Vietnam’s labour legislation and its implementation in practice are well developed. In comparison to some other countries in the region, the position of employees is well protected. Vietnamese labour law is mandatory in a one-sided way: Employer and employee may not agree on terms that are less favourable to the employee than the conditions set out in labour legislation. They may, however, agree on terms that are more favourable.
Labour Contract
With the exception of short-term labour contracts (less than one month), labour contracts must be entered into in writing. Labour e-contracts that are established in the form of data messages in accordance with the Law of Electronic Transactions are recognized as written labour contracts. It is recommended to use the standard labour contract issued by the Ministry of Labour, War Invalids and Social Affairs (“MOLISA”) as a template in order to avoid unnecessary explanations at its local departments, though this is not required by law. In principle, the labour contract must include certain major items including work to be performed, working hours and rest breaks, wages, location of job, duration of contract, conditions on occupation, safety and hygiene, training and social insurance for the employee. In addition to the compulsory items, and depending on a particular industry, employers can include additional items or clauses such as those for the protection of intellectual property rights, confidentiality, the protection of trade secrets, and non-compete and non-solicitation undertakings. Any additional items must be in compliance with the labour laws and the Vietnamese laws in general.
The terms of labour contracts can be: indefinite or definite with a maximum term of 36 months. There is no minimum threshold for a definite term labour contract.
Termination of a labour contract must comply with provisions of the labour code. At will termination by employers is prohibited. The employer may only terminate a labour contract prior to its term under certain specific conditions as set out by the law. Depending on the ground for termination, the requirements for severance or job-loss allowance, notice periods and procedures differ.
Labour contracts may be terminated in cases of the employee’s failure to carry out tasks, breach of discipline or other misconduct, or serious injury or illness. Employers may unilaterally terminate a labour contract in certain circumstances specified in the labour code. Employees may unilaterally terminate the labour contract at any time without reason but must give advance notice as prescribed. However, in some circumstances the labour contract may be unilaterally terminated by the employee without giving prior notice. Regulations require a minimum notice period for each type of contract in which the minimum length is 45 days for indefinite labour contracts, 30 days for definite labour contracts with a period between 12 months and 36 months and 3 days for definite labour contracts with a period of fewer than 12 months.
Probation
The employer and the employee may reach agreement on a probationary (trial) period of work and the rights and obligations of the two parties within that period.
The duration of a probationary period depends on the nature and complexity of the work and must not exceed 180 days for managers of an enterprise pursuant to the Law on Enterprise, 60 days for jobs requiring professional or technical college qualification or above; 30 days for jobs requiring an intermediate-level qualification or for technicians or trained staff; and 6 days for any other work.
During the probationary period, the employer must pay a salary that corresponds to at least 85% of the ordinary salary for the job. Either party may terminate the employment relationship during the probationary period without providing advance notice and without paying compensation.
Minimum Wage
The laws provide for two categories of the minimum wage: general minimum wage and regional minimum wage.
Contributions to compulsory social insurance are calculated on the basis of the salary stated in the labour contract. However, if the salary exceeds an amount above 20 times of general minimum wage, the basis of calculating the contributions is an amount appropriate to that wage. Currently, the general minimum wage is VND1,490,000 per month (approximately USD64 per month) and the minimum regional salary varies from VND3,070,000 to VND4,420,000 per month (approximately from USD128 to USD184 per month). These minimum salaries are subject to change each year by the Government.
The regional minimum wage is the minimum monthly salary to which an employee is entitled. Based on the level of development, the government divides the whole country into four (4) regions (regions I, II, III, IV). The regional minimum wage depends on the place of employment.
Foreigner Employment
The employment of an expatriate by an enterprise is allowed but generally limited to a managerial position or to a position requiring a high level of expertise that Vietnamese workers are not yet able to satisfy.
Foreign employees, with definite exceptions, are required to obtain work permits when they work in Vietnam. Work permits are issued by the local Department of Labour, Invalid and Social Affairs (“DOLISA”) where the foreign employee is working. Work permits are issued for a maximum period of 24 months and may be renewed only one time for an additional 24 months of employment. A work permit is tied to the specific employer who applied for the employee’s work permit, and the foreigner may legally work only for that employer.
Foreign employees who work without work permits shall be forced to exit or be expelled from Vietnam. Employers employing foreign employees without work permits are subject to an administrative fine.
Annually, an employer is responsible to determine its need to employ foreigners for each working position for which Vietnamese workers are unable to satisfy the requirements, and report and explain the same to the chairman of the People’s Committee of the province or city in the locality where the employer has its head office. The chairman of the provincial people’s committee shall provide written consent to each employer regarding the employment of a foreigner for each working position.
