How to Hire Remote Employees In

Vietnam

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The Basics

Currency
Vietnamese Dong (VND)
Employer Taxes
23.5%
Payroll Frequency
Monthly
Official Language
Vietnamese
OVERVIEW

Employment in

Vietnam

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
Vietnam

Set up a subsidiary in

Vietnam

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Vietnam can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Vietnam, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Vietnam.

EMPLOYMENT IN
Vietnam

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Vietnam is not the same as paying workers in your own country. Employees have to be paid using Vietnam's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Vietnam

 Specific Information

Working Hours

Normal working time must not exceed 48 hours per week.

Overtime

Overtime can be implemented with the agreement of both the employer and employee.

The number of overtime hours cannot exceed 50% of the normal working hours in a day. Overtime cannot exceed 30 hours per month and a total of 200 hours per year, except for some cases stipulated by the Government in which overtime shall not exceed 300 hours per year.

The Overtime pay rate is as follows:

normal weekdays – 150%

weekend – 200%

public holidays – 300%

Overtime during a night shift will be according to the above classifications with the following rates respectively, 200% (or 210%), 270% and 390%.


What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

23.5%
- Employer Contributions

Minimum Wage

The following wages are the minimum salary for untrained employees per region. The minimum salary for trained employees must be higher than at least 7% of the regional minimum base salary.

Payroll

Pay Cycle

Salaries are paid on a monthly or semi-monthly basis on an agreed payday.

In case of prescribed force majeure events with no remedial actions are available, the payment can be delayed for 1 month.

Interest on late payment of salary must be paid to the employee if it is delayed by more than 15 days.

13th Salary

A bonus is not compulsory in Vietnam but is encouraged.

It is Vietnamese custom that the 13th salary is paid at Tet holiday or at the year-end.

Leave

Paid Time Off (PTO)

Employees are entitled to a minimum of 12 days per year.

For every 5 years’ working for an employer, the annual leave increases by 1 day.

There is no specific regulation on the carryover policy in the law, however, it is interpreted by the authority that carryover is not allowed and unused leave must be paid in cash to the employee. In practice, many companies apply the carryover policy instead of making payment for the unused leave.

Public Holidays

There are 10 official paid holidays.

Sick Days

Sick leave is covered by the Social Insurance Authority. Employees who join compulsory Social Insurance are entitled to sick leave of up to 30 days (in general) and to maximum of 60 days (in certain circumstances).

Sick allowances: 75% of the salary of the month preceding the employee’s leave.

Maternity Leave

There are a number of maternity-related leaves:

Prenatal Check-ups Leave: up to 5 occasions, 1 day for each occasion. If her fetus is unstable, the mother is entitled to 2 days off for each check-up. Maximum entitlement: 10 days.

Mothers are entitled to a 6-month maternity leave. In the event of twins, the leave is extended by one month for each infant from the second one.

Maternity allowance: 100% of the salary of the month preceding the employee’s leave paid by the Social Insurance Authority.

Paternity Leave

Paternity leave can be 5 to 14 days, depending on the specific case.

Paternity allowance: 100% of the salary of the month preceding the employee’s leave paid by the Social Insurance Authority.

Parental Leave

Parents can take up to 20 days per year for parental leave until the child reaches the age of 3 and up to 15 days per year if the child is between the ages of 4 and 7.

Childcare leave allowances: 75% of the salary of the month preceding the employee’s leave paid by the Social Insurance Authority.

Other Leave

Work-Related Injury Leave – The employer covers all work-related injuries that an employee has suffered either directly or through insurances.

The employee should receive 100% of their average monthly earnings in the 12 months prior to the disability for 14 days if not hospitalized.

After 14 days they shall receive 66.7%. As of September 1, 2020, all work-related medical leave must be reported to the Ministry of Manpower. 

Marriage Leave

Marriage Leave – 3 days

Children’s Marriage Leave – 1 day

Bereavement Leave

Death of spouse, child, parents, parents-in-law – 3 days

Termination

Termination Process

Unilateral termination from the employee side only requires advanced notice.

Unilateral termination by an employer is restricted except for the case of expiry of the labor contract or if the employee reaches retirement age and applies for a pension. In most of the other cases, bilateral termination shall be applied.

Notice Period

The notice period is 3 working days for the seasonal contract, i.e. contract of less than 1 year; 30 days for definite labor contract, i.e. contract with for 1-3 years; or 45 days for an indefinite labor contract.

In a probation period, the employer must give the results 3 days before the end of the probation period.

Severance Pay

Severance pay is half a month’s salary per year of service.

When termination of the contract is due to changes in the structure or technology, or due to economic reasons, job loss allowance shall be applied in this case with the rate of 1 month salary for each year of work and at least equal to 2 months salary.

Probation Period

A probation period is optional and a common practice in Vietnam.

Employers and employees can negotiate a probationary contract, which must include the rights and responsibilities of both parties during the probationary period. The probationary period cannot be extended and each position can only have one probationary period.

The length of the probationary period is based on the complexity and skill required to do the work and varies between 6 to 60 days. The wage for an employee during the probation period must be agreed upon by both sides but cannot be less than 85% of the wage for the official job.

Employees working under seasonal labor contracts are not subject to probation.