 137 protects pregnant women (from the 7th month) and nursing mothers (child under 12 months) from overtime or dangerous work. Termination for pregnancy or maternity is illegal (Article 138), and contracts expiring during leave must extend (Article 138(3)). Employees return to their same or equal job after leave (Article 139).
Denying leave or firing protected staff leads to rehiring, back pay, and fines up to VND 75 million (Decree 28/2020/NĐ-CP).
5. Employment and Labor Relations Laws
Vietnam’s labor relations laws promote fairness and cooperation between employers and employees. They cover unions, agreements, rules, and dispute handling.
Trade Unions and Employee Representation
Vietnamese law acknowledges employee representation through trade unions, guided by the Trade Union Law 2012 and the Labor Code 2019.
Key points include:
- The right of every employee to join or form a union.
- A prohibition on employer interference with union activities.
- The requirement to consult employee representatives on issues like wage scales and ILRs.
- Employers typically contribute 2% of payroll to union funds.
Discrimination or retaliation (e.g., firing an employee for union membership) is strictly forbidden. Article 175 allows fines and reinstatement orders against violators.
Collective Bargaining Agreements (CBAs)
CBAs are negotiated documents that often provide better conditions than the minimum labor law requirements. They may cover:
- Higher wages than the regional minimum
- Enhanced benefits (e.g., meal allowances, housing support)
- Reduced working hours
- Additional paid leave
Vietnam’s law encourages dialogue at the workplace, usually at least once a year. If these talks fail to resolve disputes, mediation or arbitration can be pursued. Strikes are legal only as a last resort and must follow formal procedures, including a majority vote among employees.
Internal Labor Regulations (ILRs)
Any employer with 10 or more employees must register Internal Labor Regulations with the local labor authority. The ILRs generally specify:
- Working hours, breaks, and rest days
- Disciplinary measures and misconduct definitions
- Occupational safety guidelines
- Confidentiality rules
Disciplinary dismissals or sanctions are invalid if an unregistered ILR serves as their basis. After finalizing the ILR, the employer must announce or distribute it so employees are aware of the rules.
Anti-Discrimination and Harassment Protections
Vietnamese law prohibits discrimination on grounds such as gender, race, religion, pregnancy, and HIV status. It also bans sexual harassment in the workplace. Employers should:
- Define prohibited behavior in ILRs or policies.
- Provide channels for confidential complaints.
- Investigate allegations promptly and fairly.
- Impose disciplinary measures if misconduct is confirmed.
Failing to address harassment or discrimination can lead to reputational damage and legal action. The labor authorities may also inspect and fine employers for ignoring such cases.
Conclusion
The Labor Code 2019 offers a detailed, worker-friendly structure for employment in Vietnam. From termination to wages, confidentiality, leave, and relations, compliance requires careful planning and respect for legal standards. This ensures fairness and stability for all parties.
