Vietnam's labor market is evolving rapidly, attracting both local and foreign businesses. As companies expand their operations in the country, understanding employment contracts becomes crucial for compliance and effective workforce management. Whether you're an employer hiring in Vietnam or a professional seeking job opportunities, grasping the legal framework, contract types, and employee rights is essential. This guide provides a concise yet comprehensive overview of employment contracts in Vietnam, highlighting key regulations, obligations, and best practices for businesses.
1. Legal Framework Governing Employment Contracts in Vietnam
Employment contracts in Vietnam are primarily regulated by the Labour Code 2019, which took effect on January 1, 2021. This legislation outlines the rights and responsibilities of both employers and employees, ensuring fair treatment and workplace harmony. Key sources of employment law in Vietnam include:
- Labour Code 2019 (as amended)
- Government decrees and ministerial circulars providing implementation guidelines
- Company regulations and collective labor agreements
- International treaties (applicable to foreign workers under specific agreements)
The law applies to all employees working in Vietnam, regardless of nationality. It also governs employment contracts for Vietnamese nationals working abroad under the Law on Vietnamese Guest Workers 2020.
2. Types of Employment Contracts in Vietnam
Vietnamese labor law recognizes three main types of employment contracts:
- Indefinite-term contract: No fixed end date, providing long-term job security.
- Fixed-term contract: Valid for 12 to 36 months; can only be renewed once before converting into an indefinite-term contract.
- Seasonal or specific-task contract: Lasts for less than 12 months; often used for short-term projects.
Important Note: A fixed-term contract automatically converts into an indefinite-term contract if the employee continues working beyond the contract's expiration without signing a new agreement.
3. Key Components of an Employment Contract
A valid employment contract in Vietnam must include the following terms:
- Job description and work responsibilities
- Work location (including mobility clauses if necessary)
- Salary and payment method (must comply with minimum wage laws)
- Working hours and rest breaks (maximum 48 hours per week, with overtime regulations)
- Social insurance contributions (mandatory for both employees and employers)
- Health and safety conditions
- Contract duration and termination clauses
Contracts must be written in Vietnamese (or bilingual with Vietnamese as one language). Oral contracts are only permitted for jobs lasting less than one month.
4. Hiring Foreign Workers in Vietnam
Foreign employees must obtain a work permit if working in Vietnam for more than three months. Employers are responsible for supporting the work permit application process. However, certain cases allow for work permit exemptions, such as internal company transfers under international agreements. Foreign workers are subject to the same labor laws as Vietnamese employees unless an international treaty states otherwise. Employers must ensure compliance with both local regulations and international labor standards when hiring expatriates.
5. Employee Rights and Workplace Regulations
Vietnamese labor law protects employees from discrimination, harassment, and unfair treatment. Some key rights include:
- Equal pay and non-discrimination (regardless of gender, nationality, or social background)
- Mandatory trade union establishment for companies (within six months of operation)
- Rest periods (including at least one full day off per week)
- Paid annual leave (starting from 12 days per year, increasing with years of service)
- Maternity and paternity leave (with social insurance coverage)
- Sick leave and work injury benefits (covered under the social insurance system)
Vietnam also has strict laws prohibiting dismissal of pregnant employees and those on maternity leave.
6. Termination and Severance Pay
Employment contracts can be terminated under various conditions, including:
- Employee resignation (with 30–45 days’ notice, depending on contract type)
- Employer-initiated termination (must follow strict legal grounds such as poor performance, redundancy, or force majeure)
- Mutual agreement between employer and employee
- Instant dismissal (only in cases of gross misconduct like theft, fraud, or endangering workplace safety)
Severance pay applies when an employer unilaterally terminates a contract without legal grounds. The amount equals half a month’s salary per year of service, unless the employee is covered by unemployment insurance.
7. Enforcing Employment Contracts and Resolving Disputes
Labor disputes can arise from unfair dismissals, contract violations, or wage disputes. Vietnamese law provides the following mechanisms for resolving conflicts:
- Internal negotiation (between employer and employee)
- Conciliation via the Labour Conciliation Council
- Provincial Labour Arbitration Council (for unresolved cases)
- Labour Courts (as a final option for legal proceedings)
Employees also have the right to strike under specific conditions, but this process must be coordinated by the company's trade union.
Final Thoughts: Why Understanding Employment Contracts Matters
Employment contracts are critical for legal compliance and workplace stability in Vietnam. Employers must adhere to statutory obligations, while employees should understand their rights to ensure fair treatment.
For businesses expanding into Vietnam, partnering with legal experts or HR consultants can help navigate the complexities of labor laws. Meanwhile, employees should carefully review contracts before signing to safeguard their professional interests.
By staying informed and compliant, both employers and employees can foster a fair and productive working environment in Vietnam.