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Vietnam’s Labour Law for Foreign Firms in 2024: Quick Read

The most recent iteration of Vietnam’s Labour Law, the Labour Code 2019, contains details on hiring and firing, employee leave entitlements, and regulates working hours and overtime. The Labour Code, however, is quite dense and can be quite nuanced. In light of this, this Quick Read runs through the most important parts and should hopefully provide the key details foreign firms, that are looking to establish a business in Vietnam, might need.

Working hours in Vietnam

Chapter 7, Section 1 of the Labour Code covers working hours in Vietnam.

Specifically, the code states that an employee should work no more than 10 hours a day and not more than 48 hours a week. If a worker goes over 48 hours a week they are entitled to penalty rates.

Working overtime in Vietnam

Chapter 7, Section 1, Article 107 of the Labour Code addresses overtime working hours.

Workers can work overtime and should be compensated accordingly. There are, however, some general restrictions:

  • A worker cannot work more than 12 hours in a day;
  • They cannot work more than 40 hours of overtime in a month; and
  • They cannot work more than 200 hours of overtime in a year.

That said, there are exceptions for manufacturing and essential services in which employees can work up to 300 hours of overtime in one year.

Penalty rates in Vietnam

Chapter 6, Article 98 of the Labour Code covers penalty rates.

In brief, penalty rates will apply for overtime worked in Vietnam but vary depending on the day and time that overtime work is completed: 

  • For standard overtime–where the employee works more than 48 hours in a week–the penalty rate is an additional 50 percent of their regular rate. 
  • On rostered days off this jumps to their regular rate plus 100 percent.
  • For the night shift, which is 10 pm to 6 am, an employee receives their regular rate plus 30 percent; with an additional 20 percent (so 50 percent in total) if those night time hours are overtime hours.
  • On public holidays it is the regular rate plus 200 percent.

Minimum wage in Vietnam

Chapter 6, Article 91 addresses the minimum wage in Vietnam.

Vietnam’s minimum wage is reviewed every year or so by the National Wage Council which will make a recommendation to the government. The next increase kicks in from July 1, 2024. It is determined by regions which are generally relative to the cost of living in particular areas.

RegionVNDUS$
14,680,000$195
24,160,000$173
33,640,000$151
43,250,000$135

See also: Minimum Wage in Vietnam 2024: Your Questions Answered

Also, note that the minimum wage is generally well below the average wage in Vietnam which is currently about VND 7.6 million or US$304.61

See also: Average Salary in Vietnam 2024: Quick Guide

Public holidays in Vietnam

Chapter 7, Section 2, Article 112 addresses public holidays in Vietnam.

Like most countries in the world, Vietnam has a number of public holidays. In brief, there are six public holidays accounting for a total of 11 days of leave. The bulk of those days off are at the Lunar New Year during which workers have five working days off.

See also: Public Holidays in Vietnam 2024: Cheat Sheet

Leave entitlements

Vietnamese workers are awarded several different types of leave.

Annual Leave

Most workers in Vietnam receive 12 days of annual leave a year. Workers in hazardous work, that have a disability, or are minors are entitled to an additional two to four days depending on their specific circumstances.

Maternity leave

Female workers are entitled to a total of six months of maternity leave. This can be from two months before the birth up to six months after. A female employee can only return to work after taking at least four months of maternity leave. In the case of a multiple birth, the mother is entitled to one additional month of leave for each additional baby.

Paternity leave

Paternity leave is not in the Labour Code but rather can be found in the Law on Social Insurance in Chapter 3, Section 2, Article 34.

New dads are entitled to five days of leave generally, however, in the event of a C-section they can have an extra two days for a total of seven days of leave.

Wedding leave

Employees in Vietnam are also entitled to leave for weddings. If they are getting married they are entitled to 3 days off, one day off if their child is getting married, and one day off for the marriage of a parent or biological sibling.

Bereavement leave

In the event of a death in the family, Vietnamese workers are entitled to:

  • Three days off if it is a parent, a parent of their spouse, a spouse, or a child; and
  • One day off for a grandparent or biological sibling.

Entitlements in Vietnam

Workers in Vietnam are entitled to social and unemployment insurance. Contributions to these safety nets are paid for in part by the worker and in part by their employers.

Compulsory social insurance contributions 2024

Local WorkersForeign Workers
DescriptionEmployeeEmployerEmployeeEmployer
Retirement8%14%8.00%14%
Maternity LeaveN/A3%N/A3%
Health Insurance1.50%3%1.50%3%
Unemployment Insurancefirst%first%N/AN/A
Occupational Health and SafetyN/A0.5% (*)N/A0.5% (*)
Total10.50%21.50%9.50%20.50%

Source: Thu Vien Phap Luat

Employing foreign workers in Vietnam

Employing foreign workers in Vietnam comes with a few extra steps as opposed to employing a local worker. Firstly, foreign workers will require a visa to work in Vietnam. This is usually either a business visa or a work permit. It will also involve proving that the position cannot be filled by a local employee. This will generally require advertising the position online for about two weeks.

Practically speaking, for the kinds of jobs that foreign workers fill in Vietnam, there is a dearth of skills locally and it would be unusual for a foreign worker application to be knocked back on the grounds that a local worker could fill the position.

See also: Vietnam Visas for Doing Business in Vietnam: Quick Read 2024

Terminating an employee in Vietnam

Section 3, Article 36 of the Labour Code breaks down the guidelines for terminating an employment contract.

This is generally fairly straightforward. There must be a just cause which is similar to elsewhere in the world–an employee fails to meet their employer’s expectations with respect to their work but not simply because the employer doesn’t like the employee.

In order to unilaterally terminate a contract an employer must give an employee 45 days’ notice if the employee is on a permanent contract and if an employee is on a short-term contract defined as 12 months to three years it is 30 days.

Severance pay in Vietnam

Section 3 article 46 covers severance pay.

In the event an employee’s contract is terminated and they have been working for the firm for a minimum of one year, they will be entitled to half a month’s pay for each year they have been with the firm. This is calculated based on the average salary of the employee for the six months prior to their dismissal.

What’s next?

This should cover the general information a foreign firm or individual should need to know about Labour Law in Vietnam. That said, labour rules and regulations are prone to change on occasion and in order to keep abreast of the most accurate and up-to-date information firms should make sure to subscribe to the-shiv.

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