How to invest in Vietnam – Labor Regime
Vietnamese and foreigners working in Vietnam must obey the Labor Code. The Labor Code has created a legal framework defining the rights and obligations of employers and employees, working hours, labor contracts, payment of social insurance, overtime, and suspension. public and termination of labor contracts, etc.
Minimum working age in Vietnam is 15. The apprentice at a vocational training center must be at least thirteen (13) years old, except for certain jobs where the Ministry of Labor, Invalids and Social Affairs The association determines otherwise and must be physically fit to meet the requirements of the job.
2. Recruitment procedure
Foreign-invested enterprises (FIEs) may recruit Vietnamese staff directly or may contract with an employment service agency to do so. FIEs are required to notify the list of employees employed by the local government in charge of state labor management.
3. Labor contract
Labor contracts must be made in writing and conform to model labor contracts issued by the Ministry of Labor, War Invalids, and Social Affairs. Verbal agreements may be signed with domestic workers or temporary workers working for less than three months. An employment contract may be one of the following:
- An indefinite-term labor contract is a contract in which the two parties do not specify the term and term of contract termination;
- A definite-term labor contract is a contract in which the two parties determine the term and the term of validity of the contract is a period of twelve (12) months to thirty-six (36) months. ; and
- An employment contract for a specific or seasonal job with a period of less than twelve (12) months.
For contracts lasting less than three months, a written contract is not required. The probationary period can last up to 60 days for jobs requiring a special skill but 30 days for other jobs. The salary of a worker during the probationary period cannot be lower than 70% of the agreed wage.
During the probationary period, the contracts may be terminated by either party without notice period and compensation payment.
4. Termination of labor contracts
An employer may terminate an employment contract early in any of the following cases:
(i) Employees who fail to perform their jobs more than once under the labor contract;
(ii) An employee is disciplined or dismissed under the Labor Code;
(iii) If the employee is sick or injured and still cannot work after being treated for one year for an indefinite contract, six months in the case of a contractual term and a half of the contract term in the case of a particular job or seasonal job;
(iv) The employer is forced to reduce production and employment while attempting to recover from a natural disaster, fire or force majeure event; and
(v) The employer stops operating.
Except for unilateral termination in (ii) above, 45 days notice is required for indefinite contracts, 30 days for definite contracts with a term of from one year to three years, and three days for a specific job or less than a year.
The employer has no right to terminate the labor contract:
- of an employee who is ill or injured due to a work-related accident or occupational disease and is receiving medical care; or
- an employee’s annual leave, personal leave or any kind of leave used by an employer; or
- of a female employee for reasons of marriage, pregnancy, maternity leave, or child-rearing for less than twelve (12) months, unless the business ceases to operate.
5. Illegal Termination of Labor Contract
If an employer illegally terminates an employee’s employment, the employee must be re-employed and the employee must pay compensation equal to the lost wages. In case an employee refuses to return to work, the employee must be paid the lost salary plus a subsidy equal to half a month’s salary for each working year plus allowances (if any).
6. Working hours
The law requires an 8-hour workday or a 48-hour workweek. Employees may work overtime but must not work more than 4 hours per day and 200 hours per year. In some special cases prescribed by the Government, the number of overtime hours may increase to a maximum of 300 hours per year.
Businesses in all economic sectors, including foreign-invested enterprises, are encouraged to apply a 40-hour workweek.
7. Annual Leaves
Employees with a 12-month service are entitled to annual leave with full salary. Annual leave will be classified as follows:
- 12 days for a person to work under normal conditions;
- 14 days for a person involved in heavy, hazardous or hazardous work activities or to work in harsh living conditions or for people under 18; and
- 16 days for people involved in particularly heavy, hazardous and hazardous work activities or to work in extremely harsh living conditions.
The number of annual leave days will be proportional to the length of time working in a business or with an employer an extra day for each five years of work.
8. Compulsory insurance
There are 3 compulsory insurance (including health, social, and unemployment insurance) applicable to all employers (including FIE) and employees (excluding foreign employees) working at least 3 months.
Compulsory Insurances Vietnam 2020
9. Employment of foreigners
Typically, foreign employees should be recruited for positions that require high management or technical skills. Employers are required to design a plan or program to train Vietnamese employees to replace those foreign employees.
To work in Vietnam, foreigners must have a work permit from a labor agency (ie Department of Labor, Invalids and Social Affairs of the province/city where their employer is located) before signing the contract. labor contract with the employer.
Regarding foreigners moving in their businesses operating in Vietnam, at least 20% of the total number of managers, executives, and experts must be Vietnamese citizens.
However, a foreign-invested enterprise is allowed to employ at least 03 foreign managers, executives, and experts.
Foreigners working for businesses, agencies, and organizations in Vietnam for 3 months or more must have a work permit, except for the following cases:
- Foreigners entering Vietnam to work for less than 3 months;
- Foreigners who are members of a limited liability company with 2 or more members;
- Foreigner is the owner of a one-member limited liability company;
- A foreigner is a member of a Management Board Joint Stock Company;
- Foreigners enter Vietnam to provide their services;
- Foreigners entering Vietnam to handle emergencies; Foreign lawyers have been granted practice licenses by the Vietnamese Ministry of Justice as prescribed by law.
In the absence of a work permit, the employer must submit to the Department of Labor, Invalids and Social Affairs of the province a list of foreign workers including name, age, nationality, passport number and The start date and end date of the job is assumed by the employee. This list will be submitted 7 days before the start of the working day.
Employers must apply for a work permit for their foreign employees at the Department of Labor, Invalids and Social Affairs or any authorized EP and IZs.
After obtaining a work permit, the employer must sign a written labor contract with the employee (excluding foreign workers assigned by the foreign party working in Vietnam) and send a copy. so that the agency has issued a work permit.
The work permit has a term similar to the labor contract signed or assigned by the parent company, but in any case, the term is not longer than 36 months and can be extended.
10. Minimum Salary
Vietnamese law regulates the minimum wage of Vietnamese employees working for FIEs. Therefore, the minimum wage for an employee working in such businesses must not be lower than:
- 4,420,000 VND/month (equivalent to $190) is applicable to businesses operating in urban and suburban districts of Hanoi, Hai Phong, and Ho Chi Minh City and its neighboring provinces of Dong Nai, Binh Duong, and Ba Ria – Vung Tau
- 3,920,000 VND/month (equivalent to $168) is applicable to businesses operating in the outskirts of Hanoi and Ho Chi Minh City, as well as other large and medium-sized cities throughout Vietnam, such as Da Nang, Nha Trang, and Can Tho.
- 3,430,000 VND/month (equivalent to $147) is applicable to businesses operating in smaller provincial cities and suburban districts.
- 3,070,000 VND/month (equivalent to $132) is applicable to businesses operating in all remaining areas.
In addition, the minimum wage for skilled employees (including employees trained by businesses) must be higher than 7% or higher than the minimum wage as specified in the above 4 sections.
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