How to Hire Your First Employees in Vietnam: Labor Law Basics for Foreign Companies

Expanding into Vietnam often starts with a simple question: who should we hire first?

Maybe it is a local sales manager who understands the market. Maybe it is an engineer joining your regional product team. Or perhaps you are sending someone from Singapore to build your first Vietnam operation.

The hiring decision may be simple. Setting up the employment relationship is not.

Before You Hire: Build the Right Vietnam Setup

Before offering someone a job, a foreign company needs to determine how it will legally operate and employ people in Vietnam. For some companies that means establishing a Vietnamese entity. For others — particularly those testing the market or hiring a small initial team — an Employer of Record (EOR) may provide a faster route.

• Local entity: longer-term establishment, your Vietnamese company is the legal employer. Best fit for companies building a substantial operation.
• Employer of Record: faster market entry, the EOR provider is the legal employer. Best fit for companies testing the market or starting small.

The right choice depends on expected headcount, how quickly the team must be operational, whether you are testing or committing, and whether the team will eventually need its own office. The first employee does not have to determine your final Vietnam setup.

What Do You Need Before Your First Employee Starts?

• Tax registration
• Social insurance registration
• Initial labour declarations
• Internal labour regulations once the applicable headcount threshold is reached
• Employment contracts and payroll processes
• Internal policies covering working hours, leave and workplace conduct

One of the easiest mistakes is to think of hiring as Offer → Contract → Employee starts. In practice it is closer to Business setup → Employment structure → Compliance → Contract → Payroll → Employee starts.

Vietnam Employment Contracts

Vietnam's labour framework recognises two main types of labour contract.

Definite-term contracts

These have a specific start and end date. The maximum duration is generally 36 months, and a definite-term contract can generally be renewed once before the relationship converts to an indefinite-term arrangement.

Indefinite-term contracts

These have no fixed end date and provide greater employment security. They are more common where the company has established a long-term position for the role.

A compliant labour contract should set out job title and responsibilities, workplace, contract duration, salary and allowances, payment method and schedule, working hours, rest periods, insurance participation, probation terms, training responsibilities and other agreed conditions. Many foreign companies prepare bilingual contracts so the overseas parent and the local employee both understand the terms.

How Does Probation Work?

Probation is permitted, but the maximum period depends on the role:

• Enterprise manager: 180 days
• Position requiring a university degree or higher: 60 days
• Vocational or technical role: 30 days
• Other positions: 6 working days

Probationary employees must generally receive at least 85% of the salary applicable to the full position. Either party can end the probationary arrangement without the notice requirements that apply to an ordinary labour contract — but probation is not an informal period where employment rules do not apply.

Working Hours and Overtime

Standard working hours are generally capped at 8 hours per day and 48 hours per week, and employees are entitled to at least one full rest day each week. The government encourages a 40-hour week, and many foreign-invested companies operate on that basis.

Overtime must be compensated at legally prescribed premium rates:

• Normal working day: 150%
• Weekly rest day: 200%
• Public holiday or paid leave day: 300%
• Night work: an additional premium applies

For most sectors, monthly overtime is generally capped at 40 hours, with annual limits also applying. A Singapore-based company may be used to employees occasionally staying late for regional calls, but recurring overtime should still be managed within Vietnam's legal framework.

Annual Leave and Public Holidays

Employees are generally entitled to a minimum of 12 paid annual leave days per year, with additional entitlement based on length of service. Statutory public holidays include New Year's Day, Lunar New Year (Tet), Hung Kings' Commemoration Day, Reunification Day, International Labor Day and National Day. Foreign employees can also be entitled to additional paid holidays connected to their home country's traditional New Year and National Day.

Eligible employees can receive social insurance benefits for sickness and maternity, and female employees are generally entitled to six months of maternity leave.

The Real Cost of Hiring in Vietnam

Gross salary is not total employment cost. Mandatory contributions apply on both sides:

• Social insurance: employer 17.5%, employee 8%
• Health insurance: employer 3%, employee 1.5%
• Unemployment insurance: employer 1%, employee 1%
• Total: employer 21.5%, employee 10.5%

Foreign employees may be treated differently for unemployment insurance depending on their employment and immigration status.

Vietnam also uses regional rather than national minimum wages. For 2026 the applicable monthly minimums range from approximately VND 5.31 million (Region I) to VND 3.70 million (Region IV). Professional salaries in Ho Chi Minh City sit well above the statutory minimum, but the regional classification still affects statutory calculations.

Employers generally withhold personal income tax at source under a progressive system. When relocating employees from Singapore, a package that looks competitive on a gross basis may have a very different net value after Vietnam tax and statutory deductions.

A 13th-month salary is not a statutory requirement, but it is common practice around Tet and often forms part of a competitive package. If offered, document how it is calculated and when it is paid.

Hiring Foreign Employees

Foreign employees face additional requirements: a valid work permit or exemption confirmation, appropriate qualifications and experience, a suitable visa, and legalised and translated overseas documents. Vietnam recognises managers, executive directors, experts and technical workers, and the correct category should be determined before applying.

Certain foreign managers, executives, experts and technical workers may qualify for an exemption when working in Vietnam for under 90 days in total during a calendar year — relevant for Singapore companies sending people in for market research, project launches, client meetings or short-term management assignments. Track total working days rather than treating every trip independently.

Hire locally or transfer from Singapore?

Hire locally when you need local market knowledge, Vietnamese customer relationships, local sales capability and hiring networks. Transfer regional employees when you need existing company knowledge, regional leadership, technical expertise and cultural continuity. Many companies eventually use both: a regional manager establishes the operation while a local team develops the market.

Ending Employment in Vietnam

Vietnamese labour law sets specific requirements around lawful termination, notice periods and employee rights. Typical notice periods are:

• Indefinite-term contract: 45 days
• Fixed-term contract of 12–36 months: 30 days
• Fixed-term contract under 12 months: 3 working days

Employers should not assume an employee can simply be dismissed for unsatisfactory performance — performance-related termination generally requires clear grounds, documentation and compliance with the applicable process.

For a foreign company, the biggest risk is often not misunderstanding the law but failing to document what happened. Keep clear records of contracts, salary changes, probation results, performance expectations, leave, overtime, disciplinary actions, termination notices and insurance contributions.

Where Should You Base Your First Vietnam Team?

Once the legal side is sorted, there is a practical question: where should your team actually work? A company testing Vietnam may not need a traditional office from day one.

• 1–2 people: coworking or dedicated desks
• 3–10 people: private office
• 10+ people: larger dedicated workspace or full office

This lets the workplace grow alongside the team instead of locking the company into a long-term lease before headcount is proven.

Market Entry Can Happen in Stages

• Explore — understand the market, customers, competitors and regulatory environment.
• Enter — establish the right legal and operational structure and bring in the first team members.
• Operate — build local relationships, hire talent and establish day-to-day operations.
• Scale — expand the team and upgrade the workplace once the market proves itself.

Your First Vietnam Hire Is More Than an HR Decision

Hiring your first employee is often the moment a Vietnam market-entry plan becomes real. Look beyond the employment contract and consider the whole operating model: who you hire, how you employ them, where they work, and what happens when the team doubles. The best Vietnam setup is not the biggest one — it is the one that gives your company enough structure to operate today while leaving room to grow tomorrow.

Frequently Asked Questions

Can a foreign company hire employees in Vietnam? Yes, with an appropriate legal and employment structure — a Vietnamese entity or an Employer of Record.

How long can probation last? From six working days for certain roles up to 180 days for enterprise managers.

How much does an employer pay for social insurance? Employer contributions to social, health and unemployment insurance are generally around 21.5%.

Is a 13th-month salary mandatory? No, but it is a common compensation practice, particularly around Tet.

Should I set up an office before hiring? Not necessarily. A small team may start with coworking or a flexible private office before moving into dedicated space.

Note: this article is general informational content and should not be treated as legal advice. Employment and immigration requirements can change.