Hiring employees in Vietnam is governed by the Labor Code 2019, which mandates written labor contracts, sets minimum wage by region (four regional minimum wage zones, with Hanoi/HCMC in the highest zone), requires social/health/unemployment insurance contributions, and specifies statutory annual leave, notice periods, and severance rules. Foreign employers hiring foreign staff must also navigate work permit requirements for those employees, while hiring Vietnamese staff is comparatively straightforward but still requires careful contract drafting given strong statutory employee protections around termination.
Vietnamese labor law leans protective of employees on termination — dismissing a Vietnamese employee without a Labor Code-compliant process (documented cause, correct notice, or mutual agreement) exposes employers to real legal and reputational risk, so termination procedure needs to be right from the first hire, not improvised later.
Key Facts
Regional minimum wage is set in four zones (Region I being Hanoi/HCMC urban core and highest, down to Region IV being rural/lower-cost areas), reviewed periodically by the government — Region I minimum wage is meaningfully higher than Region IV.
Written labor contracts are mandatory beyond very short casual work; contracts are typically indefinite-term or definite-term (up to 36 months, renewable once as definite-term before conversion to indefinite becomes effectively required).
Statutory annual leave is a minimum of 12 days/year for standard conditions, rising for hazardous work or specific categories, plus public holidays (currently around 11-12 days/year including Tet, which itself typically spans several days).
Termination requires documented cause (or mutual agreement, or specific statutory grounds like redundancy with proper process) and statutory notice periods (commonly 30-45 days depending on contract type) — unilateral termination without cause or proper process risks being ruled unlawful with compensation obligations.
Foreign employees generally require a work permit (unless exempted, e.g., certain intra-company transferee categories, or under specific thresholds) before starting work, sponsored by the Vietnamese employer.
Probation periods are capped by law depending on job complexity (commonly up to 60 days for professional/technical roles, shorter for simpler roles), with a minimum probation pay rate (at least 85% of the full salary).
Steps
Determine the correct regional minimum wage — Identify which of the four wage regions your business location falls into and ensure offered salaries meet or exceed the applicable regional minimum wage.
Draft a compliant written labor contract — Use a Labor Code-compliant contract specifying term type, salary, working hours, leave entitlements, and probation terms — template contracts from a local labor lawyer or reputable HR provider reduce risk.
Register the employee for mandatory insurance — Register new employees for social insurance, health insurance (BHYT), and unemployment insurance within the statutory window after hiring, with contributions split between employer and employee.
Secure work permits for foreign hires — For foreign employees, initiate the work permit application (or confirm an applicable exemption) before their start date, since working without a valid permit exposes both employer and employee to penalties.
Follow proper process for any termination — Document performance/conduct issues, follow statutory notice periods, and consider mutual agreement termination where possible to minimize legal exposure.
Costs
Region I (Hanoi/HCMC) minimum wage: Highest of the four regional tiers, reviewed periodically by government decree
Employer statutory insurance contributions: Roughly 21.5% of gross salary (social, health, unemployment insurance combined, subject to caps)
Employee statutory insurance contributions: Roughly 10.5% of gross salary
Timelines
Insurance registration after hiring: Within the statutory window, commonly within 30 days
Termination notice period: Commonly 30-45 days depending on contract type
Maximum probation period (skilled/technical roles): Up to 60 days
Required Documents
Written labor contract
Employee ID/passport and work permit (for foreign hires)
Social/health/unemployment insurance registration
Internal labor regulations (required once a company reaches a certain employee headcount, commonly 10+)
Common Mistakes
Terminating an employee without following the statutory cause/notice/documentation process, risking a ruling of unlawful termination and compensation liability.
Paying below the correct regional minimum wage due to miscalculating which of the four wage zones applies.
Hiring foreign staff without confirming work permit status or an applicable exemption before their start date.
Not registering employees for mandatory insurance within the statutory window, which can trigger penalties and complicate the employee's own benefit claims later.