Labor Code Provisions in Vietnam
Under the Labor Code, employees are entitled to a range of benefits such as annual paid leave, sick leave, maternity leave, and paid public holidays. As an employer, it’s essential to ensure these entitlements are clearly stated in employment contracts and comply with legal standards.
Minimum Age
To be eligible for employment in Vietnam, a person must be at least 15 years old, although certain types of employment may allow hiring younger individuals, such as apprentices or performers. Special protections are in place for employees under 18 to ensure their safety and welfare.
Minimum Wage Payment
The government of Vietnam sets a minimum wage that varies by region and is adjusted annually. Effective from 1st July 2024, the minimum wage ranges from VND 3,450,000 to VND 4,960,000 per month, depending on the region. Employers must ensure wages are paid no later than 15 days after the end of the wage period, and any overtime work must be settled within that same time frame.
Working hours and overtime law in Vietnam
The following are the legal requirements for working hours and overtime under the Labor Code:- Employees can work a maximum of 48 hours per week or 8 hours per day
- Employees must receive at least one day off per week
- Overtime is limited to 50% of the normal working hours in a single day, with a maximum of 40 hours per month and 200 hours per year. In some special cases, this limit can be extended to 300 hours per year
- Overtime pay is calculated at 150% for regular days, 200% for rest days, and 300% for public holidays
Paid Annual Leave
In Vietnam, employees are entitled to annual paid leave after 12 months of work. The standard leave entitlement starts at 12 days per year, with an additional day for every 5 years of service. Employees working in hazardous or remote conditions are entitled to 14 days of paid annual leave. Additionally, employees who are minors, disabled, or engaged in laborious, toxic, or dangerous work are entitled to 14 days of leave, while those performing highly laborious, toxic, or dangerous work are entitled to 16 days of paid annual leave.
Vietnam's Sick Leave Rules:
Employees in Vietnam are entitled to sick leave based on their contribution to the Social Insurance Fund. The number of sick days is determined by their working conditions and the length of their employment:- Employees working in normal conditions are entitled to 30 days of sick leave per year.
- Employees working in hazardous conditions are entitled to 40 days of sick leave per year.
Public Holidays
Vietnam recognizes 11 public holidays, including Tet (Lunar New Year), National Day, and Independence Day. If employees are required to work on a public holiday, they must be compensated at 300% of their standard wage or given time off in lieu.
Health Insurance
In Vietnam, all employers are required to contribute to the Social Insurance Fund for employees. This covers health insurance, which provides basic medical care for employees through the public health system. Employers may also offer private health insurance as an additional benefit for higher-level employees or expatriates.
Vietnam's Parental Leave
Maternity leave in Vietnam is set at 6 months for female employees, with at least 60 days before the expected delivery date. Employers are required to provide this leave with full pay, covered by the Social Insurance Fund. Paternity leave is also recognized, with 5 to 14 days of leave depending on the number of children born.
Vietnam Law on Probation Period
The probation period in Vietnam typically lasts 60 days for most employees and 30 days for roles that require less technical skill. During this period, either party can terminate the contract without prior notice.
Vietnam Employment Law on Termination
Employment in Vietnam can be terminated for various reasons, including resignation, mutual agreement, or breach of contract. Employees are typically entitled to a notice period, which varies depending on their length of service:- 30 days for definite term employment contracts;
- 45 days for indefinite term contract
Layoffs, Retrenchment or Downsizing
Employers must provide notice and severance pay in the event of layoffs. Severance pay is calculated at half a month's salary for each year of employment. Employees who have worked for more than 12 months are entitled to one month's salary as severance.
Social, Health, and Unemployment Insurance (SHUI) Contributions
Employers in Vietnam are required to contribute to the SHUI, which includes Social Insurance, Health Insurance, Unemployment Insurance, and Trade Union contributions. These contributions cover benefits such as health insurance, maternity leave, unemployment, and retirement. Employers must contribute 17.5% of their employees' salaries, while employees contribute 8%.
Non Statutory Benefits or Perks
Private Health Insurance
Many companies offer private health insurance, particularly for higher-level employees and expatriates, covering private hospitals, specialist care, and sometimes family members.
Transportation or Housing Allowances
Employers may provide monthly transportation stipends or housing allowances, especially for employees relocated to other regions or expatriates. This can include rental costs or temporary housing.
Relocation Assistance for Expatriates
Companies often cover moving costs, flights, temporary accommodation, and international school fees for expatriates, making their transition to Vietnam smoother.
Training and Development Programs
Employers offer professional development opportunities like workshops, conferences, certifications, and language courses to support employee growth and skill development.
Penalties
Fines
Violations can lead to fines between VND 5 million and VND 75 million, depending on the type and severity of the infraction, such as delayed salary payments or unlawful termination.
Suspension of Operations
Repeated or severe violations can result in the temporary suspension of business activities by the authorities.
License Revocation
In extreme cases of persistent non-compliance, the company’s business license may be revoked.
Compensation for Employees
Employers may be required to compensate employees for unpaid wages, wrongful termination, or failure to fulfill contractual obligations.
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