Hiring in Vietnam: contracts, insurance, and the 2021 Labour Code.

Vietnam's 2019 Labour Code (effective January 2021) modernized one of Asia's most active labour markets. It introduced clearer contract categories, expanded the definition of 'employee,' shortened maximum probationary periods, and brought the country closer to ILO standards. For founders building offshore engineering or operations teams in Hanoi, Ho Chi Minh City, or Da Nang, the country offers strong talent at competitive cost — provided you hire inside the framework.

Vietnam is not a 'figure it out as you go' jurisdiction. MOLISA (the Ministry of Labour, Invalids and Social Affairs) inspections are real, social insurance contributions are non-trivial, and contract types are now restricted to two. Get the structure right at the start.

The contract structure — only two types now

The 2019 Labour Code eliminated the old 'seasonal' contract category. You now have exactly two options: (1) an indefinite-term contract, or (2) a definite-term contract of up to 36 months. A definite-term contract can be renewed exactly once; if you want a third term, it automatically becomes indefinite. There's no way around this — drafting a 'consulting agreement' to dodge the rule will be reclassified by an inspector.

Probationary period — short and capped by role

• Enterprise managers (as defined under the Law on Enterprises — e.g. directors, general directors): maximum 180 days (new in 2021).
• Roles requiring a college degree or higher: maximum 60 days.
• Roles requiring an intermediate qualification: maximum 30 days.
• Other roles: maximum 6 working days.
• During probation, salary must be at least 85% of the agreed regular rate.

Mandatory contributions and benefits

• Annual leave: minimum 12 days/year, +1 day per 5 years of service.
• 10 paid public holidays (Tet alone is 5 days).
• Maternity leave: 6 months fully paid via Social Insurance.
• 13th-month pay: not statutory, but is a near-universal market norm. Most Vietnamese employees expect it; not paying it is a retention disaster.
• Overtime: +50% on weekdays, +100% on weekly rest days, +200% on public holidays. Capped at 40 hrs/month and 200 hrs/year (300 in specific sectors).

Termination — narrower than you think

An employer can only unilaterally terminate an employee for the statutory grounds listed in Article 36 of the 2019 Labour Code: repeated failure to perform after written warning, prolonged illness, force majeure / natural disaster, employee absent for 5+ consecutive working days without justification, or specific disciplinary causes. Notice periods are 45 days for indefinite contracts, 30 days for definite-term contracts, and 3 working days for very short contracts. Severance pay (½ month per year of service) is owed by the employer only for service rendered BEFORE unemployment insurance contributions began (January 2009); service after that date is covered by the Unemployment Insurance fund the employer has been paying into.

Foreign worker rules — work permits and the 30-day rule

If you're sending a non-Vietnamese employee into the country, they need a work permit before starting (with narrow exemptions for intra-company transfers under 30 days, ≤3 times per year). The permit is tied to a specific employer and a specific role — switching jobs requires a new permit. The process takes 4–8 weeks and requires notarized degrees, criminal record checks, and a health certificate.

Working hours and the 48-hour standard

• Standard: 8 hrs/day, 48 hrs/week (the government has expressed intent to reduce to 44 hrs over time — verify current rule).
• Minimum 24 consecutive hours of weekly rest.
• Overtime cannot exceed 50% of regular hours in a day, 40 hrs/month, or 200 hrs/year.
• Night work (10pm–6am): +30% on top of regular rate.

Take this home — the founder's Vietnam hiring checklist

• Pick contract type deliberately — indefinite for senior/long-term, definite-term only when there's a genuine end point.
• Budget ~22% on top of gross salary for employer contributions; assume 13th-month pay even though it isn't statutory.
• Use a Vietnam-licensed EoR or set up a representative office or LLC before hiring W-2-equivalent staff.
• Document every performance issue in writing in Vietnamese — and keep the Vietnamese version as governing.
• Default to mutual termination agreements; reserve unilateral termination for clear statutory grounds.
• Confirm work permit status for any non-Vietnamese hire before they fly in.

Before you act — read this

Official sources to verify (keep this list bookmarked)