Payroll and Benefits Guide Vietnam

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee Income Tax

* As of 1st January 2022, foreigners working in Vietnam need to contribute to the Social Insurance Programme, with employer and employee contributions as above.

General

In Vietnam, the statutory minimum wage is set per zone as designated by the government.

• Zone 1: urban Hanoi and Ho Chi Minh City
• Zone 2: rural Hanoi and Ho Chi Minh City plus Da Nang
• Zone 3: provincial cities and districts of Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Binh Phuc, and other provinces not listed in Zones 1 and 2 above
• Zone 4:  all remaining localities

With effect from 1st July 2022, the updated Decree No 38/2022/ND-CP increases minimum wages as follows:

• Zone 1: 4,680,000 VND
• Zone 2: 4,160,000 VND
• Zone 3: 3,640,000 VND
• Zone 4:  3,250,000 VND.

It also increases minimum hourly wages as follows:

• Zone 1: 22,500 VND
• Zone 2: 20,000 VND
• Zone 3: 17,500 VND
• Zone 4:  15,600 VND

Wages for employees that are paid daily or on a weekly basis must not be lower than the minimum wage when converted to monthly or hourly rates.

Payroll Cycle

The payroll cycle in Vietnam is generally monthly and is usually paid on the last working day or as agreed within the employment contract.

13th Salary

In Vietnam, it is customary to pay a 13th-month salary at the Lunar New Year or the end of the year.

General

General

In Vietnam, working hours must not exceed eight hours a day or 48 hours per week.

Overtime

Work that exceeds the standard weekly working hours is deemed as overtime and workers consent is needed for overtime working. Overtime is paid at a rate of 150% salary on weekdays, 200% salary on weekends and 300% salary on holidays. Overtime working should not exceed 50% of the normal working hours in a day, up to 60 hours in a month and a total 0f 200 overtime hours per year.

By exception, in certain scenarios it is possible to work overtime of up to 300 hours per year, for which the employer must notify in writing the specialized labor agency under the provincial People’s Committee. Exceptional circumstances include certain industries such as producing, agriculture, telecommunications, problem solving jobs that require highly qualified professional and technical workers but the labor market cannot supply them adequately and promptly, cases of urgent work that cannot be delayed due to seasonality or to deal with work arising due to unforeseen objective factors such as consequences of weather and natural disasters and other cases prescribed by the Government of Vietnam.

Working Week

Monday-Saturday/Monday- Friday

Paid Time Off

Annual leave is a minimum of 12 working days per year. This increases by one day for every five years of consecutive service.

Public Holidays

Public holidays falling on weekends are moved to the next working day in lieu.

In addition to these public holidays, an expatriate employee is also entitled to one day off for the traditional new year and another day for the national day of their home country.

Sick Days

Vietnamese employees who are signed off sick by a doctor are entitled to sick leave paid by the Social Insurance Authority, equal to 75% of the salary preceding months salary, in the amount of:

• 30 days per year (where less than 15 years of contributions have been made to the Social Insurance Fund)
• 40 days per year (where between 15 to 30 years of contributions have been made to the Social Insurance Fund)
• 60 days per year (where more than 30 years of contributions have been made to the Social Insurance Fund).
• 180 days per year where an employee requires long term treatment due to specific illnesses listed by the Ministry of Health. Those still requiring treatment after 180 days continue to be entitled to the paid sick leave at a lower pay rate of 45% to 65% of their salary.

Employees must provide a medical certificate within 48 hours of the first day of sickness.

Sick leave entitlement for expatriate employees is determined by an agreement between the employer and the worker.

Maternity Leave

Female employees are entitled to a total of 6 months maternity leave – a maximum of 2 months can be taken as prenatal leave and the remainder as postnatal leave. An additional 1 month leave is given where there are multiple births.

Vietnamese nationals are entitled to payment from the Social Insurance Authority at a rate of 100% of the average monthly salary on which Social Insurance premiums are based on the six months preceding their leave, capped at a maximum salary during maternity of 20 times the minimum common salary.

Payment for expatriate employees on maternity leave is determined by an agreement between the employer and the worker.

Employees must submit an application for maternity leave to her employer at least 15 days before the expected due date. To initiate the Social Insurance subsidies, within 30 days after giving birth, the mother must submit the hospital discharge papers, birth certificate of the newborn baby and an application to receive maternal subsidies.

Paternity Leave

New fathers are entitled to leave of:

• For natural births: 5 days
• For birth by cesarean section: 7 days
• For natural birth to twins: 10 days
• For the birth of twins by cesarean section: 14 days.
• For the birth of more than two children at one time: additional 3 days of leave for every additional child (from the third child onwards).

Vietnamese nationals are paid by the Social Insurance Authority at a rate of 100% of the salary received in the month preceding the start of the paternity absence.

Payment for expatriate employees on maternity leave is determined by an agreement between the employer and the worker.

Parental Leave

Parental leave in Vietnam is available for childcare and entitles employees to up to 20 working days of parental leave per year until the child reaches the age of three and thereafter up to 15 working days per year until the child reaches the age of seven. Vietnamese nationals will have this leave paid by the Social Insurance Authority at the rate of 75% of the salary in the month preceding the start of the leave.

Other Leave

Depending on the contract, employees may be allowed additional leave types, once approved between the employer and employee for the following:

• Bereavement: Employees are entitled to 3 days of paid leave for the death of a spouse, biological or adoptive parent; spouse’s biological or adoptive parent, biological or adopted child. 1 day of unpaid leave should be given for the death of a grandparent or biological sibling.
• Marriage: Employees are entitled to up to 3 days in case of marriage and one day for a child’s marriage. 1 day of unpaid leave should be given for the marriage of a parent or sibling.

Termination Process

Termination justification is based on the criteria outlined in the labor law regulations, including repeated failure to perform work to the required standard or misconduct.

Notice of termination must be in writing. It is not permitted to terminate a worker whilst they are on paid time off.

Notice Period

Notice of termination must be in writing and the length of the notice period varies based on the type of contract:

• 45 days for an indefinite labor contract
• 30 days for a definite labor contract (between 1-3 years)
• 3 working days for the seasonal contract (contract of less than one year)
• No notice is required during the probation period

Severance Pay

Vietnamese labor law requires employers to provide severance payments to terminated employees who have been regularly working for the employer for a period of 12 months or more. The severance payment is equal to half a month’s wages for each year of employment. Both parties submit a sum of money to a severance fund every month and receive a calculated sum upon termination.

Probation Period

For permanent employees, the probation period in Vietnam is generally based on the complexity and skill required to do the role and varies between 6 to 60 days; for managerial roles up to 180 days might be used. The wage for an employee during the probation period must be agreed upon in writing, but cannot be less than 85% of the full-time permanent salary for the role.

General

• Meal allowance per month (non-taxable)
• Commuting expenses (from and to the office e.g train tickets/bus, average petrol) per month (taxable income)
• Gym membership
• Internet coverage (taxable income)

VISA

Foreign nationals typically require a work permit before entering Vietnam to take up employment. The Vietnamese work permit is a legal document authorizing the person to engage in employment and receive compensation from a company in Vietnam.

However, a foreigner may work in Vietnam without a work permit with a work permit exemption certificate in certain circumstances. This certificate is equivalent to the work permit, valid for up to two years, and serves as a basis for applying for a temporary residence card.

General

VAT is 10% standard rate.