SBLAW would like to provide the foreign invested company (FIC) in Vietnam some information on Vietnam Labor Code through Q&A form:
Q: In which currency the salaries should be paid?
A: Under Vietnam Law on foreign exchange, all transactions made within territory of Vietnam must be made by VND. Thus, currencies for the salaries must be Vietnam Dong
Q: What are the legal payroll deductions/withholdings or taxes that we should take into consideration?
A: You should consider deduction from salary of employee following items: (i) Social Insurance (8% of salary); (ii) Health Insurance (1.5% of salary); and (iii) Un-employment Insurance (1% of the salary). These deduction only applies to Local Employees.
Q: What are the ones that we deduct from the salary and the ones that we pay directly to the Government, if any?
A: Under Vietnam Law, you have to pay (i) Social Insurance (Employer: 18% of salary; Employee: 8%); (ii) Health Insurance (Employer: 3% of salary, Employee: 1.5% of salary); (iii) Un-employment Insurance (Employer: 1% of the salary; Employee: 1%) and (iv) Trade Union Fee (2%).
These amount only apply to Local Employees, not Foreign Employee. In addition, upon termination of employment contract, the employee that have been worked for 12 months or more shall be entitled to severance pay equivalent to 1/2 month of salary for each working years (You do not need to pay the severance pay for time in which you paid Un-Employment Insurance).
Upon termination of employment contract due to the reason of re-structure, the employee that have been worked for 12 months or more shall be entitled to severance pay equivalent to 1 month of salary for each working years (You do not need to pay the severance pay for time in which you paid Un-Employment Insurance).
Q: What is the number of paid leave days and are they in addition of the national holidays or not?
A: Paid leave of employee shall include:
(i) National Holiday:
One day on the New Year’s Day – January 1 of each year
Five days for the Lunar New Year festival which shall include the last day of the lunar year and the first three days of the new lunar year. The dates of these holidays may vary from year to year
One day for Hung King Anniversary Day – March 10 of the lunar year.
One day on the occasion of the Victory day – April 30
One day on the occasion of International Labor Day – May 1
One day on the occasion of National Day – September 2
(ii) Paid personal leaves:
Three days for one’s own marriage
One day for marriage of one’s son or daughter
Three days in case of death of the parent, parent-in-law, spouse, son or daughter
One day in case of death of the grandparent, siblings
Male Employee is entitled to 01 day off in case of his wife’s giving birth
(iii) Annual Leaves:
The employee who has completed one year i.e. 12 months’ service in the company shall be entitled to an annual leave of 12 days with full pay.
For an employee who has completed more than five years of service in the company, there shall be a proportionate increase of one day holiday for every five years of service.
The employee with less than 12 months’ service also shall be entitled to an annual leave but the number of days shall correspond with the length of his/her employment.
Q: What are the maximum number of weekly working hours? Is the below schedule in accordance with the law?
8h30 – 12h00: working hours
12h00 – 13h00 : lunch break
13h00 – 17h00: working hours
A: The maximum normal weekly working hours shall be 48 working hours. Further more, the overtime hours of the employee shall not exceed 50% of the normal working hours in 01 days, in case of application of working regulation on weekly basis, , the total normal working hours and the overtime hours shall not exceed 12 hours in a day, and less than 30 hours in 01 months and the total of not more than 200 hours in 01 year, except for some special cases stipulated by the Government for the overtime working but shall not be more than 300 hours in 01 years.
The above schedule (8h30 – 12h00: working hours; 12h00 – 13h00 : lunch break; 13h00 – 17h00: working hours) is acceptable under Vietnam Law.
