Employing people in Vietnam requires a thorough understanding of the country's legal framework related to labor and employment. By following the laws and best practices in recruitment, employee rights, social welfare taxes, employee benefits, termination, confidentiality, and non-competition, employers can create a positive work environment that attracts and retains talent while ensuring compliance and mitigating risks. By doing so, employers can build a strong workforce and contribute to Vietnam's continued economic growth and social development.
Types of Employment
In Vietnam, there are three main types of employment contracts under the Labor Code (2019):
- Indefinite-term contracts
- Definite-term contracts (up to 36 months)
- Seasonal or specific-job contracts (under 12 months)
Employers must provide written contracts that comply with the Labor Code's stipulations, specifying the job description, working hours, wages, and other relevant terms.
Human Rights Laws
The Vietnamese Constitution and the Labor Code (2019) protect the rights of workers, including equal opportunity and non-discrimination in employment. Specific laws include:
Gender Equality Law (2006) – Promotes gender equality and prohibits gender-based discrimination in recruitment, training, promotion, and benefits.
Law on Persons with Disabilities (2010) – Ensures equal rights and opportunities for persons with disabilities in the workplace.
Law on the Protection of Children (2016) – Prohibits child labor and exploitation.
These laws create a fair and inclusive work environment, contributing to a diverse and engaged workforce.
Social Welfare Taxes
Employers and employees in Vietnam must contribute to the compulsory social insurance system. The Social Insurance Law (2014) mandates contributions for three main funds:
- Social insurance (covering sickness, maternity, work-related accidents, retirement, and death): Employer contribution rate is 17.5% of the employee's salary, while the employee contributes 8%.
- Health insurance: Employers contribute 3% and employees 1.5% of the employee's salary.
- Unemployment insurance: Employers and employees each contribute 1% of the employee's salary.
These contributions provide essential social welfare benefits to employees and their families, ensuring financial security and promoting social stability.
The Labor Code (2019) grants employees various rights, including:
- Minimum wage: Employers must pay the government-regulated minimum wage, which varies by region.
- Working hours: Regular working hours must not exceed 48 hours per week, with overtime subject to legal limits.
- Annual leave: Employees are entitled to at least 12 days of paid annual leave, with additional leave for public holidays and personal events.
- Maternity and paternity leave: Female employees receive 6 months of maternity leave, while male employees receive 5 to 14 days of paternity leave, depending on the number of children born.
Standard Employee Benefits
Employers in Vietnam typically offer the following benefits:
- Thirteenth-month salary: A common practice is to provide an additional month's salary at the end of the year as a bonus.
- Health insurance: Some employers offer private health insurance in addition to compulsory health insurance.
- Training and development: Employers may provide training and development opportunities to improve employees' skills and advance their careers.
Termination of Employment
Employers must follow the Labor Code (2019) when terminating employees. Valid reasons for termination include poor performance, violations of company rules, or changes in business conditions. Employers must provide advance notice and severance pay, depending on the contract duration and reason for termination. Employers must also follow due process, such as conducting performance evaluations, providing warnings, and documenting evidence of misconduct or poor performance. By adhering to these regulations, employers can ensure a fair and transparent termination process, protecting the rights of employees and maintaining a positive work environment.
Confidentiality of Employee Records
The Law on Cyber Information Security (2015) and the Labor Code (2019) protect the confidentiality of employee records. Employers must implement appropriate security measures to safeguard employee data and comply with data protection principles, such as limiting access to authorized personnel and disposing of data securely when no longer needed. These laws help ensure the privacy of employees and minimize the risk of data breaches or identity theft.
Vietnam does not have specific laws on non-competition; however, the Civil Code (2015) and the Law on Intellectual Property (2005) provide the legal framework for addressing issues related to trade secrets and unfair competition. Employers can include non-compete clauses in employment contracts to prevent employees from disclosing trade secrets or working for competitors within a reasonable time and geographic scope. To be enforceable, these clauses must balance the employer's legitimate interests with the employee's right to seek new employment. By understanding and adhering to these laws, employers can protect their valuable business information while respecting the rights of their employees.