Employer of Record in Vietnam

If you’re looking to expand globally and think about conducting business in Vietnam, you have a number of options. You might open an office, work with a subsidiary, or appoint an Employer of Record in Vietnam.

Using a PEO, or professional employer organization, to assist you in conducting business overseas, is an option. Marzuna is one of the top EOR solution providers in the region because of its extensive knowledge of Vietnamese labor laws and the hiring, onboarding, payroll, and tax processes. Moving forward with Marzuna as your EOR can help you save time and money, ensure local law compliance, and minimize risks.

Overview of Vietnam

• Estimated Population: 97,338,579
• Currency: Vietnamese Dong (VND)
• Capital: Hanoi
• Number of officially recognized languages spoken: 110 officially recognized dialects
• Languages frequently used: Vietnamese
• GDP:  261.9 Billion

Employment Landscape In Vietnam

Vietnamese labor regulations have gained recognition for their worker-friendly nature. Despite Vietnam’s historical identity as an agrarian nation, its potential as a global business market cannot be overlooked. To align with international standards, labor laws in the country have undergone a series of revisions. Vietnam boasts a workforce of approximately 58 million individuals, with 1 million among them being young people. However, only 12% of the population is employed in skilled or trained sectors, which leads to a noticeable shortage of skilled workers in this domain.

Vietnam’s labor laws are committed to equal treatment of both native and foreign workers. Additionally, specific safeguards and protections are afforded to various segments of society, including the elderly and women, under Vietnam’s employment regulations.

Despite the shortage of highly qualified local workers, Vietnam’s labor laws are well-structured and comprehensive. Here, we provide a brief overview of various facets of employment in Vietnam and more.

Vietnam Labour Laws

2019 Labor Code	Beginning on January 1, 2021, the Employment Contract must be written in Vietnamese. The contract may be multilingual in cases when there are foreign investments in the company. Within 30 days of operations, employees must inform the Labor Authority on the usage of staff.
Decree 152/2020/ND-CP	The Decree provides information regarding foreigner work permits and is primarily intended for foreigners.
Internal Labor Rules (ILR)	ILR is required and must be registered with DOLISA for businesses with 10 or more employees in Vietnam. Particularly when firing employees or enforcing any sort of disciplinary action, the ILR is crucial. Employers may find it challenging to fire an employee for a specific crime if the ILR does not mention it or if it is not recorded.

Different terms of the Vietnamese Labor Code and their explanations are listed here.

Labour Contract	The law acknowledges two different kinds of contracts. The first is a labour contract with a fixed term, which can last up to 36 months. Indefinite labour agreements have no set duration. Work permit rules allow businesses that hire foreign nationals to have contracts that are no longer than 24 months.
Working hours	Employees are limited to a maximum of 48 hours per week and 8 hours per day of labour. The government encourages firms to allow their staff to work 40 hours each week, while it is not required.
Breaks and rest during working hours	A minimum break of 30 minutes during the day and a minimum of 45 minutes during the night.
Overtime	The following is a list of the authorised overtime under Vietnamese labour rules. Overtime is only permitted for a maximum of 12 hours per day, 40 hours per month, or 200 hours per year. The minimum overtime compensation is 150% of the regular working day’s hourly rate. The overtime rate is 200% of the hourly rate if it is a weekly off day. The overtime compensation is 300% of the hourly rate if it falls on a public holiday.
Wages	In Vietnam, there are two different forms of minimum wages: The bare minimum is used to determine how much state employees are paid. Additionally, it serves as the foundation for figuring out state employees’ social and health insurance. Each month, the Basic Minimum Wage in Vietnam is 1,490,000 VND. The Regional Minimum Wage serves as the benchmark for setting the ceiling on unemployment insurance and is used to determine the salaries of non-state workers. It is separated into four groups to account for economic variations and is based on the area’s cost of living. With effect from January 2020, the Regional Minimum Wage ranges from 3.07 million VND to 4.42 million VND.
Regional Minimum Wage Groups	Region Cities Minimum wage (per month) Region 1 Urban Ho Chi Minh City and Hanoi 4,420,000 VND Region 2 Rural areas around Ho Chi Minh City, Hanoi, and Da Nang 3,920,000 VND Region 3 Provincial cities and districts of Bac Giang, Bac Ninh, Phu Tho, Vinh Phuc, Hai Duong, and other areas not included in Regions 1 and 2 3,250,000 VND Region 4 Locations not included in Regions 1, 2 or 3 3,070,000 VND
Bonus	Based on an employee’s performance, companies in Vietnam award bonuses known as Tet Bonuses. Typically, it is the 13th salary. It is well-known that foreign businesses in Vietnam provide local employees with private health insurance. Employers in Vietnam also frequently take their employees on paid excursions and team activities.

Contractors vs. Full-time Employees

Vietnam, like many other countries, makes a clear distinction between hiring full-time employees under formal employment contracts and engaging independent contractors.

Independent contractors in Vietnam are typically brought on board for specific projects, tailoring their involvement to the exact project requirements. They operate autonomously, utilizing their own tools and resources to accomplish the designated tasks. Compensation for contractors is determined by a mutually agreed-upon fee documented in a written agreement. In contrast, employees in Vietnam receive compensation in accordance with the terms stipulated in their employment agreements or labor contracts.

A significant divergence between contractors and employees in Vietnam pertains to the responsibilities shouldered by employers. When hiring employees, employers are obligated to provide health insurance, make contributions to social security, and pay unemployment taxes. Conversely, these obligations do not extend to the hiring company when engaging contractors.

Furthermore, employees in Vietnam are entitled to a range of benefits and protections, including various types of leaves, minimum wage standards, overtime pay regulations, probationary periods, and specified termination notice periods, all as outlined in the country’s employment contract laws.

Recruiting in Vietnam

In Vietnam, there are several viable approaches to building your workforce. One avenue is to set up your own company in Vietnam and entrust the hiring process to local recruitment agencies. These specialized third-party firms possess in-depth knowledge of the intricacies involved in recruitment within the Vietnamese context. They can expertly guide you in securing the right mix of local and foreign talent to meet your specific requirements.

Another effective strategy is harnessing the potential of social media to connect with potential candidates in your industry. Moreover, online job portals like Vietnam Works, Careerbuilder.vn, CareerLink.vn, Mywork.com.vn, TNH Vietnam, Timviecnhanh, Indeed, Google For Jobs, and Jobsvietnam.org serve as valuable platforms for reaching out to potential job seekers.

For those who prefer not to establish a subsidiary or business entity in Vietnam, the services of an Employer of Record (EOR) in Vietnam can be an excellent choice. As specialists in EOR services in Vietnam, we possess an in-depth understanding of local labor laws and the complexities of the hiring process for both domestic and foreign employees. We offer a comprehensive solution, managing tasks such as payroll, taxes, employee health benefits in Vietnam, social security, and more. With our support, you can concentrate on your core business activities without the added hassle.

Probation & Termination

In Vietnam, the probationary term may be stipulated in the labour contract or in a separately negotiated probation agreement. Employers are not obligated to make Social Security contributions during the probationary term in the latter scenario. The initial wage and the probationary compensation must both be at least 85% of the same amount.

Vietnam’s Standard Probation Period

• It is a time frame that all parties have agreed upon.
• The probationary term often varies by position, education, and qualifications.
• However, according to the legislation, the probationary term cannot last more than 6, 30, 60, or 180 days.

Employment Termination in Vietnam

In Vietnam, a labour contract may be terminated for the reasons listed below:

• The term of the employment contract expires. No advance warning is necessary.
• completion of the work without notification.
• Both parties must agree to end the agreement for it to be effective without prior notice.
• In the event that a worker is given a prison term or the death penalty. No advance warning is necessary.
• either when an employee passes away or goes missing. No advance warning is necessary.
• if the Employer decides to end the operation. The employees need not be informed in advance in this situation either.
• foreign workers whose employment permits have expired

Period of Statutory Notice

• 45 days for an unlimited-term Contract.
• Three working days for contracts with specified terms of less than 12 months.
• 30 days for contracts with set terms.

EoR Solution

If you’re contemplating the recruitment of employees in Vietnam, teaming up with us as a leading Employer of Record (EOR) company can ensure absolute adherence to regulations and laws. Our company presents a flexible and adaptable platform, streamlining the cost-effective expansion of your business in Vietnam, endowing you with a competitive advantage in the local hiring landscape.

In the role of your EOR, Marzuna takes charge of the complete recruitment and hiring process, guiding you from inception to conclusion. Following successful onboarding, we seamlessly manage payroll, taxes, salary disbursements, minimum wage compliance, leaves, overtime regulations, probationary periods, termination procedures, and all other facets of employment. By entrusting us with the management of these intricate tasks, you can allocate your energy and focus towards your expansion goals without the burden of administrative complexities.

Our Employer of Record services are all-encompassing, and we provide access to a 24/7 online self-service platform, delivering professional support to ensure a seamless expansion experience. Through our platform, you can readily access the essential services and assistance necessary to meet your hiring needs in Vietnam.

Types Of Visas In Vietnam

Vietnam’s work visa and work permit are two distinct things. Foreign nationals are able to enter and remain in Vietnam with this visa. The foreigner has the ability to work in Vietnam with a work permit.  In essence, a foreigner must have a visa, a work permit, or a TRC (Temporary Residence Card) in order to work in Vietnam.

Types of Work Visa	Foreign nationals who want to enter Vietnam for employment purposes are granted this sort of visa. The duration of both the work permit and the multiple-entry visa is the same. The length of a work visa for Vietnam is two years at the most.
Vietnam work visa requirements	Application form Passport copy Enterprise registration certificate
Temporary Residence Card or TRC	The TRC is given to immigrants who hold work permits. Foreigners may obtain TRC if they hold a Vietnam Law Practice Registration or an Investment Registration Certification demonstrating investments of 3 billion VND or more. A foreign worker’s TRC may only be extended once they have begun working for the company that initially sponsored their work visa.

Work Permits

In order to work in Vietnam, non-Vietnamese citizens are required to obtain a work permit issued by the Department of Labor, Invalids, and Social Affairs (DOLISA). Prior to employing a foreign national, the employer must apply for the work permit at the local DOLISA office. The work permit is typically valid for a maximum of two years, with the possibility of a one-time renewal.

However, there are certain exceptions to the work permit requirement for foreigners in Vietnam. These exceptions include short-term assignments lasting less than 30 days, internal transfers within eleven service-oriented industries, board members of Vietnamese entities with an investment of over 3 billion VND, individual investors with an investment exceeding three billion VND, lawyers with a Foreign Registration licence, trainees, and foreigners married to Vietnamese citizens who do not require a job offer to work in Vietnam.

The application process for a work permit generally involves the following steps:

• The employer registers the need to employ a foreign national with the local DOLISA office, which approves the request within ten working days.
• Once approved, the employer proceeds with the application for the work permit
• The labour contract between the employer and the foreign employee needs to be submitted as part of the application process.

Payroll & Taxes in Vietnam

It might be challenging for companies setting up a team in Vietnam to understand the complexity of the payroll and tax systems. Although Vietnam has a variety of payroll providers, working with an Employer of Record like us will give your company the finest team-building results there. In addition to serving as your supplier of Vietnam payroll, we offer a unified platform that makes the hiring and onboarding process simple and manages tax and employment law compliance.

Corporate Income Tax Rate

• 20 percent corporate income tax rate
• O&G and natural gas-related businesses are subject to tax rates ranging from 32% to 50%.

Employer Taxation

Tax	Explanation
Compulsory schemes	Vietnam’s mandatory employer payroll taxes for health, social, and unemployment insurance all require contributions from both employers and employees. Employers take the employee contribution out of the employee’s pay and deposit it alongside the employer contribution with the insurance company.
Social insurance	17.5% (In the case of local employees) Earlier, it was 3.5%. In 2022, it will be 17.5%. (In case of a foreign employee)
Health insurance	3% (For native employees) 3% (For foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees
Trade Union Fee	2% of the salary fund to the Trade Union Fund.

Employee Taxation

Tax	Explanation
Social insurance	8% (applies to local workers) Previously, it was 0%. Currently, it will be 8% after January 1st, 2022. (When referring to a foreign worker)
Health insurance	1.5% (For native employees) 1.5% (For Foreign employees)
Unemployment Insurance	1% (For native employees) This insurance scheme does not apply to foreign employees.

Bonuses

In Vietnam, employers are not required by law to provide their workers bonuses; nonetheless, it is common practice to pay a 13th-month bonus or provide performance-based incentives.

To establish a successful business in Vietnam, it is imperative to adhere to the stipulations set forth in both the Enterprise Law and the Investment Law. If your aim is to create a holding company within Vietnam, the process entails registering your business in accordance with the provisions of the Enterprise Law while ensuring strict compliance with the criteria laid out in the Investment Law, specifically tailored for international investors.

Given the abundant business opportunities in Vietnam, it is highly advisable to seek the guidance of a seasoned expert in company registration before embarking on your business venture in the country. Prior to initiating a feasibility study, you will need to obtain the requisite incorporation documents for the registration process. These documents should be submitted to the Provincial People’s Committee or the Industrial and Export Processing Zones Management Authority for the necessary approvals.