EOR Service in Vietnam

In Vietnam, Gloroots serves as a leading Professional Employer Organization (PEO) and Employer of Record (EOR) service provider, fully equipped to manage all your HR, payroll, compliance, and employment needs while ensuring strict adherence to local laws and regulations.

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When businesses aim to expand in Vietnam, the usual method often involves establishing a local branch, a process that can be time-consuming and extend over several months.Another challenge to address is ensuring that your hiring practices align with Vietnam's labor regulations. 

For example, in Vietnam employment contracts vary with scope of service, and duration: Indefinite-term contracts, definite-term contracts (lasting from 1 to 36 months), contracts for specific or seasonal tasks under 12 months.  Secondly, all trade unions in Vietnam operate under the umbrella of the Vietnam General Confederation of Labor (VGCL). This structure contrasts with many countries where multiple independent trade unions exist. Employers in certain sectors are required to establish a grassroots trade union within their organization.

These laws can confound even experienced employers. Gloroots offers a reliable solution for multinational companies seeking access to Vietnam's skilled workforce while avoiding the complexities of managing labor regulations. Through our Professional Employer Organization (PEO) services, we act as intermediaries, ensuring that your employees enjoy a seamless and favorable work environment in Vietnam.

EOR/ PEO services in Vietnam can be billed using two methods: a fixed yearly fee per employee or a calculated fee based on the company's annual payroll. The first option generally falls within a specific range, while the second option is a percentage of the total payroll.

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Gloroots provides an equally competitive platform in Vietnam at an attractive rate. Our pricing guarantees that your company and its employees receive the necessary HR support for optimal performance.

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Key Metrics For Foreign Employers

The Vietnamese government has been actively driving substantial economic reforms, promoting private ownership, pursuing market-oriented restructuring, and implementing comprehensive five-year economic plans. 

Education has been a paramount focus for the government, with a substantial allocation of 20% of its budget since 2008. This strategic investment has led to the cultivation of a highly skilled workforce, particularly in the services sector.

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Vietnam.

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Source: The Global Talent Competitiveness Index 2022

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Vietnam.

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Vietnam's key employment legislation is the Employment Act, which, with a few exceptions, outlines the fundamental terms and conditions of employment for all types of workers.

The primary legal framework governing employment relationships in Vietnam is the Labor Code of 2019, which became effective on January 1, 2021. Another crucial employment law is Decree 152/2020/ND-CP, which specifically deals with the employment of foreign nationals in Vietnam. Decree 152/2020/ND-CP primarily deals with issues like work permits for foreign workers in Vietnam.

Employment Contract

An employment contract in Vietnam can be written in either Vietnamese or a foreign language, depending on the agreement between the employer and employee. Temporary jobs lasting less than three months do not require a written contract.

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Vietnamese employment laws require that an employment contract includes essential terms such as job responsibilities, working hours, wages or salary, work location, contract duration, occupational safety and hygiene conditions, social insurance, and employee benefits. Typically, these statutory terms apply to standard labor contracts for simple work.

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Alternatively, an employment contract can refer to a job description, outlining responsibilities, compensation, and benefits. Employers and employees are free to add other terms to the contract, as long as they are at least as favorable as statutory rights and do not violate social norms.

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Certain changes, like salary increases and promotions, can be made by employers without employee consent, but employers must provide a 12-month notice for such changes.

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Local employees in Vietnam must be paid in Vietnamese Dong. Consider partnering with Gloroots, a Vietnamese PEO, to simplify the onboarding process for your company.

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Working Hour 

In Vietnam, the maximum allowable working hours are capped at eight hours per day and 48 hours per week.

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Overtime

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Minimum Wage

In Vietnam, the government sets the statutory minimum wage based on different zones:

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Zone 1: Includes urban areas of Hanoi and Ho Chi Minh City.

Zone 2: Encompasses rural areas of Hanoi and Ho Chi Minh City, along with Da Nang.

Zone 3: Covers provincial cities and districts such as Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Binh Phuc, and other provinces not listed in Zones 1 and 2.

Zone 4: Includes all remaining localities.

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Starting from July 1, 2022, Decree No 38/2022/ND-CP introduces the following minimum wage increases:

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Zone 1: 4,680,000 VND

Zone 2: 4,160,000 VND

Zone 3: 3,640,000 VND

Zone 4: 3,250,000 VND

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Additionally, the updated decree raises the minimum hourly wages as follows:

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 Zone 1: 22,500 VND

 Zone 2: 20,000 VND

 Zone 3: 17,500 VND

 Zone 4: 15,600 VND

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For employees paid on a daily or weekly basis, their wages must not fall below the minimum wage when converted to monthly or hourly rates.

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Maternity Leave and Paternity Leave

Female employees in Vietnam are entitled to a total of 6 months of maternity leave, with a maximum of 2 months as prenatal leave and the rest as postnatal leave. An additional 1 month of leave is granted for multiple births.

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Vietnamese nationals receive payment from the Social Insurance Authority at a rate of 100% of their average monthly salary, based on the six months preceding their leave. However, this payment is capped at a maximum salary equivalent to 20 times the minimum common salary.

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For expatriate employees on maternity leave, payment is determined through an agreement between the employer and the employee.

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To avail maternity leave benefits, employees need to submit an application to their employer at least 15 days before their expected due date. To receive Social Insurance subsidies, the mother must provide hospital discharge papers, the newborn's birth certificate, and an application for maternal subsidies within 30 days after giving birth.

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Annual leave

Employees are entitled to a minimum of 12 working days of annual leave per year, and this allowance increases by one day for each consecutive five years of service.

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Sick Leave

Vietnamese employees who are medically certified as sick by a doctor are eligible for sick leave benefits paid by the Social Insurance Authority. The benefit is equal to 75% of the employee's salary from the preceding months. The entitlement is as follows:

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• 30 days per year if the employee has contributed to the Social Insurance Fund for less than 15 years.
•  40 days per year if the employee has contributed to the fund for 15 to 30 years.
•  60 days per year if the employee has contributed for more than 30 years.
•  In cases of specific long-term illnesses listed by the Ministry of Health, employees can receive sick leave for up to 180 days per year. Those still requiring treatment after 180 days receive sick leave at a reduced pay rate of 45% to 65% of their salary.

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Employees are required to provide a medical certificate within 48 hours of the first day of sickness.

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Sick leave benefits for expatriate employees are determined through an agreement between the employer and the employee.

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Income Tax

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Social Security contribution

Employer Payroll Contributions:

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Employee Payroll Contributions:

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Termination Process

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Grounds for termination are determined by the criteria specified in labor law regulations, which may include persistent failure to meet work standards or engaging in misconduct.

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Termination notices must be provided in written form. It is prohibited to terminate an employee while they are on paid leave.

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Notice Period

Termination notice must be in written form, and the duration of the notice period varies depending on the contract type:

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•  45 days for an indefinite labor contract.
•  30 days for a definite labor contract lasting between 1 to 3 years.
• 3 working days for a seasonal contract, which is a contract for less than one year.
• No notice is necessary during the probationary period.

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Severance Pay

In accordance with Vietnamese labor law, employers are obligated to offer severance compensation to employees who have worked consistently for them for 12 months or longer. The severance pay amounts to half a month's salary for each year of service. Both the employer and employee contribute to a severance fund each month, and the employee receives a calculated sum from this fund upon termination.

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Probation Periods

For regular employees in Vietnam, the duration of the probationary period typically depends on the complexity and skill demands of the position, ranging from 6 to 60 days. In managerial roles, the probationary period might extend up to 180 days. It's essential to have a written agreement regarding the employee's salary during the probationary period, which, however, cannot be lower than 85% of the full-time permanent salary for the given role.

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Hiring employees in Vietnam might seem complex due to various regulations to remember. You need to understand employment laws, ensure accurate payments to employees, adhere to fairness and data protection rules, and more. All these factors can make the hiring process appear intricate.

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But here's the good news – Gloroots can simplify everything for you. Our comprehensive solutions offer a convenient way to manage all aspects of hiring in Vietnam. Our experts assist with international hiring and complying with payment and work regulations. We handle employment agreements, on-time payments, and benefits, allowing you to concentrate on choosing the best candidates.

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You can rely on Gloroots to make global hiring straightforward and hassle-free.