Vietnam Legislation

Vietnam Legislation

VN-822437-edited

As one of the fastest and most stable-growing economies in Asia, Vietnam is an attractive market to explore and open up other developing markets in Southeast Asia. Vietnam’s macroeconomics alone are convincing, with a population of 90 million, consistent GDP growth of 5-6% over the last decade, relatively low costs and a literacy rate of over 90%. 

To help companies prepare themselves for business, Links has created a legislative page of the main employment laws and best practices in Vietnam. Please note that all the information listed below are to be used as a general guideline, for more detailed accounts of laws and regulations, please visit the official governmental websites.

 
 
 

 

Company Setup

Company Stamp Registration

After obtaining business license, a company is required to register company stamp with Police Office. The required documents for company stamp registration are as follows:

  • Notarized copy of business license;
  • POA letter

Tax Registration

According to Article 6, Part II, Circular No. 95/2016/TT-BTC, a taxpayer has register for tax code within 10 days from the date on Business license/ Licenses of Establishment of rep office/ branch office. 


Bank Account set-up

A company is able to open bank account in Vietnam after obtaining a business license, tax code and company stamp registration. The required documents are different between different banks.

Normally, the required documents are as follows:
  • Notarized copy of business license;
  • Chief accountant’s and legal representative’s ID/passport 
  • Proof to certify legal representative of the company
A company is required to register its bank accounts with Investments and Planning Department within 10 days from the date of opening bank account. 

 

Social Insurance Code Registration

A newly set-up company has to obtain Social Insurance (“SI”) code in order to make declaration and payment of Social, Health and Unemployment Insurance (SHUI) contributions for its employees.

Digital Signature Registration

A company is required to use digital signature for submitting social insurance reports to SI Department as well as submitting tax declaration to Tax Office.  

Personal Income Tax (“PIT”) Withholding Receipt Registration

According to current regulation, employer has to obtain PIT withholding receipt book to issue PIT withholding certificate to employees.

Internal Labour Rule

According to Article 119, Labour Law 2012, a company is required to register an internal labour rule with relevant authorities if employing for more than 10 employees.

Salary Scales Registration

According to current regulation, an employer has to set up and inform their salary scales to the authorities.

 




 
 
 

Labour Law


Social, Health and Unemployment Insurance (SHUI) Contributions

There are three elements in the Vietnam social security system including Social Insurance (“SI”); Health insurance (“HI”) and unemployment insurance (“UI”).

Employers and employees are obligated to contribute social security at the rate below:

  Social Insurance Rates in Vietnam
(Period from June 2017)

  SI HI UI Total
Employee 8% 1.5% 1% 10.5%
Employer 17.5% 3% 1% 21.5%
 
From January 01, 2018, the salary base for calculating social security contributions shall include basic salary and fix allowances (excluding bonus/incentive, innovation bonus, meal allowance, child care allowance, housing allowance, gasoline allowance, transportation allowance, mobile phone allowances and child support allowance). The current cap for salary base for social security contributions are as below:
  Current Cap  
SI and HI Contributions VND 27,800,000  
HI Contributions VND 79,000,000  

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=99775

 

Trade Union Contributions

According to Article 4 of Decree 191/2013/NĐ-CP, an employer has to contribute trade union at the rate of 2% of employee’s salary (with it's cap) regardless of having grassroot trade union or not.

 

Work Permits

Foreigner staff is required to have a work permit/work permit exemption certificate to work in Vietnam before start working in Vietnam as well as a temporary resident card to stay in Vietnam. Considerations for visa approval for each applicant include:

  • Over 18 years old and have adequate health condition to match the demand of the job.
  • High degree of specialized knowledge, qualification and technology; experienced in management, business and other professions that the domestic labors cannot currently conduct efficiently.
  • If foreigners want to work in special jobs in education or health, they are required to meet all requirements of conducting health and education work of the Vietnamese authorities.
  • Have no criminal record in their living country, Vietnam or other countries; being not under any warrant of arrest or jailing by the Vietnamese or foreign policemen.

However, there are some foreigner employees who are not required to apply for a work permit/work permit exemption certificate provided are professors, experts, directors, technicians and come to Vietnam for less than 30 days per time and accumulated staying days is under 90 days per year.

 

Minimum Wage

Common Minimum Wage

The first type is the common minimum wage, which is used to calculate salaries for employees in state-owned organizations and enterprises. The common minimum wage is 1,390,000 VND /month , taking effect starting 1 July 2018.

Regional minimum salary

The second type of minimum wage is used for employees in all non-state enterprises and is based on regions as defined by the government. From 1 Jan 2018, the National Wages Council has finalized the regional minimum salary rates for 2018, as follows:

  • Region I: VND 3,980,000/month;
  • Region II: VND 3,530,000/ month;
  • Region III: VND 3,090,000/ month;
  • Region IV: VND 2,760,000/ month.

Region I covers the rural and urban districts of Hanoi, Ho Chi Minh City, Hai Phong, Bien Hoa City, Thu Dau Mot City, Vung Tau City of Ba Ria-Vung Tau Province, and some rural districts of Dong Nai and Binh Duong Province. Region II covers the remaining rural districts of Hanoi, Hai Phong, Hai Duong City, Hung Yen City, and some rural districts of Hung Yen Province. Region III covers the remaining provincial cities, Chi Linh town, and some rural districts of Hai Duong and Vinh Phuc Province. Region IV covers the remaining localities.

http://www.molisa.gov.vn/en/Pages/Detail-news.aspx?IDNews=1455

Paid Annual Leave 

According to Labour Law 2012, employees who have worked for a full 12 months are entitled to paid annual leave as follows:

  • 12 leave days for employees working in normal conditions;
  • 14 leave days for employees who are working on heavy, hazardous or dangerous job positions or working at harsh living conditions as regulated by related laws.
  • 16 leave days for employees who are working on extremely heavy, hazardous or dangerous job position or working at extremely harsh living conditions as regulated by related laws.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650

 

Working Hours

The normal working hour should not exceed 8 hours per day and 48 hours per week 

 

Rest Day

According to Article 110, Labour Law 2012, employees are entitled to at least one rest day per week.

 

Overtime

As regulated in Article 106, Labour law 2012, any working hours beyond normal working hour as regulated by law, collective labour agreements or internal labour rules will be counted as overtime hours.

Besides, the total of overtime hours could not exceed 30 hours per month and accumulated overtime working hours could not exceed 200 hours per year except for special cases as stipulated by the Government.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650

 

Probationary Period

The length of probation will depend on job requirements and range from six days to 60 days as follows:

  • 60 days: probationary period of up to 60 days for positions which require professional and technical qualification of collegial or higher level.
  • 30 days: probation period of up to 30 days for positions which require professional and technical qualifications of intermediate vocational level, professional secondary level, or technical workers and skilled employees.
  • 06 days: for all other employment in Vietnam

Salary during probationary period will depend on agreement of employee and employer, but must not lower than 85% salary of the job. SHUI contributions are not required during the probationary period. During probationary period, employer and employees have the right to terminate probation contract without notice in advance.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650

 

Termination

According to Labour Law 2012, employer can terminate labour contract with employees before the expiration if the employee dies, goes missing, loses civil capacity, reaches retirement age, is sentenced to prison or prohibited from performing the job in a court ruling, reaching mutual agreement to terminate labour contract early; a dismissal of the employee under a disciplinary procedure; a restructure of the company or based on the right of the employer to terminate the labour contract unilaterally.

In case employer unilaterally terminate labour contracts with employee, the employer is obligated to give notice in advance before unilaterally terminating. The notice period is 45 days for an indefinite term labour contract; 30 days for definite term contract and 03 days for seasonal contract.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650

Severance Payment

An employee who has worked for the company for over 12 months is eligible to severance payment. The severance payment consists of a half month’s salary for each year worked that not contributed unemployment insurance (i.e. probationary period, maternity period, etc.).

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650

 
 
 
 
 

 

Employees


Benefits In Kind

Volunteer private health insurance is not required by the law. However, it is common practice in Vietnam for employers to offer that insurance to employees. 

  

New Employees

When hiring a new employee, the employer is obligated to register the new employee with relevant authorities (i.e. Social Insurance Department, Department of Statistic, etc.)






 
 

Statutory Benefits


Maternity Leave

Female employees are entitled to 06 months of maternity leave with 100% of salary (the average salary of the last six preceding months) paid by Vietnam Social Insurance’s authority. In case of a multiple birth, the leave period shall be extended by 01 month for each child, counting from the second child.

When the female employee has taken at least 04 months of maternity leave, she can return to work, provided that the employer agrees. In this case, besides the wage of the working days paid by the employer, the female employee shall continue to receive the maternity allowance, in accordance with the Social Insurance Law.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=99775

Paternity Leave

A male employee is entitled up to 14 days of paternity leave within the first 30 days after the day of childbirth. The number of day off depends on whether it is a single child or more and it is a natural or a surgical birth.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=99775

Sickness

Employees are entitled up to 60 days of sick leave with 75% of salary paid by Social Insurance’s authority. The number of day off depends on the length of social insurance contribution period.

http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=99775

 


 

Tax


Income Tax Calculation

Resident taxpayer is subject to Personal Income Tax (“PIT”) on worldwide employment income at progressive rates regardless of where the income is paid or earned.

Vietnam's Progressive Rates   
 Tax Bracket

 Monthly Taxable Income (Million VND)

 Tax Rate
1 Up to 5 5 %
2 Over 5 to 10  10 %
3 Over 10 to 18  15 %
Over 18 to 32  20 %
 Over 32 to 52 25 %
 Over 52 to 80 30 %
 Over 80 35 %

Non-resident taxpayer is subject to PIT at flat rate of 20% on income earning in Vietnam.

http://www.itpc.gov.vn/investors/how_to_invest/law/2009-02-24.416897/view

 

Tax Payment to Authority

An employer is obligated to withhold PIT from employee’s salary and transfer to tax authorities on behalf of their employees.

Tax payment will be paid on monthly/ quarterly basic.

  

PIT Finalisation

An employer is obligated to conduct PIT Finalization on behalf of employees who are qualified to authorize employer to conduct their PIT finalization on their behalf at the end of year.

Submission Deadline

The deadline for submission PIT reports depend on the type of tax reports as follows:

  • No later than 20 of the following month for monthly PIT declaration;
  • At the end of the first month of the following quarter for quarterly PIT declaration;
  • 90 days after the year end for PIT Finalization declaration.

More Information Here

 






Payments


Bank Accounts and Paying Salaries

In Vietnam, it is common practice to pay salary to employees via their bank account. The payment period will depend on company policies/ practices but employees should be paid at least once per month.

 

13th Month & Bonus Payments

13th month and bonus payments are not required by the current law. However, employers usually offer 13th month to employees in Vietnam.

 

 

 

Local Information


Public Holidays 2018

Employees are entitled to public holidays as follows: 

Date Day Name
January 1 Monday First day of January
February 14 Wednesday Lunar New Year
February 15 Thursday Lunar New Year
February 16 Friday Lunar New Year
February 19 Monday Compensation Holiday
February 20 Tuesday Compensation Holiday
April 25 Wednesday Hung King's Day
April 30 Monday Reunification Day
May 1 Tuesday Labour Day
September 3 Monday Compensation Holiday

 

Local Office Working Hours and Time Zone

Working Hours: 08.00/09.00-17.00/18.00

Standard time zone: UTC + 7 hours

 

Useful Web Links

 
 
 

Links International is a leading payroll outsourcing provider across Asia Pacific and supports payroll in over 15 countries. If you’re interested to explore the idea of payroll outsourcingEOR, or Visa application please do not hesitate to contact us.
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