Employment Law in Vietnam: A Guide for Foreign Employers and Employees

Introduction: Understanding Vietnam's Employment Law Landscape

Vietnam's labor market has become increasingly attractive to international businesses. With a workforce of nearly 55 million people, competitive wages, and a young population eager to develop professional skills, Vietnam offers significant opportunities for foreign employers. At the same time, foreign professionals are drawn to Vietnam's dynamic economy and improving quality of life.

However, Vietnam's employment law framework — rooted in the Labor Code 2019 (Law No. 45/2019/QH14) — is comprehensive and heavily protective of employees. Foreign employers who fail to understand these protections risk costly disputes, penalties, and reputational damage. Similarly, foreign employees working in Vietnam face specific requirements, particularly regarding work permits, that must be carefully managed.

In our experience advising multinational companies, foreign-invested enterprises, and individual expatriates on employment matters in Vietnam, we have found that proactive compliance is always more cost-effective than reactive dispute resolution. This guide covers the essential employment law issues that foreign employers and employees need to understand.

Work Permits for Foreign Employees

The work permit requirement is the threshold legal issue for any foreigner working in Vietnam. Under the Labor Code 2019 and Decree No. 152/2020/ND-CP (as amended by Decree No. 70/2023/ND-CP), foreign nationals working in Vietnam must obtain a work permit unless they qualify for an exemption.

Who Needs a Work Permit?

A work permit is required for any foreign national who works in Vietnam in any of the following capacities:

Manager: A person who heads or manages a department or the entire organizationExecutive director: A person who directly operates and manages the organizationExpert: A person with a university degree or higher and at least 3 years of relevant experience, or a person with exceptional skills/knowledge recognized by a foreign authorityTechnical worker: A person trained in a technical field for at least 1 year and with at least 3 years of experienceOther workers: Any other foreign worker, subject to the employer demonstrating that the position cannot be filled by a Vietnamese worker

Work Permit Exemptions

Certain categories of foreign workers are exempt from the work permit requirement, including:

Foreign investors (capital contributors) or owners of LLCsMembers of the Board of Directors of joint stock companiesIntra-corporate transferees under Vietnam's WTO commitmentsWorkers staying in Vietnam for less than 3 months for specific purposes (e.g., sales, technical troubleshooting)Foreign lawyers licensed to practice in VietnamStudents working as part of an internship program

Even exempt workers must complete a notification procedure with the local labor authority before commencing work.

The Work Permit Application Process

The work permit process involves several steps:

1. Labor demand registration: The employer must register its demand for foreign workers with the provincial Department of Labor, Invalids and Social Affairs (DOLISA) at least 15 days before filing the work permit application. This registration must explain why the position cannot be filled by a Vietnamese worker (unless the worker falls into a category exempt from this requirement).

2. Document preparation: Required documents include:

Application formHealth certificate issued by a competent Vietnamese or foreign medical facility (valid for 12 months)Criminal background check from the worker's country of nationality or last residence (valid for 6 months)Proof of qualifications (degree certificates, professional certifications)Proof of work experience (employment certificates, reference letters)Passport copyPhotos

All foreign documents must be legalized (apostille or consular legalization) and translated into Vietnamese.

3. Submission and processing: The application is submitted to DOLISA. The processing time is 5 working days from receipt of a complete application.

4. Work permit validity: A work permit is valid for a maximum of 2 years and can be renewed once for an additional 2 years. After the maximum renewal, a new work permit application must be filed.

Consequences of Non-Compliance

Employing a foreign worker without a valid work permit is a serious violation. Penalties include:

Administrative fines of up to VND 150 million (approximately USD 6,000) per violationDeportation of the foreign workerPotential criminal liability in egregious casesThe labor contract is considered invalid, though the worker retains rights to wages for work performed

Labor Contracts in Vietnam

The Labor Code 2019 imposes strict requirements on labor contracts that employers must follow.

Types of Labor Contracts

Vietnamese law recognizes two types of labor contracts:

Indefinite-term contracts: No fixed end date. These provide the greatest job security for employees.Fixed-term contracts: Duration of up to 36 months. An employer may enter into a maximum of two consecutive fixed-term contracts with the same employee. If the employee continues to work after the second fixed-term contract expires, the contract automatically converts to an indefinite-term contract.

There is no longer a "seasonal" or "specific task" contract category under the 2019 Labor Code, simplifying the previous system.

Mandatory Contract Terms

Every labor contract must include the following terms (Article 21, Labor Code 2019):

Employer's name, address, and legal representativeEmployee's name, date of birth, gender, address, ID/passport numberJob title and job descriptionWorkplaceContract durationSalary, salary payment method, and payment scheduleAllowances and other paymentsWorking hours and rest periodsPersonal protective equipmentSocial insurance, health insurance, and unemployment insuranceTraining and professional development

Probation Period

Employers may agree on a probation period with new employees. The maximum probation period depends on the position:

180 days: For enterprise management positions (as defined by the Law on Enterprises)60 days: For positions requiring professional or technical qualifications of college level or above30 days: For positions requiring technical qualifications at the intermediate level, or skilled workers6 days: For all other positions

During probation, the employee must receive at least 85% of the full salary for the position. Either party may terminate the employment during probation without prior notice and without severance payment.

Wages and Benefits

Minimum Wage

Vietnam sets regional minimum wages that vary based on the location of the workplace. As of 2026, the minimum wages are adjusted periodically by the government. There are four regions, with Region I (major cities including Hanoi and Ho Chi Minh City) having the highest minimum wage.

The minimum wage applies to the simplest tasks under normal working conditions. Employees performing skilled or trained work must receive at least 7% above the minimum wage.

Working Hours and Overtime

Standard working hours are 8 hours per day and 48 hours per week (the Labor Code 2019 targets a reduction to 40 hours per week, which applies to state employees and is encouraged for the private sector).

Overtime is limited to:

40 hours per month (increased from 30 hours under the previous code)200 hours per year in normal circumstances300 hours per year in special circumstances (with government approval)

Overtime compensation rates:

150% of regular salary for overtime on normal working days200% for overtime on weekly rest days300% for overtime on public holidays or paid leave days

Annual Leave

Employees are entitled to paid annual leave as follows:

12 days per year for normal working conditions14 days per year for heavy, hazardous, or dangerous work or for workers under 1816 days per year for extremely heavy, hazardous, or dangerous workOne additional day for every 5 years of service with the employer

Vietnam also observes 11 public holidays per year.

Termination of Employment

Termination of employment in Vietnam is heavily regulated, and improper termination can result in significant liability for the employer.

Employer-Initiated Termination

An employer may unilaterally terminate a labor contract only on the grounds specified in Article 36 of the Labor Code 2019:

Employee repeatedly fails to perform duties: The employee fails to perform the work according to the criteria specified in the labor contract, despite being given written warnings.Employee is sick or injured: The employee has been ill or injured for an extended period (12 consecutive months for indefinite-term contracts; 6 months for fixed-term contracts up to 12 months; more than half the contract period for shorter fixed-term contracts) and has not recovered.Force majeure: Natural disaster, fire, epidemic, or relocation required by competent authorities, despite the employer's efforts to find alternative solutions.Employee is absent without valid reason: For 5 consecutive working days or more.Employee reaches retirement age: Unless otherwise agreed.Employee provides dishonest information: That affected the hiring decision.

Notice Requirements

The employer must give advance notice before terminating a contract:

45 days for indefinite-term contracts30 days for fixed-term contracts of 12-36 months3 working days for fixed-term contracts of less than 12 monthsImmediate for certain grounds (e.g., extended absence without valid reason)

Severance and Job Loss Allowance

Severance allowance: Applies when the contract is terminated by mutual agreement, expiration, or certain employer-initiated grounds. The amount is one-half month's salary for each year of employment (counting only the period not covered by unemployment insurance contributions).

Job loss allowance: Applies when the employer terminates due to restructuring, technological changes, or economic reasons. The amount is one month's salary for each year of employment, with a minimum of two months' salary.

Consequences of Unlawful Termination

If a court finds that the employer's termination was unlawful, the employer must:

Reinstate the employee to their original positionPay wages for the entire period the employee was unable to workPay compensation of at least 2 months' salaryIf the employee does not wish to return, pay the above amounts plus severance allowance

Social Insurance, Health Insurance, and Unemployment Insurance

Vietnam operates a mandatory social insurance system. Both employers and employees are required to contribute.

Contribution Rates (as of 2026)

For Vietnamese employees:

Employer: Social insurance (17.5%), health insurance (3%), unemployment insurance (1%) = 21.5% of salaryEmployee: Social insurance (8%), health insurance (1.5%), unemployment insurance (1%) = 10.5% of salary

For foreign employees:

Foreign employees with work permits are subject to compulsory social insurance under Decree No. 143/2018/ND-CP. Employer contributions for foreign employees include retirement and survivorship funds (14%), sickness and maternity (3%), occupational accident/disease (0.5%), and health insurance (3%). Employee contributions include retirement (8%) and health insurance (1.5%).Foreign employees working in Vietnam for less than 1 year or who are intra-corporate transferees are exempt from social insurance contributions but must participate in health insurance.

Dispute Resolution

Labor disputes in Vietnam can be resolved through several mechanisms:

Internal Resolution and Mediation

The parties should first attempt to resolve the dispute through direct negotiation. If unsuccessful, either party may request mediation by a labor mediator appointed by the provincial labor authority. Mediation must be completed within 5 working days.

Labor Arbitration Council

If mediation fails, the dispute may be referred to the Labor Arbitration Council, a newly strengthened institution under the Labor Code 2019. The council must render a decision within 30 days.

Court Proceedings

Either party may file a lawsuit at the People's Court. Certain types of disputes (including disputes over unilateral termination and disputes involving social insurance contributions) may be brought directly to court without going through mediation.

Labor disputes must be filed within:

1 year from the date the party discovered the violation for most labor disputes6 months for disputes over disciplinary action

Strikes

The Labor Code 2019 revised the procedures governing strikes. Strikes are only lawful if they relate to a collective labor dispute over interests (not individual disputes or disputes over rights), follow the prescribed procedures, and are organized by a representative labor organization. Unlawful strikes can result in damages liability.

Practical Tips for Foreign Employers

Start with compliant contracts: Use properly drafted Vietnamese-law-compliant labor contracts from the beginning. It is far more difficult to modify non-compliant arrangements after the fact.

Invest in work permit compliance: Budget time and resources for work permit applications. Start the process early — at least 2-3 months before the foreign employee needs to begin work.

Maintain proper records: Vietnamese labor authorities can inspect employment records, and proper documentation is your best defense against administrative penalties.

Understand that termination is difficult: Vietnamese law strongly favors employees in termination disputes. Always consult legal counsel before initiating any termination.

Stay current on regulatory changes: Vietnamese labor regulations are updated frequently. Regular legal audits of your employment practices are advisable.

Conclusion: Navigating Vietnam's Employment Law With Confidence

Vietnam's employment law framework is protective of employees and imposes significant compliance obligations on employers. For foreign companies operating in Vietnam and for expatriate employees, understanding these obligations is essential to avoiding disputes and building productive working relationships.

At Apolo Lawyers, Attorney Vo Thien Hien and our labor law team provide comprehensive employment law advice to foreign-invested enterprises and individual expatriates. From work permit applications to labor contract drafting, compliance audits to dispute resolution, we help our clients navigate Vietnam's employment law with confidence.