FAQ - Employing Staff in Vietnam
Latest Update: March 4, 2022
This is relevant for: Foreign companies employing staff in Vietnam
We are receiving a lot of enquiries regarding the employment of local staff in Vietnam. Here are some of the frequently asked questions (FAQs) that we receive:
🤔 How much does it cost to employ white collar staff 👩💼 in Vietnam?
Costs for employing staff may vary heavily depending on seniority, know-how and international experiences. With this in mind, there are several HR companies offering salary guides for Vietnam, e.g.:
Apart from these FOC resources there is also a very detailed salary report prepared by Talentnet and Mercer available here.
As the customers of these HR companies will often be foreign enterprises, there reports seem to include a premium in comparison to local employers, who often pay less. It is indeed advisable to offer competitive salaries. High-potential Vietnamese staff will strive to afford themselves some luxuries such as decent living quarters, (private) schooling for children and may be even a car. If staff feels that they are not earning enough they might resort to other means of income through non-compliance/graft, side businesses or even hopping to higher paying jobs. Paying appropriate salaries will not guarantee that employees will be deterred from showing detrimental behavior. However, it will reduce the chance of people resorting to typical “vices” (meaning: graft, side business, job hopping) that seem to be everyday headaches for many Vietnamese employers.
Generally speaking, here are some remarks on certain professional groups often enquired to us:
IT staff: Highly sought-after, can be very pricey. Salaries may reach 2k USD/month and more..
(Sales) Engineers: May earn high salaries if they speak English and especially if they engage in sales. 1.5 to 2k USD/month should be set aside.
Chief accountants: They carry a lot of responsibility and hence fetch some of the highest salaries in their respective companies. Salaries of 2k USD/month and more are possible.
Investors should be aware that the gross salaries displayed here do not equal "Total Employment Costs". A guide to calculate these can be found here.
Salaries between Hanoi and HCMC as well as their immediate surroundings do not diverge much. However, in less developed regions wages may be considerably lower. It should be kept in mind though that talent supply may be limited here.
🤔 How much does it cost to employ blue collar staff 👩🔧 in Vietnam?
Average wages in Vietnam hover around 250 USD/month. So, this is roughly the ballpark within which blue collar workers can be calculated. In the more developed Greater HCMC region (HCMC, Binh Duong, Dong Nai, Long An) shop floor wages may be higher with 300 to 400 USD/month while they tend to be lower approaching minimum wage levels in the rest of the country. Minimum wages diverge by region within a four tier system. An overview can be found here on page 15/16 (please note that minimum wages have not been raised in 2021).
🤔 By how much do wages increase yearly?
We generally recommend an orientation on the yearly inflation (roughly 4 to 5%) as well as the minimum wage hikes (2021: no increase) ending up with a yearly standard increase of about 5%. However, in some Vietnamese regions the labor market is running hot. For example, there seem to be pronounced labor shortages in parts the Greater HCMC region. Here, stronger wage hikes might be in order. VNExpress/Talentnet reports that - overall - wages have increased by "at least 8 percent a year" over the past ten years.
A common phenomenon, especially with skilled employees are “brazen” demands for salary increases. Especially after the first year after they have learned the ropes of their jobs, staff may ask for payment raises of up to 50%. The employer then has to decide how to handle these demands.
Overall, the employer should take care to pay equal salaries to people with similar job descriptions and/or seniority. Other than in Germany, salaries are not a well-kept secret in Vietnam. Imbalances in salary ranges could lead to dissatisfaction, contract terminations or salary negotiations.
🤔 How many hours do Vietnamese work per day/per week?
By law the standard working hours are limited to eight per day and 48 per week. Blue collar workers will mostly follow these working from Monday through Saturday. White collar workers usually work 40h/week. For white collar, overtime will typically not be clocked in. Overall, white collar will not stay as long in the office as in East Asian countries. The work day usually starts at 8.30h and ends at 17.30h. However, blue collar workers seem to be more motivated to work overtime. This is because Vietnamese employees may receive up to 300% of their regular wage for certain overtime types. Employers should note that overtime is limited to 200 hours per year (!).
🤔 How many public holidays does Vietnam have per year?
Eleven (about the same as Germany). Most important holiday is "Tet" or "Lunar New Year" which will be celebrated for about a week. Tet will be celebrated based on the lunar calendar some time between January and early March each year. The yearly Tet bonus (explanation here) will be paid some time before or after Tet. Another longer holiday will be celebrated around Labor Day on May 1. It should be noted that public holidays falling on weekends will be observed on the first following working day.
🤔 How many days of leave do Vietnamese employees enjoy per year?
They start with twelve days off. For every five completed years of employment, another day will be added. By law, additional leave must be granted for special occasions such as marriage or birth of a child.
🤔 Can we have limited-term labor contracts and can we terminate them?
Vietnamese labor contracts may have a limited term of up to three years. They can be renewed for a second limited term of - again - up to three years. However, after a maximum of six years, an employer must offer an unlimited term contract. It should be noted that it is very hard to terminate a labor contract during its term employer-wise. It however seems customary for staff to terminate their labor contracts employee-wise with two weeks notice.
Please consider this information without liability for any data with respect to content, completeness or up-to-datedness. For legally valid information you should turn to a lawyer. A list of German lawyers can be found here.
Further information can be obtained from the following sources:
Germany Trade and Invest: Lohnkosten Vietnam (German only)
Roedl & Partner: Labour Regulations in Vietnam
Dr. Matthias Dühn: Hinweise zu Rechtsfehlern bei Personalauswahl und -anstellung (German only)