Human resource & Employment in Vietnam

HUMAN RESOURCE & EMPLOYMENT IN VIETNAM

 

Vietnam is well - known for a disciplined, hard - working, and fast learning population. Traditions emphasizing learning and respect for authority, as well as low wages and a high adult literacy rate, are often cited by investors as among the most attractive aspects of the country's investment environment.

Employees’ rights and remuneration

The legal framework for employment relationships is currently set out under the Labor Code, which was enacted in 2012. The stated aims of the Labor Code and relevant guiding regulations are to create social equality, to improve protection for employees and employer, and to the country's demand for regional an international integration. 

Workers generally must be at least 15 years old (except for apprentices working in approved trade training centers, who must be at least 13).

The wage and salary minimum pay rates schedules are applied, which vary by region. Regulations apply to overtime, leave and working week. 

An employee may be employed in any geographical location not prohibited by law. An individual may be hired directly by an enterprise or via an employment service organization. Foreign investment firms may recruit directly in the local market. All enterprises must report biannually to the provincial department of labor on their employment levels and projected employment needs.

Working time

Weekly hours: 40 - 48

Daily hours: 8

Daily break: 1 hour

Overtime: 200 hours / year and paid leave days (300 hours in special cases)

Overtime payment must be at least 150 % of regular wages on normal work days, at least 2005 on weekends and at least 300 % on public holidays) and paid leave days.

Wages and Benefits

According to Decree No. 90 / 2019 / ND - CP, the region - based minimum monthly wages applied from 1 January 2020 are as follows: 

Region I VND 4,420,000 (equivalent to USD 192)

Region II VND 3,920,000 (equivalent to USD 170)

Region III VND 3,430,000 (equivalent to USD 149)

Region IV VND 3,070,000 (equivalent to USD 133)

Of Which

Region I includes urban Hanoi, Hai Phong, Ho Chi Minh City, Dong Nai, Binh Duong and Ba Ria - Vung Tau 

Region II includes rural Hanoi, lai Phong, Ho Chi Minh City and medium - sized cities and towns 

Region III includes small - sized cities and towns

Region IV includes the remaining less developed areas of Vietnam 

Social insurance (SI), Health Insurance (HI), and Unemployment Insurance (UI)

The Vietnamese compulsory SIHIUI scheme is applicable to Vietnamese national employees with a definite term under a Vietnamese labor contract of 1 months or above. 

Foreign employees, however, shall only be subject to the mandatory Vietnamese HI scheme in the same manner as Vietnamese national employees. Currently, the SIHIUI contributions for eligible employees are based on the following prescribed rates: 

 

Termination of Employment

Pursuant to the current Labor Code, a labor contract is terminated in the following cases: 

1. The employment contract expires, except for the case specified in Clause 4 Article 177 of this Code.
2. The tasks stated in the employment contract have been completed.
3. Both parties agree to terminate the employment contract.
4. The employee is sentenced to imprisonment without being eligible for suspension or release as prescribed in Clause 5 Article 328 of the Criminal Procedure Code, capital punishment or is prohibited from performing the work stated in the employment contract by an effective verdict or judgment of the court.
5. The foreign employee working in Vietnam is expelled by an effective verdict or judgment of the court or a decision of a competent authority.
6. The employee dies; is declared by the court as a legally incapacitated person, missing or dead.
7. The employer that is a natural person dies; is declared by the court as a legally incapacitated person, missing or dead. The employer that is not a natural person ceases to operate, or a business registration authority affiliated to the People’s Committee of the province (hereinafter referred to as “provincial business registration authority”) issues a notice that the employer does not have a legal representative or a person authorized to exercise the legal representative’s rights and obligations.
8. The employee is dismissed for disciplinary reasons.
9. The employee unilaterally terminates the employment contract in accordance with Article 35 of this Code.
10. The employer unilaterally terminates the employment contract in accordance with Article 36 of this Code.
11. The employer allows the employee to resigns in accordance with Article 42 and Article 43 of this Code.
12. The work permit or a foreign employee expires according to Article 156 of this Labor Code.
13. The employee fails to perform his/her tasks during the probationary period under the employment contract or gives up the probation.

The Labor Code also specifies certain cases where employer and employee may unilaterally terminate the labor contract, for example: employee's failure to perform the contracted work; reduction in employer's business scale due to force majeure events; employee's inability to continue working due to illness, accidents or breach of discipline; etc.

In case of unilateral termination, the employer is required to give 3 days ' advance notice in writing for a seasonal or work - specific contract with term of under 12 months; 30 days ' for a definite - term labor contract, and 45 days ' for an indefinite - term contract. The advance notice requirement, however, does not apply to employees dismissed on disciplinary grounds. 

Employment Termination Allowance

Severance allowance 

Except for cases of dismissal on disciplinary grounds, the employee with working period of 12 months or above shall be entitled to severance allowance upon termination of a labor contract at the rate of half of one month's salary for each working year. 

Job - loss allowance 

In the case of a company being restructured, the employee will receive a “ job - loss allowance” instead of “ severance allowance ” from the employer if the employee has been employed for at least 12 months by the company , i.e. a full month's pay for each year of service and not less than two full months' pay in total. 

Calculation of severance and job - loss allowance 

Severance allowance =Time basis x Salary basis x 1/2 

Job - loss allowance = Time basis x Salary basis. 

OF WHICH 

Salary basis is the average of the monthly salary under the labor contract within the six consecutive months preceding the time of contract termination. 

• Time basis is the total actual working time of the employee minus the time of UI contribution and the time of being paid with severance allowance from the employer measured by the number of years.

For employees being recruited after 1 January 2009 and having fully contributed to the compulsory UI scheme, the State Unemployment Agency shall be responsible for paying severance / job - loss allowance which is also referred to as unemployment allowance to these employees upon termination of labor contract. 

Employment of Foreigners

To be employed in Vietnam, foreigners must meet the following requirements: 

• Be at least 18 years old; 

• Be in good health condition necessary to satisfy the job requirements; Be in possession of high technical skills or considerable professional experience in production operation / management; 

• Be a manager, an executive director or an expert; and 

• Have no criminal convictions, civil record or pending criminal proceedings in Vietnam or abroad. 

Work permit & Visa Application

Foreigners must obtain a valid work permit from the local Labor Department before working in Vietnam, except for some special cases, including “ foreigners entering Vietnam to hold the positions of experts, managers, chief executive officers or technicians for a period of under 30 days and an accumulated working period of under 90 days per year” as per the recently issued regulations. This new provision opens up new opportunities for expatriates working in Vietnam for a short - term duration ( i.e. less than 90 days ) to be exempted from work permit application Yet, in order to enjoy such exemption, the foreign experts must hold a Bachelor degree or above , and possess at least 3 years of working experience in relevant positions. The maximum term of a work permit is 2 years. Renewal of a work permit is required prior to its expiry if the foreign employee is still under the assignment term. In addition, a business visa is statutorily required prior to a foreigner's entry into Vietnam. Upon the expiry of the initial business visa (normally 3 months), applying for either visa extension or a temporary residency card (TRC) is required. Since the duration for visa extension is only less than 12 months, the TRC with a current limited period of up to 3 years should be considered in case of long - term assignment.