Vietnam Employment Guide
Vietnam Employment Guide
Vietnam is in Southeast Asia with sustained high economic growth, and its manufacturing, technology and service industries develop rapidly. With a large young labor force and improving infrastructure, it is attracting more multinational enterprises to invest in branches or outsourcing teams, becoming a popular market for global employers. In HR management, Vietnam has a relatively sound labor law system covering employment contracts, working hours, minimum wages, benefits and termination procedures. Employers must contribute to social insurance, health insurance and unemployment insurance, and pay salaries monthly in Vietnamese Dong generally. Probation periods, fixed and open-ended contracts have clear legal provisions, and employee dismissals must meet statutory conditions. Flexible employment is growing with digital office trends, but formal labor relations still emphasize written contract compliance. Local professional services are recommended for legal employment procedures.
Check recruitment costs
Currency
Vietnamese Dong (VND)
Capital
Hanoi
Official language
Vietnamese
Salary Cycle
Monthly
Our Employment Guide in Vietnam
Browse the following tags to learn all about hiring employees in Vietnam
Understanding Employer Costs in Vietnam: A Comprehensive Guide
For businesses expanding into Vietnam, accurately calculating total labor costs is crucial for budgeting and compliance. The total employer contribution for Vietnamese employees typically amounts to 23.5% of the gross salary. This includes Social Insurance (17.5%), Health Insurance (3%), Unemployment Insurance (1%), and Trade Union fees (2%). For foreign employees, the total cost is slightly lower at 22.5%, as they are exempt from the 1% Unemployment Insurance contribution. These mandatory contributions are a key part of the employment landscape that companies like SailGlobal help international firms navigate seamlessly.
Social Insurance Contribution Caps and Details
Social insurance contributions in Vietnam are calculated based on a capped salary base. The maximum contribution base is set at 20 times the regional minimum wage. For example, with a regional minimum wage of 4,960,000 VND, the maximum base for calculating contributions would be 99,200,000 VND. This cap is a critical factor for high-earning employees.
| Insurance Type | Employer Rate | Employee Rate | Contribution Cap (VND) | Minimum Base | Key Notes |
|---|---|---|---|---|---|
| Social Insurance (SI) | 17.5% | 8% | 46,800,000 | Regional Minimum Wage | Covers sickness, maternity (3%), occupational disease/accident (0.5%), and retirement (14%). Applies to both local and foreign staff. |
| Health Insurance (HI) | 3% | 1.5% | 46,800,000 | Regional Minimum Wage | Provides coverage for outpatient, inpatient, and prescription drug costs. |
| Unemployment Insurance (UI) | 1% | 1% | 46,800,000 | Regional Minimum Wage | Mandatory for Vietnamese nationals only; foreign employees are exempt. |
| Trade Union Fee (TU) | 2% | - | 36,000,000 | - | Paid solely by the employer. Companies without an internal union must pay this fee to the regional union. |
| Total | 23.5% | 10.5% |
Vietnam's Personal Income Tax (PIT) Structure
Vietnam employs a progressive tax system for resident taxpayers. A resident is defined as an individual residing in Vietnam for 183 days or more within a calendar year or holding a permanent residence card. Taxable income is calculated after deducting allowances, including a personal deduction of 11 million VND per month and a dependent deduction of 4.4 million VND per month for each qualifying dependent (e.g., parents, spouse, children). Additionally, mandatory social insurance contributions made by the employee (8% SI + 1.5% HI + 1% UI) are fully deductible from the gross income before tax calculation.
| Monthly Taxable Income (Million VND) | Tax Rate | Deduction (Million VND) |
|---|---|---|
| Up to 5 | 5% | 0 |
| Over 5 to 10 | 10% | 0.25 |
| Over 10 to 18 | 15% | 0.75 |
| Over 18 to 32 | 20% | 1.65 |
| Over 32 to 52 | 25% | 3.25 |
| Over 52 to 80 | 30% | 5.85 |
| Over 80 | 35% | 9.85 |
Practical Case Study: Calculating Net Salary
Consider a Vietnamese employee in Hanoi with a gross monthly salary of 30 million VND, supporting one dependent. First, calculate the deductible amounts: Personal deduction (11M VND) + Dependent deduction (4.4M VND) + Employee's social insurance contributions (10.5% of 30M VND = 3.15M VND). Total deductions equal 18.55M VND. The taxable income is therefore 30M - 18.55M = 11.45M VND. According to the tax table, the tax payable is (11.45M VND * 15%) - 0.75M VND = 967,500 VND. This case illustrates the importance of accurate calculation, a service expertly provided by partners like SailGlobal.
Hire easily in Vietnam
Compare employee hiring costs across over 100 countries worldwide, helping you accurately calculate labor costs. Try it now
Cost Calculator
Please select the country/region you wish to recruit from, and the calculation can be done with just a few clicks.
USD