Understanding Vietnam Labor Law for Foreigners: Key Regulations and Guidelines

Huy Tran

Welcome to a comprehensive guide on Vietnam labor law for foreigners. In this article, we will delve into the essential aspects of working in Vietnam as a foreigner, providing you with valuable insights and guidance.

Understanding Work Permits

Eligibility Criteria for Foreign Workers

A work permit is a legal document that allows a foreigner to work in Vietnam for a specific employer and position. It is issued by the Vietnamese competent authorities after verifying the qualifications, skills, and health of the foreigner. A work permit is required for most foreigners who want to work in Vietnam, except for some exemptions such as foreign investors, experts, managers, executives, and technical workers.

To apply for a work permit, a foreigner must meet the following eligibility criteria:

  • Be at least 18 years old and have full civil act capacity;
  • Have professional qualifications, techniques, skills and working experience relevant to the job position;
  • Have enough health and strength as prescribed by the Minister of Health;
  • Have documents issued in foreign countries legalized;
  • Have a valid passport with at least 6 months of validity;
  • Have a certificate of no criminal record or not facing criminal prosecution in Vietnam or abroad.

The employer must also meet certain requirements to sponsor a work permit for a foreigner, such as having a registered business license, having enough capital and assets, having suitable labor conditions and facilities, and complying with labor laws and regulations.

A foreigner who works in Vietnam without a valid work permit may face legal consequences such as fines or deportation. Therefore, it is important to obtain a work permit before starting any employment activity in Vietnam.

Work Permit Application Process

The process of applying for a work permit involves submitting an application form to the Department of Labor – Invalids and Social Affairs (DOLISA) or its authorized agencies. The application form must be accompanied by the required documents such as passport copy, employment contract, health certificate, criminal record certificate (if applicable), etc.

The DOLISA will then conduct an initial assessment of the application and issue an approval letter if it meets all the criteria. The employer must then submit the approval letter along with other documents such as labor contract extension form (if applicable), tax clearance certificate (if applicable), etc. to the DOLISA or its authorized agencies. The DOLISA will then issue an official work permit within 15 working days after receiving all the documents.

The validity period of a work permit depends on several factors such as the type of job position, the duration of employment contract, the nationality of the employer or employee, etc. Generally speaking, there are three types of work permits:

  • Temporary work permit (valid for up to 12 months);
  • Permanent work permit(valid indefinitely); and
  • Special work permit (valid for specific purposes such as training programs).

A foreigner can apply for an extension of his or her work permit before it expires by submitting an application form to DOLISA or its authorized agencies along with supporting documents.

Work Permit Exemptions

A work permit exemption certificate is a document that allows a foreigner to work in Vietnam without a work permit, but still enjoys the same rights and obligations as a foreign worker with a work permit. A work permit exemption certificate is valid for up to 2 years and can be extended if necessary.

There are several categories of foreigners who are exempt from the work permit requirement in Vietnam, such as:

  • Foreigners who are owners or capital contributors of certain types of companies, such as limited liability companies or joint-stock companies with at least VND 3 billion capital contribution.
  • Foreigners who are heads or members of the board of directors of certain types of companies, such as joint-stock companies with at least VND 3 billion capital contribution.
  • Foreigners who are heads or representatives of certain types of organizations, such as international organizations or foreign non-governmental organizations.
  • Foreigners who enter Vietnam and stay for less than 3 months to offer services or deal with complicated technical or technological problems that cannot be solved by Vietnamese and foreign experts.
  • Foreign lawyers who hold a professional practice license in Vietnam.
  • Foreigners who get married with Vietnamese citizens and wish to reside in Vietnam.
  • Foreign workers who are internally reassigned in certain service industries that are covered by Vietnam’s WTO commitments on services, such as business, communication, construction, distribution, education, environment, finance, health, tourism, culture, entertainment and transportation.
  • Foreign workers who enter Vietnam to provide professional and technical advisory services or perform other tasks serving the research, construction, appraisal, assessment, management and execution of programs and projects funded by ODA according to the International Treaties on ODA between the competent authorities of Vietnam and other countries.
  • Foreign workers who have licenses for the practice of communications or journalism in Vietnam issued by the Ministry of Foreign Affairs.

To get a work permit exemption certificate, you need to apply either through your employer or by yourself, depending on the exemption category. The process is similar for both methods:

  • Submit an application form and supporting documents (passport copy, employment contract extension form, tax clearance certificate, etc.) to DOLISA or its authorized agencies.
  • Wait for an approval letter from DOLISA within 15 working days.
  • Submit the approval letter and other documents (labor contract extension form, tax clearance certificate, etc.) to DOLISA or its authorized agencies.
  • Receive an official work permit exemption certificate from DOLISA within 15 working days.

Understanding Vietnam’s Labor Law for Foreigners

Working Hours and Overtime

The standard work week in Vietnam is 48 hours, which means that employees are entitled to 12 days of paid annual leave per year. However, there are some exceptions for certain occupations or industries that require more than 48 hours of work per week, such as textiles, garments, leather, shoes, electricity, electronics, etc. In these cases, the number of overtime hours is limited to 200 hours per year.

Overtime pay is exempt from personal income tax in Vietnam. However, employers must ensure that the overtime hours do not exceed 50% of the normal working hours in a day; in case of applying the regulation of normal working hours by week, the total number of normal working hours and overtime hours shall not exceed 12 hours in a day; no more than 40 hours in a month; and no more than 200 hours in a year. Employers must also obtain the consent of the employee before requiring them to work overtime.

Salaries and Wages in Vietnam

Minimum Wage Standards

Salaries in Vietnam must comply with minimum wage standards set by the government. There are two types of minimum wages:

  • Common minimum wage (VND 1,800,000) for state-owned enterprises and enterprises
  • Regional minimum wage (VND 4,680,000 to VND 4,160,000) for non-state enterprises based on zones

The regional minimum wage varies depending on the location of the enterprise. For example:

  • Region I covers urban Hanoi and Ho Chi Minh City
  • Region II covers rural Hanoi and Ho Chi Minh City along with Da Nang
  • Region III includes provincial cities and districts of Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Binh Phuc and other provinces not listed in Region I and Region II
  • Region IV covers remaining localities

Payroll Regulations

Payroll regulations are stringent in Vietnam. Employers must ensure that employees’ salaries are paid on time every month. They must also deduct various contributions and taxes from employees’ salaries before paying them. These include:

  • Social insurance contributions (such as health insurance premium)
  • Income tax withholding (15% for employees earning above VND 7 million)
  • Labor insurance contributions (such as accident insurance premium)
  • Unemployment insurance contributions (0.5% for employees earning above VND 7 million)
  • Housing allowance (if applicable)
  • Transportation allowance (if applicable)

Employers must also issue payslips to employees every month showing their gross salary before deductions.

Holidays and Leaves in Vietnam

Public Holidays

Public holidays in Vietnam are administered by the Ministry of Labour Invalids and Social Affairs of Vietnam (MOLISA). The Vietnamese New Year (Tet) is the most important holiday observed by most Vietnamese people. It usually falls between late January or early February according to the lunar calendar. Other public holidays include:

  • National Day (September 2)
  • Hung Kings Commemoration Day (April 18)
  • Victory Day (April 30)
  • International Labor Day (May 1)
  • Vesak Day (May or June depending on lunar calendar)
  • Vietnamese Family Day (June 28)

Annual Leave

Employees who have worked with an employer for over one year are entitled to fully paid annual leave as follows:

  • Employees working in normal conditions will be entitled to 12 days of leave
  • Employees who are underage (14 years old or younger), disabled (51% or greater decrease in working capacity or severe disability), work under arduous (heavy, hazardous, or dangerous) conditions will be entitled to 16 days of leave
  • Employees who work under harsh living conditions will be entitled to 14 days of leave
  • Employees who have not yet worked for one year for a single employer will be entitled to have paid annual leave based on their number of months worked
  • Employees who work with an employer for more than five years will be entitled to one extra day of annual leave

Maternity Leave

Female employees receive six months’ leave if they give birth or adopt a child under four months old. If they have more than one child under four months old they will receive an extra 30 days for each additional child. Female employees also receive maternity leave (six months) if they give birth after working for at least six months with an employer. Female employees can also take up to two years off from work without losing their jobs if they want to pursue higher education or training.

Independent Contractors

Independent contractors do not have statutory leave rights like annual leave, sick leave, maternity leave, unpaid leave, statutory insurance, severance, job loss allowance upon termination of employment. However they may negotiate their own terms with their clients regarding their working hours, payment methods, benefits, etc.

Social Security and Health Insurance

Foreign workers in Vietnam are subject to mandatory social security and health insurance contributions, providing them with essential benefits. The scheme applies to employees who are foreign citizens working in Vietnam under indefinite-term labor contracts or definite-term labor contracts for one year or more with a work permit/practicing license/practicing certificate issued by the Vietnamese competent authorities.

The compulsory social insurance contribution scheme is not applicable to foreign employees who work in Vietnam under internal transfer arrangements, i.e., assigned directly by headquarters to the subsidiary in Vietnam, nor to those who reach retirement age. The pension regime can be claimed on a lump-sum basis, subject to certain conditions.

Social insurance covers sickness, maternity, occupational diseases, accidents, retirement, and death. Health insurance covers medical expenses for employees and their dependents. Both types of insurance are funded by mandatory contributions from both employers and employees.

Employers register and pay insurance contributions monthly on behalf of their employees at the provincial Department of Labor, Invalids and Social Affairs (DoLISA).

Employee Rights and Protections

Vietnam’s labor laws offer protections against discrimination and lay down clear rules regarding termination and severance pay. Employees in Vietnam are entitled to various benefits, such as annual leave, maternity leave, sick leave, social insurance, health insurance, pension, etc.

The Labor Code of Vietnam is the main law that regulates employment relationships in Vietnam. It covers various aspects of employment contracts, such as terms and conditions of employment, probationary periods, termination of employment, redundancy, discrimination, harassment, etc. The Labor Code also provides for different types of workers with different rights and obligations.

The Law on Social Insurance is another important law that governs social security and health insurance for employees in Vietnam. It specifies the contributions rates and entitlements for employees and employers in different categories of workers. The Law on Social Insurance also establishes the mechanisms for social insurance registration, payment, supervision, audit, etc.

The Law on Labor Relations is a law that regulates labor disputes between employers and employees or their representatives. It defines the procedures for filing complaints or disputes to the competent authorities or courts. It also sets out the grounds for dismissing workers or imposing sanctions on employers who violate labor laws.

Dispute Resolution

The legal avenues available for dispute resolution are outlined below:

Negotiation: This is a method of settling disputes without involving a third party. The parties can communicate directly with each other to reach an agreement that suits their interests. Negotiation is flexible, effective, convenient, fast and simple. However, it depends on the voluntariness and cooperation of the parties.

Mediation: This is a method of involving a neutral third party who helps the parties to find a mutually acceptable solution to their dispute. Mediation does not determine who is right or wrong based on evidence or law. Mediation is confidential and voluntary. However, it requires good faith and willingness from both parties to participate in good faith.

Arbitration: This is a method of resolving disputes by submitting them to one or more arbitrators who make a binding decision based on evidence or law. Arbitration can be mandatory or consensual depending on the contract between the parties. Arbitration is usually faster and cheaper than litigation but less flexible than negotiation or mediation.

Court: This is a method of resolving disputes by submitting them to one or more judges who make a final judgment based on evidence or law. Court proceedings are formalized by rules of procedure that ensure fairness and transparency. Court judgments are legally binding but can be appealed or reviewed by higher courts under certain conditions.

Le & Tran Law: Your Trusted Advisor For Navigating Vietnam Law

Employment law in Vietnam can be complex and challenging, especially for foreign employers and employees who may face some legal and cultural barriers. That is why you need a trusted advisor who can help you navigate the employment law landscape in Vietnam.

Le & Tran Law is a leading law firm in Vietnam that specializes in employment litigation, white-collar crimes, labor and employment and other corporate compliance services. We have a team of highly trained and experienced lawyers who can provide you with practical and effective solutions for your employment issues.

Le & Tran Law can assist you with various employment matters, such as:

  • Drafting, reviewing and negotiating labor contracts and collective bargaining agreements.
  • Advising on labor policies, procedures and regulations.
  • Representing and defending employers and employees in labor disputes, arbitration and litigation.
  • Advising on termination of employment, severance pay and job-loss allowance.
  • Advising on social insurance, health insurance and unemployment insurance.
  • And more.

If you are looking for a reliable and professional partner who can help you with your employment law needs in Vietnam, look no further than Le & Tran Law.

Contact us today at info@letranlaw.com or call us at (+84 28) 36 22 77 29 to get started.

We look forward to hearing from you and working with you.