Overview of Labour law in Vietnam Print

 Asialaw Vietnam Analyst Issue July 2008

By Patrick Chee and Dung Le

In Vietnam, the Labour Code (“Code”) serves as the principal legal base for all the labour matters. It applies to both employee and employer including foreign organizations employing local and foreign staff working on regular basis in Vietnam.

There are also a number of implementing regulations, i.e. Decrees, Decisions, and Circulars, which provide detailed guidelines for implementation the Code. These regulations play useful and important roles in the Vietnamese legal system, as the government authorities would often refer to them in practice.      

Individual Labour Contract      

According to the Code,  employment in all business entities, including foreign-invested enterprises, should be based on a written labour contract, which contains clauses relating to: the scope of work, working hours, rest/ breaks, recreation time, wages, place of work, terms of contract, occupational safety and hygiene, social and medical insurance.

Labour contracts in Vietnam is categorised into three types:

  • Contract without a definite term (“indefinite term contract”);
  • Contract which is valid from 12 to 36 months (“definite term contract”); and
  • Contract for a seasonal job or a specific job to be carried out in less than 12 months (“seasonal/temporary contract”).

A probationary period could be applied before the execution of a labour contract. However, it should not be longer than 60 days for positions requiring college level qualifications, 30 days for position requiring vocational level qualifications and 6 days for manual labour. During the probationary period, either party can terminate the employment without prior notice. .

Collective Labour Agreement  

Any enterprise operating in Vietnam, which has more than 10 employees, ought to enter into a collective labour agreement (“CLA”). Normally, a CLA would be negotiated and signed by the Trade Union of the enterprise.  The CLA could be specified to be binding for a period of 1 to 3 years (depending on case to case basis) and thereafter subject to renewal.

The Code stipulates that where the rights stipulated in a signed individual labour contract are less favourable than those provided for in the CLA, the respective terms and conditions stated in the latter would prevail.    

Unilateral termination of Labour Contract

Generally, the law requires that a party willing to terminate labour contract unilaterally must give a prior notice of termination in writing to the other party. For the case of indefinite term contract this period is 45 days for definite term labour contract 30 days, and for seasonal/temporary labour contract: 3 days.…

The Code only allows unilateral termination of labour contract in limited circumstances. Generally, it is more difficult for employers to do so. Among the conditions provided in the Code, in practice, the most common circumstance for unilateral termination by the employer is dismissal for disciplinary reasons.

Remuneration and Benefits

Vietnamese government sets a dual minimum salary system for domestic enterprises and for foreign-invested enterprises. The minimum salary rate is adjusted from time to time by the government subject to the socio-economic changes in the country.

As from 1 January 2008, the minimum monthly salary rate stipulated by the government for employees at foreign-invested enterprises  operating in Hanoi, Ho Chi Minh City is VND 1 million (SGD 75) and in other provinces it varies from VND 800,000 to 900,000 (SGD 65 to 70). Employees, who have gone through vocational training program, including that of provided by the employer, should receive a salary of at least 7% higher than the above mentioned minimum salary rate.  

Both the employer and employee in all contractual employment relationships lasting longer than 3 months shall make contribution to the state run Social Insurance Fund (“SIF”). For the time being, all employers in Vietnam are required to pay 17% of employees’ salary for SIF, of which 15% is for social insurance and 2% is for medical insurance. While employees are required to pay 6% of their salary for SIF, of which 5% is for social insurance and 1% is for medical insurance.

From the year 2010, every two years, the employer is required to pay an additional 1% social insurance until the contribution rate reaches 18% and the employee must pay an additional 1% until the contribution rate reaches 8%. 


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