In comparison to some other countries in the region, Vietnamese employees seem to be better protected under Vietnam’s labour laws and regulations. Vietnamese labour law is mandatory in the way that an employer and employee may not agree on terms that are less favourable to the employee than the conditions set out in labour legislation. On the contrary, they may agree on terms that are more favourable to the employee. The primary legislation governing employment in Vietnam is the labour code with the current one is the Labour Code of 2019 (“Labour Code”). With a pro-employee principle in mind, the Labour Code provides various legal measures and tools to protect employees. Regardless, the Labour Code provides circumstances in which an employer may dismiss or lay off one or multiple employees.
Labour Contract
With the exception of short-term labour contracts (i.e., with the term of less than one month), labour contracts are required to be made in writing. A labour contract must include statutory items including work type, working hours and rest breaks, wages, location, term, conditions on safety and hygiene, and social insurance contribution for the employee. In addition to the compulsory items, an employer may include other clauses such as intellectual property, confidentiality, protection of trade secrets, non-compete and non-solicitation, etc.
The term of a labour contract can be indefinite or definite. The maximum term of a definite labour contract is 36 months. An employer may only sign up to two definite-term labour contracts with an employee. Thereafter, the employer is required to sign an indefinite-term labour contract with the employee.
An employer may only early terminate a labour contract in circumstances listed under the Labour Code and the related labour contract (e.g., poor performance, breach of the labour rules, etc.). At will termination by the employer is not allowed. On the contrary, an employee may unilaterally terminate his/her labour contract at any time without reason by sending a prior notice as prescribed under law (e.g., 45 days for indefinite labour contracts or 30 days for definite labour contracts).
Probation
An employer and an employee may reach agreement on a probationary (trial) period of work and the rights and obligations of the two parties within that period.
The duration of a probationary period depends on the nature and complexity of the work and must not exceed 180 days for managers/executive; 60 days for jobs requiring professional or technical college qualification or above; 30 days for jobs requiring an intermediate-level qualification or for technicians or trained staff; and 6 days for other types of work.
During the probationary period, the employer must pay a salary that corresponds to at least 85% of the ordinary salary for the job. Either party may terminate the employment relationship during the probationary period without providing an advanced notice and without paying compensation unless the parties agree otherwise.
Minimum Wage
Vietnamese labour laws provide for two categories of minimum wage: basic wage (which is applicable to calculate compulsory social insurance contributions and salaries for civil servants, etc.) and regional minimum wage (applicable for other employers and employees to use as thresholds for salary negotiation).
Currently, the basic wage is VND1,490,000 and the minimum regional salary for region I is VND4,680,000 per month. These minimum salaries are subject to change from time to time as determined by the Government.
Based on the level of economic conditions, the Vietnamese Government divides the whole country into four regions (i.e., region I, II, III and IV). Region I includes Hanoi and Ho Chi Minh city. A region denominated with a higher number means it is less economically developed.
Employment of Foreign Expatriates
Employment of foreign expatriates is allowed but generally limited to managerial positions or experts who have expertise that Vietnamese workers are not yet able to satisfy.
Foreign employees, with some few exceptions, are normally required to obtain work permits before entering into Vietnam for work. A work permit is issued by the provincial Department of Labour, Invalid and Social Affairs where the employer is located. Work permits are issued for a maximum period of 24 months and may be renewed only one time for the same period as maximum. A work permit is tied to the specific employer who applied for the employee’s work permit, and the foreigner may legally work for that employer only.
Annually, each employer who wishes to employ a foreign expatriate(s) is responsible to determine its needs to employ foreign expatriates and requests the same to the chairperson of the provincial People’s Committee where the employer’s head office is located. The chairperson will consider issuing an approval to the employer before the employment can be proceeded.
Employers who employ foreign employees without work permits or fail to comply with other requirements for foreign employment of foreign expatriates are subject to administrative fines. Foreign employees who work in Vietnam without a work permit may be deported.
