Vietnam Employment Guide

Understanding Vietnam's Payroll Cycles

For international companies operating in Vietnam, establishing clear payroll cycles is fundamental to workforce management. Most organizations typically disburse salaries on the last working day of the month or the first working day of the following month. An alternative approach adopted by some firms is a semi-monthly payment system, with wages paid around the 15th and the end of each month. Consistency in payment timing helps build trust and ensures compliance with local labor expectations.

Annual Bonus Structures: 13th Month Salary

While not mandated by Vietnamese law, the 13th-month salary has become a widespread practice, serving as a key component of the total compensation package to attract and retain talent. This bonus is customarily paid in the final month of the year or before the Lunar New Year (Tet). It's important to note that a 14th-month salary is not a standard practice. Companies like SailGlobal often integrate this bonus into their employment contracts to remain competitive in the local market.

Vietnam's Regional Minimum Wage Framework

Effective from July 1, 2024, under Government Decree No. 74/2024/ND-CP, Vietnam's minimum wage structure remains in effect for 2025. The country is divided into four distinct regions, with wage levels calibrated to reflect varying economic development and living costs. This tiered system is crucial for foreign investors to accurately budget for labor expenses.

Scope of Application: These rates apply to employees under labor contracts and exclude freelancers or informal workers.

Overtime Regulations and Maximum Working Hours

Legal Limits on Working Time

Vietnamese labor law stipulates clear boundaries for working hours to protect employee well-being.

• Standard Workweek: Maximum of 8 hours per day or 10 hours per day if calculated on a weekly basis, not exceeding 48 hours per week.
• Industry Exceptions: Sectors like textiles, garments, electronics, and agriculture may have an annual overtime cap extended to 300 hours, subject to approval.

Overtime Hour Restrictions

Overtime is strictly regulated to prevent exploitation.

• Daily Limit: Overtime must not exceed 50% of standard daily working hours (i.e., a maximum of 4 hours extra per day).
• Monthly & Annual Caps: Total overtime is capped at 40 hours per month, 200 hours per year for most sectors, and 300 hours for eligible manufacturing industries.
• Emergency Provisions: In cases of national defense needs or emergencies like natural disasters, these limits can be exceeded with a 15-day advance notice to authorities.

Calculating Overtime Pay

Correctly compensating overtime is a critical compliance area.

• Standard Rates: 150% of the normal salary rate for weekday overtime; 200% for weekend work; and 300% for work on public holidays or paid leave days.
• Night Shift Premium: For work between 10:00 PM and 6:00 AM, an additional 30% is added to the base overtime rate. For example, weekday night overtime would be calculated as 150% x 130% = 195% of the normal salary.

Protections for Vulnerable Employees

Vietnamese law provides specific safeguards for certain worker groups.

• Restricted Overtime: Pregnant women (from the 7th month) and those nursing a child under one year old cannot be assigned overtime, night shifts, or business travel. Similarly, employees in high-risk roles involving hazardous substances are protected from mandatory overtime.
• Exemptions: The aforementioned protections may not apply during national emergencies or critical defense missions.

Compliance and Legal Risks

Adherence to these regulations is non-negotiable for foreign entities.

• Employee Consent: Written employee agreement is mandatory for any overtime work. Failure to obtain consent constitutes a legal violation.
• Consequences of Non-Compliance: Companies face substantial financial penalties. For foreign workers, illegal overtime can result in visa revocation and deportation. Non-payment of correct overtime wages is a common trigger for labor disputes and collective lawsuits, which can severely damage a company's reputation and operations. SailGlobal advises clients to implement robust time-tracking and payroll systems to mitigate these risks.