Vietnam is one of the fastest-growing countries in the South-Asian region. It is also a potential participant in the global IT landscape due to significant advancements in software, education communications and technology.
Furthermore, it ranks 5th in Southeast Asia for setting up a startup. With a vast availability of skilled talent, Vietnam is becoming one of the top destinations for IT outsourcing. The hiring process in Vietnam embodies an engaging amalgamation of traditional values and modern practices. As the nation progresses in the international economic sphere, its labour force becomes an increasingly important component of its growth fabric.
Reports state the demand for IT staff in the country has quadrupled in the last decade. Culturally, the Vietnamese workplace is often characterised by its hierarchy, emphasising the importance of building relationships and trust. This cultural nuance, sometimes, influences hiring practices too, with personal referrals and networks playing a crucial role in recruitment.
Are you, too, considering hiring from Vietnam for your upcoming projects? With a comparatively lower cost of living than in the US and EU, hiring in Vietnam is an economically favourable decision. But what do employers need to know about hiring in Vietnam? Are the local laws and taxations favourable too? Let us find out everything in this guide for hiring in Vietnam.
Key Facts about Vietnam
Things Employers Must Know About Hiring in Vietnam
Familiarity with the local labour laws, social security measures and business culture are essential for being a compliant employer in Vietnam.
Labour Laws of Vietnam
The 2019 Labour Code regulates most employment arrangements in Vietnam. Foreign nationals have to follow a set of decrees related to work permits. Here are a few things stated in the labour laws of Vietnam that employers must know:
Labour Contracts
A labour contract must be drafted in Vietnamese or a foreign language, depending on the candidate’s nationality. In a bilingual contract, provide a translation to ensure both versions are identical. There are two types of labour contracts:
- Indefinite term: Employers and employees do not fix contract liability and termination terms.
- Definite term: Both employer and employee agree on a definite contract period of up to 36 months. If an employee continues to work after the expiration of the definite term labour contract, it becomes an indefinite one.
Working Hours
In Vietnam, the standard working hours are set at 48 hours per week. You can divide it with a typical 8-hour workday over 6 days a week, or 9-hour shifts for 5 days. The employer has the final say on this matter.
Minimum Wages
Vietnam’s minimum wage increased by 6% in 2024. The rate varies by region, ranging from 3,250,000 VND (133 USD) in rural areas to 4,680,000 VND (192.33 USD) in urban centers. The average salary also depends on the nature of the job, the experience required and the candidate's qualifications.
Payroll Cycle
Vietnam generally follows a monthly payroll cycle. The salary is disbursed on the last working day of the month or per the dates mentioned in the employment contract.
13th Pay
While a 13th-month salary is not mandatory in Vietnam, most organisations give it at the end of the year or during the Lunar New Year. It is often termed as the “Tet bonus.”
Employee Benefits and Social Security
Vietnam, like other nations, has statutory benefits that employers are required to offer to their full-time employees.
Leaves
Employees who have worked for an employer for over 12 months are eligible for 12 days of paid annual leave. Those who are disabled, work under arduous, toxic and hazardous conditions or live in harsh conditions are entitled to 14 days of leave.
Other types of leaves include:
- Public holidays: There are 6 major public holidays in Vietnam.
- Sick leaves: Maximum of 30 days per year.
- Maternity leave: 6 months of prenatal and postnatal leave. The prenatal leave period shall not exceed 2 months, paid by the Social Insurance Fund.
- Paternity leave: New fathers are entitled to a paid leave of 5-14 days within a month of childbirth. The leave also depends on the circumstances: 5 days for normal delivery and 7 days if the child is born by C-section.
- Tet celebrations: The Lunar New Year is a five-day celebration during which all workers travel to their hometowns. Throughout the week, a lot of local businesses close as well. This is one of the most important holidays in Vietnam.
Overtime
Overtime cannot exceed 4 hours per day. The compensation depends on the day the employee works overtime:
Regular weekday: 1.5x of the standard hourly rate
Weekend: 2x of the standard hourly rate
Public holiday: 3x of the standard hourly rate
Termination
Provided that you have a signed definite term contract, employers planning to terminate you must give notice of at least 30 days.
Social Security
Both the employer and the employee must pay these mandatory contributions. Social security contributions in Vietnam are divided into three types:
- Social Insurance: Employers contribute 17.5% of employees' salary to social insurance. This covers employee benefits like sick leave, maternity leave, benefits for work-related accidents and occupational diseases and pension allowance.
- Health Insurance: Employers contribute 3% of employees' salary to health insurance. Medical costs, both inpatient and outpatient, are covered by insurance.
- Unemployment Insurance: This is a replacement for severance pay. The monthly unemployment allowance equals 60% of the person’s average salary for the last six months of employment. The employer contribution is 1% every month.
Taxation
Vietnam recently approved a new minimum corporate income tax (CIT) for multinational companies. From 2024, multinational enterprises with revenue above $800 million or more must pay a 15% tax.
All local and foreign companies are subject to CIT, a direct tax levied on the profits earned by companies or organisations. Moreover, it has to be paid quarterly. The standard CIT is at 20%.
Business Culture in Vietnam
Local entities and employees are well aware of Vietnamese business ethics and practices. However, a foreign company looking at setting up a permanent entity or hiring in Vietnam needs to acquaint itself with its business culture:
Titles and Hierarchy Matter
In Vietnamese culture, titles and hierarchy are very important. Senior members or leaders often make business decisions while the team executes them. While referring to someone, names are preceded by titles or positions. It is a mark of showing respect to those above you.
Face-Saving
Like Asian culture, maintaining one’s dignity is highly regarded in Vietnam. A person is considered to ‘lose respect’ if he/she is disrespected or rejected in front of others. Thus, it is expected to be humble and diplomatic in case of any disagreements.
Punctuality
Vietnamese people respect time, especially for important meetings. But it is acceptable to be about 5-10 minutes late in some situations.
Reciprocation
It is good etiquette to reciprocate an action or a favour at work. The people of Vietnam are eager to return the favour if you’ve helped them. It is one of the ways to build personal relationships professionally.
Compliance Risks in Vietnam
When venturing into the Vietnamese job market, employers must navigate a complex landscape of local labour laws, language barriers and cultural nuances to ensure compliance and successful hiring.
Vietnam's labour laws are comprehensive and detail-oriented. Employers must adhere to strict minimum wage regulations, overtime and labour contracts which vary by region and industry. Failure to comply with these laws can result in significant fines and legal challenges.
While English proficiency is rising in Vietnam, especially among the younger population and in major cities, language barriers can still pose significant challenges in the workplace. If you are looking at hiring independent contractors, there could be a chance of miscommunication and potential non-compliance with local regulations. Consider hiring bilingual staff or providing language training to facilitate clear communication and compliance with Vietnamese laws and workplace expectations.
Vietnam's data protection and privacy regulations may not be as comprehensive as those in some other jurisdictions, but there are still legal requirements to consider, especially regarding the collection, use and protection of personal data. Employers must ensure that their handling of employee data complies with local laws.
Understanding these key areas is crucial for smooth operations and avoiding potential legal and operational pitfalls.
Hiring in Vietnam Vs. Hiring in India
Vietnam is a very popular destination for IT outsourcing or recruiting foreign talent, but India is one country that has an upper edge in that aspect. Here are some reasons you can consider hiring from India instead of Vietnam:
Wide Talent Pool: India produces over 1.5 million engineers yearly, so there is no shortage of qualified talent. The country’s larger population and longer history as a global outsourcing destination mean it has a more extensive and experienced talent pool in certain sectors. Since the early 90s, India has provided outsourcing services to global companies.
English proficiency: The use of English in education and business communication in India ensures a high proficiency rate. English is the second language in this diverse country.
Digitization: Internet penetration has significantly entered even remote parts of India. By 2025, 56% of new interest users in India will be from rural areas. With access to technology, hiring remote talent from India is easily possible.
Both India and Vietnam have their share of advantages when outsourcing talent. You can decide based on your requirements, budget, government support and infrastructure in the country of your candidates.
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If you need assistance finding the right talent in India, rely on Rapid EOR. With over two decades of ingrained experience navigating India's ever-changing environment, our journey has equipped us with firsthand knowledge of the challenges and opportunities for hiring talent in India.
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