This age of digitization and automation has given rise to telecommuting and distributed teams. With advantages such as savings on office costs, more work flexibility, and access to global talent touted as some of the benefits of remote work, it’s easy to see why many employers have shifted from a traditional hiring model to hiring talent from across the globe. One of the countries sought after by overseas employers is Vietnam.
In this article we’ll be covering everything you need to know about employing talent from Vietnam, including the hiring process, local labor law requirements, and more. Check out the FAQs below:
One of the main reasons employers seek out remote talent from Vietnam is its relatively young talent pool. Vietnam has a population of approximately 98 million with its current labor force representing roughly more than 50% of the population. Around 1 million young adults enter the labor market every year, with more than 300,000 university students being added to the workforce.
Another reason why Vietnam is a top choice for employers is the relatively low minimum wage and low expected salary for employees in the computer science, information technology, and supply chain management fields. To put this into perspective, Vietnam’s monthly minimum wage ranges from 3,070,000 VND (133 USD) to 4,420,000 VND (192 USD). The cost of living in Vietnam is also very low compared to Singapore – which is 123% higher – and other Western countries.
In the last decade, Vietnam’s economy has boomed, resulting in economic growth, an influx of foreign investors, and a dynamic workforce. The country has consistently been a hot spot for many companies from MNCs to startups looking to set up remote tech teams. Vietnam’s population is particularly tech-savvy and has a vast amount of high-performing computer science students.
Over the last 15 years, the government has invested heavily on science, technology, engineering, and math education. Vietnamese students often gain exposure to computer science and training at a young age, and earn high scores in math and science in international exams. This, combined with the improved internet connectivity and a young, low-cost workforce, has spawned a thriving IT industry that is most promising to potential employers.
When looking for the best places in Vietnam to hire remote talent, you typically want to hire talent from the following regions:
These regions have a higher economic activity compared to the rest of Vietnam, and have larger business and tech hubs with more available English talent. Getting graduates from the following top universities in the country is also a plus:
Another way to hire talent is to post listings on popular job sites and portals or hire through a trusted recruitment agency. In Vietnam, the most popular jobs portals are:
While the average daily minimum wage in Vietnam ranges from VND 3,070,000 (USD 133) to VND 4,420,000 (USD 192), depending on the employee’s location, the average salary will depend on the nature of the job.
Here’s an approximation of the average monthly salary for six different positions:
Most Vietnamese employees will expect an increase of around 15% when moving jobs and the majority of employees expect a 7-15% increase in annual salary.
But let’s put some more context into the average salary figures. A 2019 presentation on Reducing Poverty in Vietnam: Issues, Policies, Challenges released by the Mekong Development Research Institute, showed the following figures:
The middle class in Vietnam are among those that can be classified as exportable talent for your remote teams given their monthly income range. You can expect the middle class to have a higher educational attainment and possibly higher English proficiency as well.
Vietnam follows a progressive income tax model. For more information about income tax, you can visit this website here.
According to a July 2019 survey titled "How Vietnamese Want to Work", commissioned by global workforce solutions company ManpowerGroup, 87% of jobseekers aged 18-65 in almost all fields preferred project work and part-time work. This is almost double the global figure which is 45%.
An article in VnExpress states, “Unlike their global counterparts whose preference for alternative work is most influenced by entrepreneurial pursuits, the key reason for Vietnamese job seekers’ interest is autonomy. Other factors include time for other business plans and time for family.”
While freelancing is quickly becoming a growing career trend in Vietnam, one risk of hiring freelancers or independent contractors is their compliance with local tax laws. Without a local registered company withholding income tax for them, freelancers may fail or forget to pay their income tax. (See the other risks of hiring an independent contractor here.)
You can help your Vietnamese employee comply with local taxation laws by using Professional Employer Organizations (PEOs) like Multiplier who will take care of payroll and taxes for you.
Vietnam labor laws state that regular working hours cannot exceed 48 hours per week. This is applicable for employees working under normal working conditions. For employees who are working under extremely heavy, hazardous, or toxic working conditions, working hours cannot exceed 36 hours per day. The local government however, recommends a 40-hour work week, to promote a healthy work-life balance.
While the number of daily hours is negotiable, you cannot exceed the maximum regular working hours. For example, you can have your employees work for 10 hours a day from Monday to Thursday and have them work for 8 hours a day on Friday. Alternatively, you can have your employees work 8 hours a day from Monday to Saturday. You can have a separate agreement between you and your Vietnamese employee regarding this.
Employees who work 8 consecutive hours (or 6 if they work in hazardous working conditions) are entitled to at least a 30 minute rest break (45 minutes if they work the late night shift), which is included in the working hours.
If employees work overtime, these criteria must be met:
Overtime pay can be calculated as follows:
Employees are also required to have at least 1 day of rest per week. If the work week cycle does not allow this, there is a minimum requirement of 4 rest days per month.
13th month pay: Unlike countries such as the Philippines or Indonesia, a 13th month pay cycle is not mandatory in Vietnam. However, it is highly encouraged, with most employees expecting to receive this bonus either at the end of the year or during the Tet holiday (Vietnamese New Year). Most locals call this a ‘Tet bonus’.
Annual Leaves: The number of paid annual leaves (exclusive of public holidays), a Vietnamese employee has, is dependent on their working conditions.
Employees also have one additional day of leave for every five years of service. Take note that the above regulations only apply to employees who have worked for an employer for at least one year. If an employee has worked for less than one year, his or her annual leave is prorated.
There is no specific regulation when it comes to carrying over unused leaves. While some employers allow this or allow this until a certain date during the next year, others choose to payout the unused leaves in cash.
Sick Leaves: In Vietnam, sick leaves are covered by the social insurance fund and not the employer. Should an employee take a sick leave, the employee must usually provide a medical certificate to support their leave. In general, Vietnamese employees are entitled to 30-60 days of sick leave per year, depending on the length of their social insurance contribution.
Family Leaves:
Maternity Leave: Like sick leaves, maternity leaves are covered by the social security fund. Every female employee working under normal working conditions is entitled to six months of maternity leave. In the case of multiple births, mothers are entitled to an additional one month of leave for every additional child. Women are also entitled to five paid prenatal checks-up; this can be extended to 12 paid days if the fetus is unstable.
As of July 2019, the maximum salary or remuneration during maternity leave has been capped at 20 times the base salary (VND 29.8 million). Take note that if the employee’s actual gross salary base is higher than this amount, the employer will usually cover the remaining balance.
Paternity Leave: A male employee whose wife has given birth is entitled to take 5-14 days of paid leave, depending on certain factors:
In the case of multiple births (three children and more), the male employee is entitled to take an additional three days of leave for every child.
Other Leaves: Vietamese employees are also entitled to other leaves at the discretion of the employee and employer, which include the following:
Insurance and social security: Vietnamese law requires both the employee and employer to contribute to the social, health, and unemployment insurance funds. The total percentage contribution for the employer is 23.5%, and the total percentage contribution for the employee is 10.5%. The employers’ and employees’ contributions are calculated as a percentage of the employee’s base salary, as follows:
The social security fund serves as insurance to help reduce financial risks when it comes to unemployment, sickness or injury, pregnancy, and childbirth. As of 2020, health and social insurance are capped at VND 29.8 million (USD 1,287). Unemployment insurance is capped at VND 88.4 million (USD 3818).
While not mandated by law, it is quite common to provide non-taxable allowances for your remote employees, and it's expected by the employees. These can include stipends for business and equipment expenses, internet and telecom allowances, and even transportation allowance – if your remote employee works from a co-working space. If you work with a PEO platform like Multiplier, they can arrange for other benefits and allowances for your Vietnamese employees for you.
To gain a competitive advantage, some Vietnamese companies will not only offer more annual and sick paid leaves, but also provide their own supplemental health coverage for their employees. Alternatively, employers can also provide an insurance allowance or stipend for their employees.
Other common benefits for Vietnamese employees include:
Currently, Vietnam has a total of 10 public paid holidays. If a public holiday falls on a weekend, employees are entitled to have the following day off as well. If you require your Vietnamese employee to work on a public holiday, refer to the table under FAQ #5 to calculate overtime payment. For an updated list of Vietnamese holidays, click here.
If your business is registered in another country, the easiest way to hire a Vietnamese remote talent would be through a Professional Employer Organization. PEO platforms like Multiplier make it easy for you to hire remote talent, comply with local labor laws, and pay your employees in time. Instead of having to jump through the legal and financial hoops of setting up a business entity in another country, Multiplier will act as your representative and abide by all the necessary laws for you.
If you want more details on how to hire and set up your remote team, you can check out our article here.
It is common practice in Vietnam to arrange a probation period when hiring new employees. Probation periods are agreed upon by both the employer and employee and are usually written up in a probationary contract. This must include the rights and responsibilities of both parties during this period. Take note that the probation period cannot be extended beyond the contract, and that each position can only have one probationary period. Employees who are working under seasonal labor contracts are not subject to probation.
The duration of the probation period can range from 6-180 days, and will depend on the complexity of the work and the nature of the job. This following table may be used as a guideline or reference:
During the probation period, there is no obligation on the end of both parties to make social security contributions. Probationary salary must also be negotiated and agreed upon by both parties, but must not be lower than 85% of the normal salary for the same job. Either party may terminate the employment relationship during the probationary period without providing a prior notice or paying compensation.
The easiest way to pay your Vietnamese remote talent would be through PEO platforms like Multiplier. With a PEO platform, you won’t have to worry about payroll or compliance with local taxes and labor laws as they will be taking care of everything for you.
Vietnam does not have a strict payment cycle, and employers can choose to pay their employees either bi-monthly or monthly on an agreed upon payday. Take note that the payment cycle should be agreed upon by both the employer and the employee beforehand.
In case of prescribed force majeure events with no remedial actions are available, salary payment can be delayed for one month. Should payment be delayed for more than 15 days, an interest rate on the salary must be applied. The interest rate is computed as follows: The overdue amount multiplied by the ceiling interest rate for one-month deposits set by the State Bank of Vietnam (SBV) at the time of payment.
As a general rule, salaries paid to Vietnamese employees must be paid in Vietnamese Dong
(VND). Even transactions, labor contracts, and agreements should be referenced with Vietnamese Dong and written in Vietnamese. This can be quite troublesome for foreign nationals looking to hire Vietnamese remote employees, which is why using PEO platforms like Multiplier can be extremely advantageous. Multiplier can help set up a contract, enable regular payment cycles in the local currency, and ensure labor law and taxation compliance for you.
By paying your Vietnamese remote employees in their local currency, you’ll be able to avoid fluctuations in conversion rates, which will help make tax calculations and contributions to benefits such as healthcare and social security easier.
While not particularly common due to its complexities and arduous processes, it is possible to unilaterally terminate a Vietnamese remote employee for the following reasons:
A Vietnamese remote employee on the other hand, can unilaterally terminate a contract for the following reasons:
In most other cases, bilateral termination is applied. The notice period for termination is as follows:
Vietnamese labor law requires employers to make severance payments to terminated employees who have been regularly working for the employer for 12 months or more. Severance pay is equivalent to half a month’s worth of salary for each year of employment. When calculating severance pay, the salary is equivalent to the average salary under the employment contract for the six months immediately preceding the termination of the employment contract.
Severance pay is can be withheld for the following reasons:
As of 1 January 2021, in addition to the above mentioned reasons, severance allowance will not be required if the employee is absent from work without justifiable reason for five consecutive working days or more.
Likewise, if contributions to the unemployment insurance fund were made for the benefit of the employee, employers are not required to pay severance for the duration of time that the employees participated in the unemployment insurance fund.
When termination of the contract is due to changes in the structure or technology, or due to economic reasons, job loss allowance shall be applied in this case with the rate of one month’s salary for each year of work and at least equal to two months salary.
Learn more about how you can easily hire remote talent from Vietnam with the help of Multiplier. You can visit our website or contact us today.
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