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Vietnam's labour law framework is governed by the Labour Code 2019, which introduced substantial changes to employment contracts, working hours, overtime limits, and disciplinary procedures while maintaining strict work permit requirements for foreign employees. For foreign-invested enterprises, the interplay between Vietnamese labour law and expatriate employment rules creates a compliance environment that demands systematic attention from the outset of operations.
Employment contract structuring is the foundation of labour compliance. The Labour Code 2019 recognises two principal contract types: definite-term contracts (up to 36 months) and indefinite-term contracts. An employee who has worked under two consecutive definite-term contracts must be offered an indefinite-term contract upon the expiry of the second contract. This provision has significant implications for workforce planning, particularly for foreign-invested enterprises that prefer the flexibility of fixed-term arrangements. We advise on contract structures that comply with statutory requirements while accommodating operational needs.
Internal labour regulations (ILRs) are mandatory for enterprises with ten or more employees and must be registered with the provincial labour department. The ILR governs working hours, rest periods, occupational safety, disciplinary procedures, and material liability. The Labour Code 2019 tightened procedural requirements for disciplinary actions, including mandatory written notice, the right to legal representation, and specific timelines for each step of the process. Failure to follow these procedures can result in invalidation of the disciplinary decision and reinstatement of the employee.
Foreign employee work permits remain one of the most administratively demanding aspects of labour compliance. Work permits are generally required for foreign nationals working in Vietnam for more than three months, with limited exceptions. The application process requires health certification, criminal background checks, and evidence of professional qualifications. Processing times vary by province and can extend to several weeks. We manage work permit applications, renewals, and the transition to temporary residence cards for foreign employees and their dependents.
Labour disputes in Vietnam are resolved through a multi-tiered system comprising enterprise-level conciliation, district-level labour arbitration, and court litigation. The Labour Arbitration Council handles disputes involving individual rights, collective labour disputes, and disputes over the interpretation of labour contracts. Courts handle matters that cannot be resolved through arbitration, as well as appeals from arbitration decisions. We represent employers in all phases of the dispute resolution process, with particular attention to preserving employment relationships where possible and protecting the employer's position where termination is necessary.
Compliance Audit — We review existing contracts, ILRs, and procedures against current Labour Code requirements.
Structuring — We draft or revise employment contracts, ILRs, and work permit applications to achieve compliance.
Implementation — We manage registration filings, employee briefings, and work permit submissions.
Ongoing Support — We advise on disciplinary matters, disputes, and regulatory changes as they arise.
The Labour Code 2019 caps overtime at 40 hours per month and 200 hours per year for most industries, with a higher annual cap of 300 hours for certain sectors including textiles and footwear. Exceeding these limits exposes employers to administrative penalties and can invalidate provisions in employment contracts that purport to authorise additional overtime.
Unilateral termination by an employer is permitted only on specific statutory grounds, including repeated failure to perform work in accordance with the labour contract, prolonged illness, force majeure, or organisational restructuring. The employer must provide written notice and, where applicable, severance pay calculated based on years of service.
Social insurance contributions are mandatory for both employers and employees and cover health insurance, social insurance, and unemployment insurance. The employer contribution rate is approximately 21.5% of gross salary, while the employee contributes 10.5%. Non-compliance can result in penalties, interest charges, and restrictions on the employer's business registration.
Collective bargaining agreements (CBAs) negotiated with enterprise-level trade unions can establish terms more favourable than statutory minimums. Foreign-invested enterprises should be aware that the Vietnam General Confederation of Labour maintains significant influence, and union recognition is effectively mandatory. We advise on union relations and CBA negotiation strategy.
