Vietnam is the world’s 14th most populous country which has transformed since 1986 from a highly centralized to a mixed economy. During the three decades of economic reforms, the country has witnessed rapid growth and emerged as a leading agricultural exporter besides becoming a major destination for foreign direct investments. Since 1990, the economic growth of Vietnam has been 6.4% per year on average, which is one of the highest in the world. Foreign trade is critical to Vietnamese economy, which is evident by the combined value of the country’s exports and imports, as high as 179% of its GDP.
Currency: Vietnamese Dong
Principal Language: Vietnamese
Government: Socialist Republic of Vietnam
Capital City: Hanoi
Major Cities: Ho Chi Minh City, Da Nang
An employment contract is required to be in writing with both the employer and the employee keeping a copy each. The contract is allowed to be verbal only for temporary jobs, which are those with a term of 3 months or less, or if the employee is a domestic servant. A contract must contain:
- Job description
- Work hours
- Break time
- Length of the contract
- Safety and hygiene at the workplace, and
- Terms of social insurance.
A contract may be binding for an unspecified term, for 1 to 3 years, or for a seasonal job or a particular job to be performed in less than 1 year.
By law, regular work schedule may not be more than 8 hours per day and 48 hours per week, although the Labor Code recommends employers to fix a 40-hour workweek. An employee must get 30 minutes of rest time -- 45 minutes in the case of a night-shift worker -- in a 6 or 8-hour shift. Employees must get at least 12 hours of free time after the end of a shift and the start of the next.
An employee must get at least one 24-hour day of rest every week on Sunday or any other day during the week. If the type or nature of an employee’s work makes it impossible for specifying a weekly rest day, an employer needs to give the employee at least 4 days of rest every month. In some occupations, the rest periods are determined by the government.
Overtime cannot be more than 4 hours a day, 30 hours a month and 200 hours during a year, except in some special jobs, in which overtime can be up to 300 hours a year. Overtime work performed on a regular workday is payable at 150% of the regular hourly rate. Pay for work on a weekly rest day is 200% of the usual hourly rate while on holidays 300% of the usual rate is payable. Overtime is allowed only in emergencies, including national emergencies and situations such as flood, fire, earthquake, accident, and an outbreak of an epidemic.
Employees in Vietnam get the following 10 public holidays with full pay: :
- Jan. 1: New Year's Day
- Lunar New Year Festival: 5 days
- March 10: Hung Kings Commemoration Day
- April 30: Victory Day
- May 1: International Labor Day
- Sept. 2: National Day
Foreign workers in Vietnam can avail one day off for their country's National Day (if any) as well as one public holiday for their traditional occasion. If a holiday occurs on a day that is not a workday, a leave is taken on the following day.
After completing 1 year with an employer, an employee is eligible for a fully paid annual leave of:
- 12 days if an employee carries out job responsibilities under normal working conditions
- 14 days if an employee works in a dangerous or hazardous job, or in a workplace with tough conditions or if the employee’s age is under 18, and
- 16 days if an employee works in a hazardous or dangerous job located in a place with harsh living conditions.
The number of days of annual leave is increased at the rate of 1 for every 5 years with an employer. Employees with less than 1 year with an employer are entitled to annual leave in proportion to their length of employment.
Employees become eligible for 2 days of paid sick leave per month of employment in the first year. Sickness benefits are available for ailments not related to work provided they are not self-inflicted or due to substance abuse. The payable sick leave benefit is 75% of the insured's wages for up to 30 days in a calendar year when the insured has completed fewer than 15 years of covered employment length; 40 days if it is between 15 and 30 years, and 60 days if in excess of 30 years.
The level and period of the sickness benefit go up if an employee performs a hazardous or strenuously demanding job. In this case, the benefits range from 100% of the insured's wages payable for 40 days in a calendar year to 70 days based on the number of years of service. Full benefits are payable for prolonged hospitalization lasting 180 days and reduced benefits if it continues further.
During pregnancy, a female employee can take 5 days' paid leave for prenatal medical checkups; five 2-day paid leaves if the medical facility is located far or the employee is ill. A woman is eligible for 6 months of paid leave, but more than 2 months of these cannot be taken before the birth of the child. If the employee gives birth to twins or more than two children, she can take another 30 days of leave for every additional child.
Maternity benefits are payable at 100% of salary plus a lump sum of 2 months of the minimum wage for every child. Additional leaves can be taken at 25% benefits even after completing the entire duration of the maternity leave.
An employee may resume her work before the end of maternity leave if she has already taken 4 months or more of leave after childbirth and a doctor certifies in writing that her return to work will not impact her health adversely. The employee continues to receive maternity benefits in addition to her pay till the expiry of the maternity leave.
When a pregnant employee undergoes a miscarriage, abortion, or the suffering due to a stillborn child, she is entitled to between 10 and 50 days of leave based on the duration of fetal growth. Maternity benefits are also payable to insured women adopting a baby aged less than 4 months.
There is no statutory obligation in Vietnam to grant paternity benefits.
- Bereavement Leave – Employees can take a leave for 3 days on the death of a close relative, such as child, parent, spouse or spouse’s parent, siblings, and grandparent.
- Personal Leave – Employees in Vietnam are granted 3 days of personal leave with full pay for their marriage, and 1 day’s leave for the marriage of their child.
Pension and Social Security
Vietnam's social insurance system provides coverage to all private and public sector employees if they are on an employment contract of at least 3 months’ duration. The system provides benefits to employees for occupation injury, occupational disease, pregnancy, sickness, retirement, and death. The amount to be used for calculation of social contributions cannot be more than 20 times the minimum wage.
Employee and employer contributions to the system change according to the benefits program. For old-age, survivors', and disability benefits, employees need to contribute 8% of their gross monthly wages to the system, and an employer that has hired more than 10 workers contributes 14% of the monthly payroll. Voluntary contributors need to pay the total 22% of assessed earnings.
For sickness and maternity benefits, an employer needs to contribute 1.5% of the monthly payroll, while employees do not have to contribute. For health insurance, employers are required to pay 3% of monthly payroll, while employees need to pay 1.5% of monthly income. Self-employed individuals pay 4.5% of the minimum wage for health insurance. In order to receive work-injury benefits, employers need to pay 1% of the monthly payroll, while employee need not make any contributions. Amounts of contribution cannot be more than 20 times the legal minimum salary.
Male employees from age 55 onwards and women employees from age 45 onwards become eligible for the old-age pension in Vietnam, subject to the number of years of contributions, type of employment, and condition of health. Retirement from employment is the major qualifying criteria to receive the old-age pension.
Receivable benefits are based on the insured’s average income during the last 5 to 10 years before retirement. The payable pension is 45% of average earnings with 15 years of contributions for the insured. With each additional year of contributions, this percentage increases by 2% for men and 3% for women, which may go up to 75%.
Men who have made contributions for 30 years and women who have contributed for 25 years are eligible for a lump sum amount. This amount is based on the number of years of additional contributions in excess of 30 and 25 years for eligible employees.
Sick Child Benefit
A female employee may be paid 75% of her remuneration for up to 20 days in a calendar year to look after a sick child who is under 3 years of age, and 15 days for a sick child in the age group of 3 to 7 years.
An employee with an assessed level of disability of 61% or more is entitled to receive a disability grant. The number of years of contributions, the gender of the injured worker, the average wage for the last 5 years, and requirements for regular retirement are considered when calculating the disability benefit.
All employees with an employment contract that lasts for 3 months or more are entitled to receive workers’ compensation. Workers assessed to have lost 5% to 30% of their earning capacity get a lump sum while those with a minimum 31% loss of earning capacity are entitled to a monthly benefit. When the insured dies due to a workplace accident, his or her relatives receive survivors’ benefits and a lump sum amount 36 times the monthly minimum wage.
Up to 4 dependents can claim survivors’ benefits in Vietnam if the employee has made 15 years of contributions or more to the social insurance system. Adult survivors need to be 55 or 60 years of age or older. Benefits vary if the deceased was declared disabled. Survivors, which include children and some close relatives, are entitled to a monthly pension equal to 50% the minimum monthly wage.
If the survivors can show that they do not possess any other means of livelihood, the benefit goes up to 70% of the minimum wage. The survivors’ benefits vary if the deceased made fewer than 15 years of contributions, was receiving an old-age pension or had a permanent disability.
When a worker, pensioner, or disabled worker dies, a lump sum equal to 10 months of the minimum wage is granted to the person who paid for the funeral.
Unemployment insurance takes the place of severance pay in Vietnam and is paid to employees on the basis of the duration of their last and previous employers’ contributions. The monthly unemployment allowance is 60% of employees’ average remuneration during the last 6 months of employment.
Mandatory minimum contributions are required from both the employer and employee. Note that unemployment and social insurances are mandatory only for Vietnamese staff, while health insurance includes both Vietnamese and foreign workers in its purview.
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