Local labour policies in Vietnam

Local labour policies in Vietnam

Capital: Hanoi

Currency: Vietnamese Dong (VND)

Language: Vietnamese

Minimum wage:

Zone 1: 4,680,000 VND

Zone 2: 4,160,000 VND

Zone 3: 3,640,000 VND

Zone 4: 3,250,000 VND

Payroll cycle: Monthly, usually paid on the last working day or as agreed in the employment contract.

Thirteenth salary Mandatory, with the thirteenth month's salary paid on the lunar new year or at the end of the year.

Estimated cost to employer: 23.5 per cent

Working hour standard: 8 hrs/day, 40hrs/week, Mon-Fri.

Overtime Policy:

Overtime work should not exceed 50% of normal working hours in a day

Not more than 60 hours per month, not more than 200 hours per year in total

Overtime work on working days: 1.5 times the standard hourly rate of pay

Weekend overtime: 2 times the standard hourly rate

Overtime on public holidays: 3 times the standard hourly wage

Annual leave: 12 days

Statutory holidays: 6

Taxes:

Vietnam has recently confirmed in a press conference that it will raise the monthly personal tax threshold to VND11 million. In other words, those earning less than VND11 million per month will not have to pay personal income tax.

Probation & Severance Rules

Probationary period

For permanent employees, the probationary period in Vietnam usually ranges from 6 to 60 days (and may be up to 180 days for managerial positions) depending on the complexity and skills required for the position. The employee's salary during the probationary period must be agreed in writing, but may not be less than 85.00% of the full-time permanent salary for the position.

Severance Policy

Notice of Termination:

Notice of termination must be provided in writing and the length of the termination notice period varies depending on the type of contract:

If the contract is for an indefinite period, the employer must provide the employee with the statutory notice period of 45 days;

If the contract is between 1 and 3 years, the employer must provide the employee with a statutory notice period of 30 days.

If the contract is for less than 1 year, the employer must provide the employee with 3 days' statutory notice.

Severance pay

Vietnam's labour law requires employers to provide severance pay to dismissed employees who have worked continuously for the company for 12 months or more. The amount of severance pay is half a month's salary for each year of employment. Both parties make a monthly contribution to a severance fund and a calculated amount will be paid as severance pay at the time of termination.

Termination Conditions

The employer can resort to unilateral termination of the contract under five conditions:

The employee does not comply with the provisions of the contract, the collective bargaining agreement or internal company rules at work. The employer should bear in mind that the work must be detailed in the contract. After receiving two written warnings in a month, the employee may be dismissed after a period of time, depending on the type of contract.

Employee's leave due to illness or accident. In the case of an indefinite contract, the duration of the leave is 12 months; in the case of a fixed-term contract, six months; and in the case of a seasonal contract, the duration of the leave is half the duration of the contract. If the employee's health improves after termination, the employer should consider re-employing him/her.

The company needs to downsize or lay off staff due to fire or natural disaster.

The employer may terminate the employment contract if the employee has been called up for military service, detained, subjected to compulsory re-education through labour, detoxification, pregnant or if he/she has agreed with the employer to stop working, and has been absent from work for 15 days or more.

The company needs to lay off employees due to structural or technological developments, for economic reasons or in connection with a merger or consolidation of the company.

Others

The following are common benefits packages in Vietnam for reference only:

Monthly meal allowance (not counted for tax purposes)

Monthly commuting expenses (travelling expenses from home to office, e.g. train/bus tickets, average petrol cost. Included in taxes)

Gym membership fees Internet fees (included in taxes)