Vietnam Labour Law Guide 2026

This Vietnam Labour Law Guide 2026 is designed to help foreign investors, HR professionals, business owners, and in-house legal teams navigate Vietnam’s employment regulations with confidence.

Whether you are preparing to hire your first employee, reviewing your HR policies, or ensuring your business remains compliant with the latest legal developments, this guide will serve as a reliable reference throughout your operations in Vietnam.

Overview of Vietnam Labour Law

Vietnam’s employment relationships are primarily governed by the Labour Code 2019 (Law No. 45/2019/QH14), which took effect on 1 January 2021. The Labour Code establishes the legal framework for employment contracts, probation, working hours, wages, leave, labour discipline, occupational safety, and termination of employment.

In addition to the Labour Code, employers must also comply with other key legislation, including the Law on Social Insurance, Law on Employment, Law on Occupational Safety and Hygiene, Law on Trade Unions, and the Personal Income Tax regulations. Together, these laws define an employer’s obligations throughout the employment lifecycle.

For foreign-invested companies, understanding Vietnam’s labour laws is essential. Many employment practices that are acceptable in other jurisdictions may not comply with Vietnam’s mandatory legal requirements. Staying up to date with legal developments and regularly reviewing HR policies can help businesses reduce compliance risks and avoid costly penalties.

Who Does the Labour Code Apply To?

Vietnam’s employment relationships are primarily governed by the Labour Code 2019 (Law No. 45/2019/QH14), which took effect on 1 January 2021. The Labour Code establishes the legal framework for employment contracts, probation, working hours, wages, leave, labour discipline, occupational safety, and termination of employment.

In addition to the Labour Code, employers must also comply with other key legislation, including the Law on Social Insurance, Law on Employment, Law on Occupational Safety and Hygiene, Law on Trade Unions, and the Personal Income Tax regulations. Together, these laws define an employer’s obligations throughout the employment lifecycle
Types of Employment Contracts.

For foreign-invested companies, understanding Vietnam’s labour laws is essential. Many employment practices that are acceptable in other jurisdictions may not comply with Vietnam’s mandatory legal requirements. Staying up to date with legal developments and regularly reviewing HR policies can help businesses reduce compliance risks and avoid costly penalties.

Probation Rules

According to Article 24 and 25 of Vietnam Labour Code 2019, the employer can sign an probationary contract with the employee per time per job to assess whether a candidate is suitable for the position before entering into a formal employment relationship.

Maximum Probation Period

An employee may only undergo one probation period for the same position. Employers cannot extend or renew probation beyond the statutory limit.

In addition, employers are not permitted to require a probation period for employment contracts with a term of less than one month. This restriction is intended to protect employees engaged in short-term work and ensures they receive full employment rights from the first day of work.

Probation Salary

According to Article 26 of Vietnam Labour Code 2019, the probation salary of the employee must be at least 85 percent of the full-time salary. In practice, many companies choose to pay 100 percent of salary to attract talent or offer to refund 15 percent of salary after probation term.

Probation Agreement

The employer may either include the probation clauses in the employment contract or sign a separate probation contract.

If the employment contract contains a probation clause, the employment relationship continues automatically after the probation period if the employee successfully completes the assessment

However, if the probation clause is included in the employment contract, the employer is required to register and contribute compulsory social insurance for the employee from the commencement of the contract, even during the probation period. This differs from a separate probation agreement, under which compulsory social insurance may not be required, depending on the circumstances.

Therefore, Forra recommends that employers carefully consider their employee benefits strategy and compliance obligations before deciding whether to incorporate the probation period into the employment contract or execute a separate probation agreement.

Probation Contract Termination

During the probation period, either the employer or the employee may terminate the probation agreement without prior notice or compensation, provided the probation complies with the Labour Code.

Employment Contracts

An employment contract is the foundation of the employment relationship and establishes the rights and obligations of both the employer and the employee. Under the Labour Code 2019, employers are generally required to enter into a written employment contract before an employee commences work, except in certain limited circumstances prescribed by law.

Types of Employment Contracts

Vietnam currently recognises two main types of employment contracts:

• Indefinite-term employment contract: A contract that does not specify its expiry date and remains effective until it is lawfully terminated by either party.
• Fixed-term employment contract: A contract with a specified duration of up to 36 months.

Upon the expiry of a fixed-term contract, the parties may enter into a new contract. However, the Labour Code limits the use of successive fixed-term contracts. In most cases, after entering into two consecutive fixed-term contracts, any subsequent employment relationship must be established under an indefinite-term employment contract, unless a statutory exception applies.

Form of Employment Contract

Employment contracts may be executed in:

• Written paper form.
• Electronic form using electronic means.

Both forms have the same legal validity.

For employment contracts with a term of less than one month, the parties may enter into a verbal agreement, except where the law requires a written contract, such as when employing minors or domestic workers.

Mandatory Contents

An employment contract should include key terms such as:

• Employer and employee information.
• Job title and workplace.
• Contract term.
• Salary, allowances, and payment method.
• Working hours and rest periods.
• Social, health, and unemployment insurance.
• Occupational safety and hygiene.
• Training obligations (if any).

Clearly defining these terms helps minimise misunderstandings and reduces the risk of future disputes.

Language of the Contract

Vietnamese law does not prohibit bilingual employment contracts. In practice, foreign-invested companies commonly execute contracts in both Vietnamese and English to ensure that both parties clearly understand their rights and obligations.

Where a bilingual contract is used, employers should specify which language prevails if there is any inconsistency between the two versions.

Working Hours and Overtime in Vietnam

Vietnam’s Labour Code establishes clear limits on working hours and overtime to protect employees’ health and wellbeing. Employers must ensure that working schedules comply with these statutory requirements, while maintaining accurate attendance and overtime records.

Standard Working Hours

Under the Labour Code 2019, an employee’s normal working hours must not exceed:

• 8 hours per day, and
• 48 hours per week

Employers may adopt either a six-day or five-day working week, provided the total working hours remain within the statutory limit. In practice, many companies in Vietnam operate on a five-day working week, with employees working from Monday to Friday. Some service businesses ask employees to work on Saturday morning or a full day, which is less attractive in hiring talent.

Working Time Arrangement

Employers have the flexibility to determine daily and weekly working schedules based on their business needs. However, the working arrangement should be clearly stated in the company’s internal policies or employment contract and communicated to employees before implementation.

Rest Breaks

According to Article 109 of the Labour Code 2019, if employees work for 6 hours and above per day, they will be entitled to a minimum 30-minute break and 45-minute break if working at night. If employees work continuously for at least six hours during the day, the rest break will be included in working hours.

Weekly Rest Day

Employees are entitled to at least 24 consecutive hours of rest each week. If operational requirements prevent a weekly rest day, the employer must ensure employees receive at least four rest days per month.

The employer can decide the rest day on Sunday or another day in the week, but must regulate this under the Company’s Internal Rules.

Overtime Work

Overtime may only be arranged with the employee’s consent, except in certain emergency situations prescribed by law.

Employers must also comply with statutory overtime limits and pay employees at the applicable overtime rates.

The maximum overtime limits are generally:

• Up to 50% of normal working hours in a day.
• No more than 40 hours per month.
• No more than 200 hours per year, unless the business operates in sectors permitted to apply the annual limit of 300 hours.

Overtime Pay

Employees working overtime are entitled to higher wages than their normal hourly rate. The minimum overtime rates are:

Under Article 98 of the Labour Code 2019, employees working at night (from 22:00 to 06:00) are entitled to an additional 30% salary premium for the hours worked at night . Where employees perform overtime during night hours, employers must also pay an extra 20% of the hourly wage for the corresponding daytime work, in addition to the statutory overtime pay and the night work premium. As a result, overtime performed at night attracts a significantly higher rate of pay than regular working hours.

Salary & Payroll Requirements

Salary is one of the most important aspects of the employment relationship and is strictly regulated under the Labour Code 2019. In addition to paying employees on time, employers must comply with legal requirements regarding salary structure, payment methods, payroll records, and statutory deductions. Failure to comply may result in administrative penalties, labour disputes, or compensation claims.

What Constitutes Salary?

Under Article 90 of the Labour Code 2019, salary is the amount agreed between the employer and the employee for performing a specific job or position. An employee’s salary generally consists of three components:

• Basic salary: The agreed salary for the job or position.
• Salary allowances: Payments intended to compensate for working conditions, job complexity, living conditions, or other factors not fully reflected in the basic salary.
• Other additional payments: Other amounts agreed by the employer and employee, which may be paid regularly or based on specific conditions.

Salary Payment

Employers and employees may agree to pay salaries on an hourly, daily, weekly, monthly, or piece-rate basis, depending on the nature of the work. For full-time employees, monthly salary payments are the most common practice.

Delayed Salary Payments

Employers should make every effort to pay salaries on time. Where salary payment is delayed due to force majeure events and all reasonable measures have been taken, the delay should generally not exceed 30 days.

If the payment is delayed by 15 days or more, the employer must compensate the employee by paying additional interest on the delayed amount in accordance with the Labour Code.

Bonuses and the 13th-Month Salary

Many foreign employers assume that the 13th-month salary is a statutory entitlement in Vietnam. In fact, Vietnamese law does not require employers to pay a 13th-month salary or Tet bonus.

Bonuses are generally determined based on the employer’s production and business performance and the employee’s work performance, in accordance with the company’s bonus policy.

Employers should clearly specify bonus policies in their internal regulations or employment contracts to avoid misunderstandings and manage employee expectations.

Minimum Wage 2026

Employers in Vietnam are required to pay employees at least the applicable regional minimum wage. The minimum wage serves as the legal baseline for salaries agreed under employment contracts and is determined based on the location where the employee works, rather than the employer’s registered office.

Regional Minimum Wage

Vietnam is divided into four wage regions, with Region I having the highest minimum wage and Region IV the lowest. Each district, city, or province is assigned to one of these regions.

How to Determine the Applicable Region

The applicable minimum wage is based on the employee’s actual workplace. For businesses operating in multiple locations, employees working in different branches or offices may be subject to different regional minimum wages.

Is Every Employee Paid the Minimum Wage?

The regional minimum wage represents the legal minimum that an employer may pay an employee performing the agreed work under normal working conditions. In practice, many employers offer salaries above the statutory minimum to attract and retain qualified employees.

Leave Entitlements in Vietnam

Employees in Vietnam are entitled to various types of statutory leave under the Labour Code 2019. These include annual leave, public holidays, sick leave, maternity leave, paternity leave, personal leave, and unpaid leave. Employers should understand these entitlements to ensure compliance and maintain effective workforce planning.

Annual Leave

Employees who have worked for an employer for 12 months are entitled to paid annual leave as follows:

• 12 working days for employees working under normal conditions.
• 14 working days for employees who are minors, employees with disabilities, or those performing hazardous or dangerous work.
• 16 working days for employees engaged in particularly hazardous or dangerous occupations.

Employees who have not completed 12 months of service are entitled to annual leave on a pro-rata basis.

For every five years of continuous service with the same employer, an employee is entitled to one additional day of annual leave.

Public Holidays

Employees are entitled to paid leave on Vietnam’s official public holidays, including:

The Government announces the official holiday schedule each year, particularly for the Tet holiday.

Sick Leave

Employees participating in Vietnam’s compulsory social insurance scheme may receive sick leave benefits in accordance with the Law on Social Insurance.

The number of paid sick leave days depends on factors such as the employee’s length of social insurance contributions and working conditions. Sick leave benefits are paid by the Social Insurance Fund, rather than the employer.

Maternity Leave

Female employees are generally entitled to six months of maternity leave, provided they satisfy the eligibility conditions under the Law on Social Insurance.

During maternity leave, eligible employees receive maternity benefits from the Social Insurance Fund.

Paternity Leave

Male employees participating in compulsory social insurance are entitled to paid paternity leave upon the birth of their child. The duration of leave varies depending on the circumstances of the birth, such as whether it is a normal delivery, caesarean section, or multiple birth.

Personal Leave

Employees are entitled to paid personal leave in certain circumstances, including:

• Marriage of the employee: 3 working days
• Marriage of the employee’s child: 1 working day
• Death of the employee’s spouse, parent, adoptive parent, parent-in-law, child, or adopted child: 3 working days

Employees may also agree with the employer to take unpaid leave for other personal reasons.

Social Insurance in Vietnam

Vietnam’s social insurance system is a mandatory welfare scheme designed to provide financial protection for employees during retirement, illness, maternity, occupational accidents, and other qualifying circumstances. Employers are responsible for registering eligible employees and making compulsory contributions in accordance with the law.

Failure to comply with social insurance obligations may result in administrative penalties, interest on late payments, and, in serious cases, legal liability.

Who Must Participate?

In general, compulsory social insurance applies to:

• Vietnamese employees working under an indefinite-term employment contract.
• Vietnamese employees working under a fixed-term employment contract of one month or more.
• Foreign employees holding a valid work permit, practising certificate, or practising licence, unless they qualify for an exemption under Vietnamese law.

Contribution Rates

Both employers and employees are required to contribute to compulsory insurance schemes, including:

• Social insurance
• Health insurance
• Unemployment insurance (Vietnamese employees only)

The contribution rates are prescribed by law and are calculated based on the employee’s monthly salary used for insurance purposes.

Employer Responsibilities

Employers are responsible for:

• Registering employees with the social insurance authority.
• Calculating and withholding employee contributions.
• Paying both employer and employee contributions on time.
• Reporting changes in employment status.
• Completing social insurance procedures when an employee resigns.

Timely registration and contribution are essential to ensure employees receive their statutory benefits.

Benefits Under the Social Insurance Scheme

Eligible employees may receive benefits for:

• Sick leave.
• Maternity leave.
• Occupational accidents and occupational diseases.
• Retirement pension.
• Survivorship benefits.

Most benefits are administered and paid by the Vietnam Social Security authority rather than directly by the employer.

Social Insurance for Foreign Employees

Foreign employees working in Vietnam may also be required to participate in compulsory social insurance if they meet the statutory conditions. However, certain categories of foreign employees are exempt, such as those transferred within an enterprise or individuals who have reached the statutory retirement age.

As the rules applicable to foreign employees differ from those for Vietnamese employees, employers should assess each case individually before completing the registration process.

Personal Income Tax in Vietnam

Employers in Vietnam are responsible for withholding, declaring, and remitting personal income tax (PIT) on behalf of their employees. Understanding the applicable tax rules is essential to ensure payroll compliance and avoid penalties for underpayment or incorrect tax declarations.

Tax Residency

An individual’s tax liability depends on whether they are classified as a tax resident or non-resident in Vietnam.

A person is generally considered a tax resident if they:

• Are present in Vietnam for 183 days or more within a calendar year or any consecutive 12-month period; or
• Have a permanent residence in Vietnam in accordance with the applicable tax regulations.

Individuals who do not meet these conditions are generally treated as non-residents.

Tax Rates

Tax residents are subject to progressive tax rates ranging from 5% to 35%, depending on their taxable income.

Non-residents are generally taxed at a flat rate of 20% on employment income derived from Vietnam.

Employer Obligations

Employers are required to:

• Register employees for a tax identification number (where applicable).
• Calculate and withhold PIT from employees’ salaries.
• Declare and remit PIT to the tax authority on time.
• Issue income and tax withholding documents when required.
• Assist eligible employees with annual PIT finalisation, where applicable.

Maintaining accurate payroll records is essential to ensure the correct calculation of tax liabilities.

Annual PIT Finalisation

At the end of each tax year, eligible employees may be required to complete a personal income tax finalisation. In many cases, employers may perform the finalisation on behalf of employees who authorise them to do so and satisfy the relevant conditions.

Foreign Employees in Vietnam

Vietnam welcomes foreign professionals and experts to support business growth and investment. However, before employing a foreign national, employers must ensure that all immigration and employment requirements are satisfied. In most cases, a foreign employee may only commence work after obtaining the appropriate work authorisation.

Work Permit Requirements

A foreign national working in Vietnam is generally required to obtain a Work Permit before commencing employment. To be eligible, the employee must typically satisfy the following conditions:

• Be at least 18 years old and have full legal capacity.
• Possess the qualifications, professional experience, or technical skills required for the position.
• Meet the applicable health requirements.
• Have no unspent criminal convictions or be subject to criminal prosecution.

The employer is responsible for applying for the work permit before the employee begins working in Vietnam.

Work Permit Exemptions

Certain categories of foreign employees may be exempt from obtaining a work permit, such as:

• Owners or capital-contributing members of companies meeting the statutory capital thresholds.
• Members of the Board of Directors of joint-stock companies meeting the statutory capital thresholds.
• Intra-corporate transferees in specific service sectors.
• Individuals entering Vietnam for short-term assignments in circumstances permitted by law.
• Other cases prescribed by Vietnamese legislation.

Although a work permit may not be required, many exemptions still require the employer to complete a work permit exemption confirmation with the labour authority before the employee starts work.

Temporary Residence Card

Foreign employees holding a valid work permit or work permit exemption may be eligible to apply for a Temporary Residence Card (TRC). A TRC allows the holder to reside in Vietnam for an extended period without obtaining multiple visas and simplifies entry and exit procedures.

Termination Rules

Terminating an employment relationship in Vietnam is subject to strict legal requirements under the Labour Code 2019. Whether the termination is initiated by the employer or the employee, both parties must comply with the applicable procedures, notice periods, and statutory obligations. Failure to follow these requirements may result in compensation claims, administrative penalties, or labour disputes.

Grounds for Termination

An employment contract may be terminated in several circumstances, including:

• Mutual agreement between the employer and the employee.
• Expiry of the employment contract.
• Unilateral termination by the employee.
• Unilateral termination by the employer.
• Dismissal due to serious disciplinary violations.
• The employee reaches retirement age or becomes ineligible to continue working under the law.
• Other circumstances prescribed by the Labour Code.

Employee Resignation

Employees have the right to unilaterally terminate their employment contract, provided they comply with the statutory notice period unless an exception under the Labour Code applies.

The notice period is generally:

• 45 days for indefinite-term employment contracts.
• 30 days for fixed-term employment contracts of 12 months or more.
• 3 working days for fixed-term employment contracts of less than 12 months.

Employer Termination

An employer may only unilaterally terminate an employment contract in circumstances permitted by the Labour Code, such as:

• The employee repeatedly fails to fulfil their contractual duties.
• The employee is unable to work due to prolonged illness.
• The employer is forced to reduce its workforce because of restructuring, technological changes, or economic reasons.
• The employee fails to return to work after the statutory leave period.
• Other grounds expressly provided by law.

Before terminating an employee, the employer should ensure that the legal grounds, supporting evidence, and statutory procedures have been fully satisfied.

Notice Period

Unless termination is based on immediate dismissal or another statutory exception, employers must provide advance notice to the employee in accordance with the Labour Code.

Final Settlement

Upon termination, employers should complete all outstanding obligations, including:

• Payment of outstanding salary.
• Payment for unused annual leave, where applicable.
• Severance or job loss allowance, if required.
• Completion of social insurance procedures.
• Return of employment-related documents where required.

These obligations should generally be completed within 14 working days from the termination date, although the Labour Code permits a longer period in certain exceptional circumstances.

Unlawful Termination

If an employer unlawfully terminates an employment contract, it may be required to:

• Reinstate the employee.
• Pay salary for the period during which the employee was unable to work.
• Pay compulsory insurance contributions for that period.
• Compensate the employee in accordance with the Labour Code.

Given the potential financial and legal consequences, employers should carefully assess each termination before proceeding.

Conclusion

Vietnam’s labour laws provide a comprehensive legal framework governing every stage of the employment relationship, from recruitment and probation to payroll, employee benefits, disciplinary procedures, and termination. While the regulations are designed to protect both employers and employees, they can also present compliance challenges, particularly for foreign-invested companies and businesses entering the Vietnamese market for the first time.

By understanding the key legal requirements and regularly reviewing employment contracts, HR policies, and payroll practices, employers can minimise legal risks, avoid unnecessary penalties, and build a compliant and productive workforce.

As Vietnam’s labour legislation continues to evolve, businesses should monitor regulatory developments and seek professional advice when implementing significant HR decisions or handling complex employment matters.

If your company requires assistance with labour law compliance, HR administration, payroll outsourcing, work permits, or employment advisory services, the team at Forra Consulting is ready to help. Our experienced consultants support businesses across Vietnam in building compliant HR practices and navigating the country’s evolving employment regulations with confidence.