Vietnam’s booming economy and wealth of business prospects have been drawing more and more foreign professionals to its shores. However, understanding the local labor laws, especially labor law in Vietnam for foreigners, is essential to make your entry into the workforce as smooth and compliant as possible.
Whether you’re planning a move to Vietnam or are already part of its dynamic workforce, this guide is invaluable. Let’s explore the complexities of labor law in Vietnam for foreigners together, fostering a professional environment that respects and upholds your rights as a worker.
Understanding Work Permits
Requirements for Obtaining a Work Permit in Vietnam
A work permit is mandatory for most foreigners who wish to work in Vietnam. This permit is issued by the relevant Vietnamese authorities for a specific job and employer once they have confirmed the individual’s skills, qualifications, and health status.
Most foreigners who wish to work in Vietnam need a work permit, with a few exceptions. These exceptions include foreign investors, experts, foreign lawyers, foreigners married to a Vietnamese and living in Vietnam, and in some cases managers, executives, and technical workers.
To obtain a work permit in Vietnam, applicants must meet certain requirements. These requirements include:
- Be at least 18 years old and have full capacity for civil acts.
- Have a valid passport with at least 6 months of validity.
- Have professional qualifications, relevant and acceptable techniques, skills, and work experience for the position.
- Meet health requirements.
- Have a clear criminal record in Vietnam or overseas.
- Be hired by an eligible Vietnamese employer.
Employers also have to meet certain requirements to sponsor a work permit for a foreigner. They must have a registered business license, sufficient capital and assets, suitable labor conditions and facilities, and comply with labor laws and regulations.
Foreigners who work in Vietnam without a valid work permit could face legal consequences, such as fines or deportation. Therefore, obtaining a work permit before starting any employment activity in Vietnam is crucial.
Obtaining Work Permit and Visa Requirements In Vietnam
Several procedural steps must be followed for those intending to work in Vietnam. Initially, an application form must be submitted to the Department of Labor – Invalids and Social Affairs (DOLISA) or its authorized agencies.
The application form should be supplemented with the necessary documents, which include:
- A photocopy of the passport
- The employment contract
- A health certificate
- A criminal record certificate (if applicable)
- The Application form for a Vietnam work permit (Form No. 11/PLI)
- A Certificate of health issued in Vietnam or a legalized health check if issued abroad, along with its certified Vietnamese translation.
Additional documents may be required based on the specific job position and circumstances.
Foreigners working in Vietnam must also comply with visa requirements. To enter Vietnam, you’ll need a visa issued by the Vietnamese Embassy or Consulate in your home country. There are a few different types of visas:
- Business visa: Suitable for short-term business visits to Vietnam.
- Work visa: Required for foreign nationals intending to work in Vietnam on a long-term basis.
- Temporary Residence Card (TRC): Foreign nationals who hold work permits valid for one year or more and a work visa may qualify for a TRC. The TRC, issued by the immigration agency under the Ministry of Public Security, is valid for a duration of one to ten years, contingent on the visa type.
Keep in mind that Vietnamese authorities have been enforcing work permit regulations more strictly. If you’re caught working in Vietnam without a work permit, you could face penalties or even deportation.
The process of getting a work permit and visa in Vietnam can be complicated, especially because of cultural differences and communication challenges. Getting help from a reliable and professional visa consultancy is a good idea to ensure you successfully navigate the application process.
Overview of Labor Law in Vietnam for Foreigners
Vietnamese labor law is governed by the Labor Code, which contains provisions that outline the rights and obligations of employers and employees in Vietnam.
Key Provisions of Current Vietnamese Labor Law
Employment Contracts
In Vietnam, labor contracts fall into two main categories: indefinite and fixed-term.
An indefinite-term contract is a type of employment agreement that doesn’t have a specified end date. It continues until either the employer or the employee decides to terminate it.
On the other hand, a fixed-term contract is an employment agreement valid for a specific period. The duration of these contracts is clearly defined at the outset, and the contract automatically expires at the end of this period.
Regardless of the type, every labor contract in Vietnam must include certain key provisions. These include:
- Scope of Work: This outlines the duties and responsibilities of the employee.
- Working Hours: This specifies the employee’s regular work schedule.
- Wages: The contract must clearly state the employee’s wages for their work.
- Job Location: Where the employee is expected to perform their duties.
- Contract Terms: These include the start and end dates for fixed-term contracts.
- Occupational Safety and Hygiene Conditions: The contract should address these to ensure the employee’s well-being at the workplace.
- Social Insurance: The contract must include provisions for social insurance, a form of protection the state provides to employees. This offers benefits such as sickness, maternity, retirement, and death benefits.
It’s important for both employers and employees to understand these provisions to ensure a fair and productive working relationship.
Salary and Wage Regulations
The minimum wage and salary are set by the government of Vietnam and governed by Articles 90 to 96 of the Labor Code 2019. These articles cover aspects such as salary agreements, statutory minimum wages, payment rules, and forms.
The government reviews this minimum wage periodically to ensure it remains fair and relevant in the face of economic changes. This ensures that the workers’ rights are protected and their compensation aligns with the country’s economic conditions.
The minimum wage varies by region, reflecting local living costs and economic conditions. Here’s a brief overview:
| Region | Monthly Minimum Wage (VND) | Equivalent in USD (approx.) |
| Region I | 4,680,000 | $204 |
| Region II | 4,160,000 | $181 |
| Region III | 3,640,000 | $159 |
| Region IV | 3,250,000 | $142 |
In addition, the labor code also ensures minimum hourly wage rates for the relevant regions. These are:
- Region I – VND 22,500 (US$0.97)
- Region II – VND 20,000 (US$0.86)
- Region III – VND 17,500 (US$0.75)
- Region IV – VND 15,600 (US$0.67)
Employers in Vietnam are obligated to follow these regulations. They must ensure wages are paid on time and in line with the employment contract’s agreed-upon amounts. Additionally, they must provide wage increases and promotions as specified in the contract. It’s all about ensuring a fair and equitable work environment.
Starting from July 2024, Vietnam has plans to increase the minimum wage by 6 percent. The wage increase applies to employees who work under labor contracts under the labor code, including businesses, organizations, cooperatives, households, and individuals who hire employees on labor contracts.
Allowances
The Labor Code of Vietnam ensures that employees receive various allowances to support their well-being and compensate for specific job-related circumstances. These allowances include:
- Seniority Allowance: Employees with long-term service at an organization may receive a seniority allowance. This allowance serves as a recognition of the employee’s loyalty and experience.
- Position Allowance: Employees holding managerial or specialized positions may receive a position allowance. This compensates for the added responsibilities and complexity associated with these roles.
- Hazard Allowance: Employees working in environments with hazardous conditions are entitled to a hazard allowance. This compensates for the risks associated with their working conditions and aims to improve their safety and health.
- Area Allowance: Employees working in remote, isolated, or economically disadvantaged areas may receive an area allowance. This is designed to compensate for these regions’ challenging living and working conditions.
- Shift Allowance: Employees working in shifts, particularly night shifts, are entitled to a shift allowance. This recognizes the inconvenience and potential health impacts of working irregular hours.
Working Hours and Overtime Regulations
In Vietnam, the Labor Code, guided by Decree 143/2019/ND-CP, sets the rules for working hours and overtime. Normally, employees work 8 hours a day, up to 48 hours a week. Any work beyond these hours is considered overtime.
The Labor Code ensures employers pay their employees extra for overtime work. This means that the pay rates for overtime are usually higher than the regular hourly rates. This rule ensures that employees get fair pay for their extra time and effort.
However, if the employer and the employee agree on an overtime deal, the overtime can’t exceed 12 hours a day, 40 hours a month, and 200 hours a year. According to Resolution No. 17/2022/UBTVQH15, employers can ask their employees to work overtime for over 200 hours but not more than 300 hours per year.
Holidays and Leaves
Public holidays in Vietnam are overseen by the Ministry of Labour Invalids and Social Affairs of Vietnam (MOLISA). The most celebrated among these is the Vietnamese New Year (Tet), which typically occurs between late January and early February, based on the lunar calendar. Additional public holidays include:
- Hung Kings Commemoration Day (10th day of the 3rd lunar month)
- Reunification Day (April 30)
- International Labor Day (May 1)
- National Day (September 2)
Employees who complete a year of service are entitled to fully paid annual leave, which constitutes 12 days under standard working conditions and extends to 14 days for those working in harsh environments. Employees with less than a year of service accrue leave on a monthly basis. Additionally, employees who have exceeded five years of service receive an extra day of leave annually.
Maternity leave provisions allow women to take six months of leave for childbirth or adoption, with an additional 30 days granted for each subsequent child beyond the first. This provision applies to women employed for at least six months. Furthermore, employees can extend the leave period up to two years for educational purposes without jeopardizing their employment status.
Social Security and Employee Benefits
As per Decree 143/2019/ND-CP, Vietnamese labor law mandates employers to provide their employees with social insurance, including health, unemployment, and retirement insurance. The law requires employers to withhold a portion of an employee’s wage and contribute to the required insurance on their behalf.
The social insurance contribution rates are the same for Vietnamese and foreign employees. Employees contribute 8% of their monthly salary, while employers contribute 17.5% to the social insurance fund. These contributions are determined based on employees’ monthly salary or wage.
Health insurance is mandatory for Vietnamese and foreign employees under labor contracts with a definite term of over three months or labor contracts with indefinite terms. Unemployment insurance is only required for Vietnamese employees.
Once a foreign worker’s employment in Vietnam expires, the foreign worker can claim a one-off payment on the contributed amount from the social insurance agency, depending on certain circumstances.
Termination, Severance, and Payment
Termination
The 2019 Labor Code governs the termination of labor contracts in Vietnam, outlining the conditions and procedures for lawful termination.
Employers and employees can terminate labor contracts in various ways, including mutual agreement, expiration of the contract term, completion of the work stipulated in the contract, or unilateral termination by either party.
- Unilateral Termination by Employer: Employers can unilaterally terminate a labor contract in specific cases, such as:
- The employee repeatedly fails to perform the work according to the terms of the contract.
- The employee is ill or injured and unable to work after receiving treatment for a specified period.
- The employer needs to reduce production and employment due to economic reasons or force majeure.
- The employee reaches the retirement age specified by law.
- Employers must provide advance notice at least 45 days for an indefinite-term contract, 30 days for a fixed-term contract, and 3 days for a seasonal or specific job contract of less than 12 months.
- Unilateral Termination by Employee: Employees can unilaterally terminate their labor contract without any reasons, provided they give advance notice: at least 45 days for an indefinite-term contract, 30 days for a fixed-term contract, and 3 days for a seasonal or specific job contract of less than 12 months.
- Immediate Termination: Certain circumstances allow immediate termination without notice, such as severe mistreatment or danger to the employee’s health and safety.
Severance
Employees who have worked for a company for a period of 12 months or more are entitled to severance pay upon termination of their labor contract in cases unrelated to disciplinary dismissal.
The severance pay is calculated based on the number of years worked and the employee’s average salary over the preceding six months.
Specifically, the formula is:
Severance Pay = Half a month’s salary × Number of years worked
Payment upon Termination
Upon termination of the labor contract, the employer is responsible for paying all outstanding salaries, unused annual leave, and any other lawful benefits owed to the employee.
This payment must be made within 14 working days from the date of termination, though this period can be extended in special circumstances, but not beyond 30 days.
Additionally, the employer must complete all necessary procedures to confirm the termination of social insurance and provide the employee with the necessary documents, such as the decision on termination and the employee’s social insurance boo
Comparison with International Standards
As Vietnam becomes more integrated into the global economy, it consistently revises and updates its labor laws for foreigners to align with international labor standards. In January 2021, Vietnam enacted an amended Labor Code, which the International Labor Organization (ILO) recognizes as a significant step towards aligning with international labor standards.
Global trade agreements, notably the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA), have significantly impacted the enforcement and compliance of labor laws in Vietnam. These agreements require Vietnam to adhere to the standards set by the ILO.
However, the influence of global trade agreements on labor law compliance and enforcement is a complex issue with varying perspectives on their effectiveness in promoting and safeguarding workers’ rights. Some believe that international labor standards and trade agreements can help maintain a level playing field in the global economy and prevent the degradation of labor standards for competitive advantage. Conversely, others question the enforcement mechanisms and the effectiveness of these agreements in protecting workers’ rights.
Support and Resources for Foreign Workers
When working in Vietnam, it is important for foreign workers to have access to support systems and resources to navigate the challenges they may face. This support can range from legal assistance and language services to cultural integration and health care information.
At Russin & Vecchi, we are your trusted international law firm, offering comprehensive support and resources for foreign workers. With a legacy of over 60 years in serving emerging economies, we have the expertise to help clients navigate the complex Vietnamese regulatory system, from devising an entry strategy to managing operations.
Our comprehensive services are tailored to labor law, including employment contracts, workplace safety compliance, dispute resolution, collective bargaining agreements, and labor union negotiations. We also assist with the legal aspects of employee benefits and compensation, as well as issues related to discrimination and harassment in the workplace.
For further information, please contact:
Nguyen Thi Thuy, Russin & Vecchi
NTThuy@russinvecchi.com.vn
