Employment Contracts in Vietnam

A Comprehensive Guide to Employment Contracts in Vietnam
Employment contracts in Vietnam must adhere to strict legal standards, ensuring clarity and protecting both employers and employees. Whether hiring directly or through an Employer of Record in Vietnam, understanding these regulations is essential.

1. When Does the Employment Contract Start?
The employment contract becomes effective once signed by both the employer and the employee. Contracts must be finalized before the employee begins work to ensure compliance.
💡 Pro Tip: Always draft written agreements to clearly define roles, rights, and obligations, minimizing legal risks.

2. Key Components of a Vietnamese Employment Contract
To meet Vietnamese labor regulations, employment contracts should include:
Job Title and Responsibilities: Clearly state the role and expectations.
Work Location: Specify the primary workplace, whether it is office-based, remote, or hybrid.
Contract Type: Contracts can be definite-term (1–36 months), indefinite-term, or seasonal/project-based.
Working Hours: The standard is 8 hours per day and 48 hours per week. Overtime requires additional pay.
Compensation and Benefits:
Salary: Must meet the regional minimum wage.
Allowances: Housing, transportation, and meal stipends may be included.
Mandatory Benefits: Social insurance, health insurance, and unemployment insurance contributions are required.
Leave Policies:
Annual Leave: Minimum 12 days, increasing with seniority.
Sick Leave: Paid leave is covered under social insurance.
Maternity/Paternity Leave: Maternity leave is 6 months; fathers are entitled to paternity leave as per labor laws.
Termination Terms: Include notice periods (30–45 days depending on the contract type) and grounds for dismissal.
💡 Why This Matters: Comprehensive contracts minimize disputes and ensure compliance with Vietnamese labor laws.

3. Salary Structure in Vietnam
Compensation packages in Vietnam typically include:
Base Salary: Must align with regional minimum wage laws.
Bonuses: Performance-based or annual bonuses are common.
Allowances: Transportation, housing, and meal allowances vary by employer.
💡 Key Takeaway: Transparent and structured salary packages attract and retain top talent while ensuring compliance.

4. Legal Considerations: Protecting Your Business
a. Non-Compete and Confidentiality Clauses
Non-compete agreements are enforceable if reasonable in duration and scope. Confidentiality clauses protect business interests.
b. Statutory Contributions
Employers must contribute to:
Social Insurance: Covers retirement and sickness benefits.
Health Insurance: Mandatory for all employees.
Unemployment Insurance: Provides security during periods of unemployment.
💡 Tip: Accurate statutory contributions ensure compliance and avoid penalties.

5. Background Checks and Employee Protections
Background checks are allowed in Vietnam but must respect employee privacy. Consent is required for verifying educational qualifications, work history, and criminal records.

6. The Importance of Written Contracts
In Vietnam, written contracts are crucial for legal compliance and clarity. These agreements protect both parties and clearly outline roles, expectations, and obligations.

7. Why Partner with GlobainePEO?
Expanding into Vietnam requires navigating its complex legal framework. Partnering with GlobainePEO ensures:
Smooth hiring and onboarding processes.
Compliance with payroll, taxes, and statutory contributions.
A focus on core business operations while we handle the complexities.

💡 GlobainePEO Advantage: As your trusted Employer of Record in Vietnam, we handle contract drafting, employee benefits, and compliance with local labor laws.

Drafting compliant employment contracts is the foundation of successful business expansion into Vietnam. Partnering with a Vietnam EOR, like GlobainePEO, allows you to focus on your core operations while ensuring legal and administrative requirements are met efficiently.