4 key labour issues in Vietnam
Article 2 minute read

4 key labour issues in Vietnam

11 October 2016

Vietnam’s latest labour rule changes bring various benefits to employees, but how will they affect companies doing business in the country?

In late August, the Vietnam Business Forum arranged a dialogue with the Ministry of Labor, Invalids and Social Affairs (MOLISA) to discuss pending and newly arisen labour issues at the Annual Vietnam Business Forum 2016 in Hanoi, Vietnam. Here are some of the key issues discussed and their impact on doing business in the country.

1. Minimum salaries

According to the MOLISA, minimum salaries in certain working regions will be increased to the range of VND180,000 to VND250,000 (approximately US$8 to US$12) in 2017. 

A new decree on the change will be issued soon; employers should be aware of, and well prepared for, their human resources budget for 2017.

2. Work permits for foreign employees

The government will soon issue a new circular for work permit requirements. Currently, the concept of managers who are permitted to work in the country is limited to the narrowly-defined “managerial positions” under the Enterprise Law of Vietnam (EL). The result is only a few people qualify for managerial positions.

Employers can expand the definition of 'managerial position' in their charter or persuade the MOLISA (the issuing body of work permits) to accept them as experts with one of the following conditions:

  • Acknowledgment by company’s headquarters as an expert
  • Obtainment of a bachelors degree or equivalent
  • Having at least three years' experience in the relevant industry.

3. Overtime

In response to a request for additional overtime hours, the MOLISA confirmed that the amended Labor Code will address this issue. Specific overtime hours vary by industry and are subject to agreements between employees and employers.

The change will bring more benefit to manufacturing companies, especially in industries such as garments and construction, where large amounts of overtime are accrued in peak seasons.

4. Social Insurance for foreign employee

From 1 January 2018 all employees with a labour contract term of one month or more, including foreign employees, will be required to pay the compulsory social insurance. However currently there is no clear guidance regarding the implementation. At the time of publishing, foreign employees working in Vietnam with a three-month or more employment contract are subject to health insurance contribution.

According to the MOLISA, the government is negotiating with other countries to allow foreign employees to include the Vietnamese social insurance contribution period in their total social insurance contribution time, so that the employees can enjoy the benefit in their home countries.

Companies should take into account this type of payment when calculating benefits payable to foreign employees, and when developing their business plan for 2017.

Need more information?

TMF Vietnam monitors changes in local rules and regulations to help you stay compliant, while your local business aspirations thrive. We are experienced with payroll, recruitment, work permits, foreign visas, employment contracts and other essential HR functions your business may require in Vietnam.

Get in touch with our experts to learn more.

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Written by

Hang Hoang

Head of Payroll Services, TMF Vietnam

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