Vietnam's employment law framework has undergone significant change in 2025, with a new Law on Social Insurance, amendments to the Law on Health Insurance and Trade Unions, sweeping foreign worker reforms under Decree 219/2025/ND-CP, and a major new Law on Personal Data Protection taking effect in 2026. This guide covers the full framework — from employment contracts and wages through to termination and data protection obligations — and is designed to give employers and HR teams a reliable working reference for operations in Vietnam.

1. Year in Review: Key 2025 Developments

Law on Social Insurance 2024 — The revised Law on Social Insurance expands compulsory participation, reduces the pension contribution period, adds new benefits for participants, and tightens penalties for non-compliance. Individuals working under a labour contract with a term of at least one month are required to comply with social insurance contribution obligations. The law also captures individuals who enter into agreements under another name — even without a formal labour contract — where those agreements contain provisions concerning paid work, salary, and supervision by one party.

Amendments to the Law on Health Insurance 2024 — Electronic health insurance cards became effective from 1 January 2025. The amendments expand participant categories and introduce stricter measures against late or evaded premium payments.

Amendments to the Law on Trade Unions 2024 — The updated Trade Unions Law allows foreign workers on 12-month contracts to join grassroots trade unions. It defines a four-level union structure from central to grassroots level and retains the 2 per cent union fee, with new options for exemption (e.g., bankruptcy), reduction (e.g., financial hardship), or suspension of up to 12 months on a retroactive basis.

Large labour shift following state apparatus reform — Since early 2025, Vietnam's administrative boundary adjustments and streamlining of the state apparatus have resulted in a significant downsizing of the civil service. This is releasing a large number of workers into the private labour market — presenting both opportunities in terms of labour supply and short-term pressure on wage expectations and market conditions.

2. Significant Cases

Strike statistics 2024 — In 2024, there were 76 collective work stoppages across Vietnam. According to the Vietnam General Confederation of Labour, most occurred in foreign-invested enterprises (FDIs), primarily in major provinces and cities in the southern key economic region — 44 out of 76 cases (57.89 per cent). The same number also took place within industrial parks, export processing zones and economic zones. The main causes were worker dissatisfaction with Tet bonuses and disagreements over changes in wage and bonus calculation methods.

Statute of limitations in labour disputes — Hanoi People's Court, Judgment No. 12/2024/LD-PT — The statute of limitations for bringing an individual labour dispute to court is one year from the date on which the disputing party discovers the act believed to infringe their rights and interests. Determining that discovery date in cases with multiple time points can be complex.

In Judgment No. 12/2024/LD-PT dated 2 July 2024, the Hanoi People's Court considered a case where the plaintiff unilaterally terminated her labour contract on 11 March 2022. In May and June 2022, the parties agreed in writing on the severance amount but did not specify a payment date. The company had not paid as of 23 November 2022, when the plaintiff lodged a complaint. In July 2023, the company made a partial payment during mediation. The Trial Panel held that the case remained within the statute of limitations, treating 23 November 2022 — the date the plaintiff considered her rights to have been violated — as the start of the limitation period, not the earlier date when the parties agreed on the severance amount.

The practical lesson: in disputes involving agreed but unpaid entitlements, the limitation period may run from the date of a formal complaint or notice of default, not from the underlying agreement. Litigants should monitor limitation issues carefully in the early stages of any dispute.

3. Entering into an Employment Relationship

Employment contracts — An employment contract must be in place before an employee begins work. In most cases it must be written; oral agreements are only permissible for contracts of less than one month. There are two recognised types: indefinite-term contracts and fixed-term contracts (maximum 36 months).

Every employment contract must include:

Where a role involves business secrets or technology knowledge, the employer has the right to conclude a separate written agreement protecting its IP assets, setting out the duration and specifying the consequences of a breach. Any amendment to a signed contract requires at least three working days' advance notice to the other party and their consent. Changes can be implemented through a contract appendix.

Probationary periods — Employers and employees may agree to a probationary period within the employment contract itself or in a separate probationary agreement. Probationary periods do not apply to contracts of less than one month.

The permissible probationary period depends on the role and can range from six days to a maximum of 180 days. Probationary compensation must be at least 85 per cent of the official salary for the role. Either party may unilaterally terminate the probation at any time without prior notice or liability for damages. At the end of probation, the employer must inform the employee of the outcome.

Establishing a legal presence — A foreign-owned legal presence can be established in Vietnam as a foreign-invested business entity, a representative office, a branch of a foreign trader, or an executive office under a business cooperation contract.

Even without a formal legal presence, a foreign company may be deemed to have a permanent establishment (PE) in Vietnam. A PE is defined broadly to include any location where a foreign company conducts all or part of its business activities, including: services provided by employees or agents; agents acting on behalf of the foreign company; and representatives with authority to sign contracts or who consistently deliver goods or services in Vietnam. A foreign company with a PE is taxed on income generated both inside and outside Vietnam that relates to the PE's operations.

4. Restrictive Covenants

Vietnamese employment law does not expressly recognise non-compete clauses or agreements. Their legality remains subject to ongoing debate. The Labour Code 2019 permits employers to negotiate written agreements with employees concerning the protection of business secrets and technological knowledge, including associated benefits and compensation for breach. This framework, read together with the Law on Intellectual Property, is often used to justify non-compete clauses in practice, particularly for senior or technical roles.

The courts have gone both ways. The Ho Chi Minh City Court (Decision No. 755/2018/QD-PQTT) upheld a mutually agreed NDA where the employee had full legal capacity and was not subject to coercion. Conversely, Judgment No. 420/2019/LD-PT and Judgment No. 03/2023/LD-PT both invalidated NDAs on the basis that they infringed the employee's constitutional right to work and freely choose their employment.

Non-solicitation clauses face similar uncertainty. They are difficult to enforce in practice because of the burden of proof and Vietnamese courts' limited familiarity with such provisions. Despite these legal risks, employers — particularly multinationals — regularly include non-compete and non-solicitation clauses in employment contracts or side agreements for key personnel.

5. Wages, Working Time and Overtime

Standard working hours — Standard working hours must not exceed 8 hours per day or 48 hours per week. The employer determines whether daily or weekly arrangements apply. Under a weekly model, daily hours must not exceed 10 and weekly hours must not exceed 48. Night work is defined as the period from 10:00pm to 6:00am. The sum of night and day hours must not exceed the statutory limit.

Female employees who have reached the seventh month of pregnancy (or sixth month in upland, remote, border and island areas) may not be assigned to night shifts. Female employees raising a child under 12 months old should not be assigned to night work without their agreement.

Overtime — Overtime requires the employee's express consent as to the hours, location and tasks involved. The overtime duration must not exceed 50 per cent of regular working hours per day, 40 hours per month, and 200 hours per year. Under a weekly working model, the combined total of regular and overtime hours must not exceed 12 hours per day.

Overtime compensation rates, calculated from the employee's regular hourly salary, are as follows:

Overtime scenario Rate
Weekdays, daytime 150%
Weekdays, night-time 200%
Weekends, daytime 200%
Weekends, night-time 270%
Tet or public holidays / paid leave, daytime 300%
Tet or public holidays / paid leave, night-time 390%

6. Foreign Workers

Foreign employees in Vietnam are governed by the Labour Code 2019 and implementing decrees, including Decree 219/2025/ND-CP (effective 7 August 2025). Foreign workers are entitled to the same protections as Vietnamese employees, with one principal exception: they are not covered by the local unemployment insurance scheme.

Work permit requirements — Foreign nationals require a work permit to work in Vietnam (valid for a maximum of two years, renewable once for a further two years) unless they fall within a statutory exemption. Under Decree 219/2025/ND-CP, the separate demand report previously required before a work permit application has been eliminated — the justification for hiring a foreign worker is now incorporated into the single work permit application.

Before hiring, employers must post a recruitment notice on the Employment Service Center, online recruitment platforms, or the company's Vietnamese website, at least five days before submitting the work permit application. After an unsuccessful attempt to recruit Vietnamese workers, the employer may submit the work permit application, which must be lodged at least 10 days and no more than 60 days before the foreign worker's expected start date.

Work permits may be extended once for up to a further two years. After that, a fresh application following first-time issuance procedures is required.

Employee register and headcount — Foreign employees must be included in the employer's employee management book, maintained in physical or digital form. There is no fixed legal cap on the number of foreign employees a company may hire, but employers may only recruit foreign nationals for managerial, executive director, skilled worker, or technical roles that Vietnamese workers are unable to perform. Hiring more than a minimal number of foreign workers without demonstrating legitimate need and complying with prescribed procedures is not permitted.

Taxes for foreign workers — Foreign employees pay personal income tax on Vietnam-sourced income. Employers withhold PIT monthly and remit to the tax authority. The applicable rate depends on residency:

Social insurance for foreign workers — Foreign employees are required to participate in compulsory social insurance (SI) if they have a labour contract with a Vietnamese employer for at least 12 months. Exemptions apply to intra-corporate transferees, employees who have reached Vietnamese statutory retirement age, and cases covered by applicable international treaties. Monthly SI contribution rates are as follows:

SI Fund Type Employee Employer Total
Retirement and survivorship fund 8% 14% 22%
Sickness and maternity fund — 3% 3%
Occupational accident and disease fund — Up to 1% Up to 1%
Total mandatory SI contribution 8% Up to 18% Up to 26%

Foreign employees participating in SI are entitled to the same benefits as Vietnamese employees: sickness, maternity, occupational accidents and diseases, retirement and survivorship allowances.

7. Internal Labour Rules

Under the Labour Code 2019, disciplinary policies must be incorporated into Internal Labour Rules (ILR) to be enforceable. Employers with 10 or more employees are required to issue an ILR; for employers with fewer than 10 employees, an ILR is optional but disciplinary rules must be included in individual labour contracts.

The ILR must cover:

Before issuing or amending the ILR, employers must consult with the grassroots trade union or employee representative organisation. The consultation must be documented in signed minutes. Employers with 10 or more employees must register the ILR with the competent authority within 10 days of issuance. The ILR must be communicated to all employees (via meetings, notices, or intranet) and its key content publicly displayed in the workplace. Vietnamese authorities prefer the ILR to be registered in Vietnamese.

8. Parental Leave

Under the Law on Social Insurance 2024, maternity and paternity leave benefits are funded by the social insurance department, not the employer. During eligible paid leave days, employers are not required to pay the employee's salary.

Eligibility — For maternity benefits, female employees (including pregnant employees, surrogate mothers and intended mothers) must have contributed to social insurance for more than six months within the 12 months before giving birth, relinquishing a child, or adopting a child under six months old. Surrogate or intended mothers who have contributed for more than 12 months but must stop working during pregnancy on medical advice must have contributed at least three months within the 12 months before giving birth.

Paternity benefits apply to male employees whose wives give birth (as natural or surrogate mothers), provided the employee has been making SI contributions.

Entitlements — Paid leave entitlements are available for prenatal check-ups, miscarriage, abortion, stillbirth, ectopic pregnancy, childbirth, surrogacy, child adoption under six months, and contraceptive measures. Female employees are entitled to a total of six months' leave before and after childbirth. Male employees whose wives give birth to one child without surgery are generally entitled to five working days of paternity leave.

Health recovery leave: female employees or surrogate mothers whose health has not recovered after maternity leave are entitled to five to ten additional paid recovery days within the first 30 days after maternity leave ends. The payment rate is 30 per cent of the reference salary per day.

Protection from dismissal — The Labour Code 2019 prohibits dismissal of an employee during pregnancy, maternity leave, or while raising a child under 12 months old. Narrow exceptions exist where the individual employer passes away or is declared legally incapacitated or deceased, or where a corporate employer ceases operations or is confirmed by the provincial authority to lack a legal representative.

9. Employee Representation

Grassroots employee representative organisations are established voluntarily by employees at a specific workplace. They include the grassroots trade union and the employee organisation within the enterprise. The law does not set a maximum on the number of members or a representative-to-employee ratio. For grassroots trade unions, the minimum number of members is five.

Election procedures for the grassroots employee organisation are set out in the organisation's charter. Secret ballot is used for electing executive and inspection committees and group-level leaders. Show of hands or membership card voting applies to procedural matters at the trade union congress. The term of a grassroots trade union aligns with that of its directly supervising higher-level union.

Employee representatives — particularly executive committee members — are entitled to: restrictions on the employer's right to unilaterally terminate, transfer or discipline them without written agreement with the employee organisation; salary entitlements during performance of representative duties; and an extension of their labour contract until the end of their term of office. Employers must not obstruct employees from establishing, joining or participating in lawful representative organisations. Any unilateral termination, reassignment or disciplinary dismissal of a management board member requires written agreement with the organisation or, failing agreement, notification to the provincial labour authority and a 30-day waiting period before a decision can be issued.

10. Data Protection

Vietnam's data protection framework is governed by Decree No. 13/2023/ND-CP (Decree 13) and, from 1 January 2026, the Law on Personal Data Protection 2025 (PDPL). Together, these instruments impose substantial obligations on employers as data controllers.

Impact assessment dossier — Data controllers and processors must prepare and maintain a personal data impact assessment dossier from the start of data processing. Employers must submit this dossier to the Department of Cybersecurity and Hi-tech Crime Prevention under the Ministry of Public Security (MPS) within 60 days of commencing processing of employee data. The dossier must remain available for MPS review and be updated as circumstances change.

Notice and consent — A privacy notice must be provided to employees before their data is processed, and their explicit, affirmative and voluntary consent must be obtained. The burden of proving consent lies with the employer as data controller.

Under the PDPL (effective 1 January 2026): during recruitment, employers may only collect and use personal data for lawful recruitment purposes or other agreed purposes. If a candidate is not hired, the employer must delete or destroy their personal data unless otherwise agreed. Employee data must be retained only for the duration required by law or as agreed with the employee. Upon termination of employment, the employer must delete or destroy personal data unless otherwise required by law.

Data collection limitations and technical protections — Data collection must be limited to the scope and purposes of processing. Processing must not exceed what employees have agreed to. System logs of personal data processing must be recorded and stored, and appropriate data protection standards applied. Employees must be made aware of any technology used to process their personal data in the course of employment management.

Cross-border data transfers — Transfers of Vietnamese citizens' data outside Vietnam require a separate impact assessment. The transferor must prepare an overseas data transfer dossier, keep it available for MPS review, submit it within 60 days of processing commencement, and notify the MPS upon completion of the transfer.

Sensitive data and background checks — Employees must be informed if their data is categorised as sensitive. Employers handling sensitive data must appoint a responsible department or person and notify the Specialised Agency for Personal Data Protection. Regarding background checks, employers may request certain information from employees at the contract conclusion stage but are not permitted to request criminal records or credit reports.

Electronic signatures — The Labour Code recognises labour contracts concluded electronically. Electronic signatures that meet the legal requirements of the Law on Electronic Transactions are legally binding and enforceable as wet-ink signatures.

11. Discontinuing Employment

Vietnam does not have at-will employment. Employment can only be terminated on specific grounds prescribed by law.

Termination via a labour discipline hearing — Dismissal is treated as a disciplinary measure and requires a formal labour discipline hearing. Dismissal is only permitted where the employee:

The hearing must follow prescribed procedural formalities and be conducted by the employer's officers. If a trade union exists, a union representative must be invited to attend. Employees dismissed through a valid disciplinary process may still apply for unemployment allowance if they meet the contribution period requirements.

Termination via written notice — An employer may unilaterally terminate by written notice — without a discipline hearing — in the following circumstances:

The required advance notice period is: three days for contracts under 12 months; 30 days for 12–36 month contracts; and 45 days for indefinite-term contracts.

Mass redundancies — Where technological or organisational changes, a merger or consolidation, or severe economic conditions result in the redundancy of two or more employees, the employer must prepare a Labour Utilisation Plan (LUP), consult the grassroots trade union, notify affected employees and submit the LUP to the provincial People's Committee at least 30 days before conducting the redundancies. Affected employees are entitled to unpaid salary, statutory job-loss allowances and any other required compensation.

Prohibited terminations — Employers may not unilaterally terminate employment when the employee is: (i) sick, injured, or suffering an occupational disease and undergoing treatment; (ii) on annual leave, personal leave, or other employer-permitted leave; or (iii) pregnant, on maternity leave, or raising a child under 12 months old.

Consequences of wrongful termination — If an employer wrongfully terminates an employee, it must reinstate the employee and pay compensation equal to the full salary and allowances for the period of wrongful dismissal, plus an additional two months' salary and allowances. If the employee's position no longer exists, the employer must renegotiate the contract. Where the employee does not wish to return, they are entitled to the job-loss allowance plus the above compensation. If the employer refuses to reinstate, the parties may agree on an additional payment of at least two months' salary, or the court will determine the amount.

12. Transfer of Business

In the case of organisational restructuring — including change of ownership or merger — the employer must develop a Labour Utilisation Plan. Both the current and the prospective employer are responsible for implementing the approved plan. Employees who are made redundant as a result of the transfer are entitled to a redundancy allowance, which compensates for job loss and supports the employee during their job search period.

13. Outlook and Conclusions

Vietnam's job market in 2025 and beyond is expected to continue expanding rapidly in technology and data-related fields. Demand for roles in artificial intelligence, cybersecurity, cloud computing and data analytics has increased significantly across industries including finance, logistics, healthcare and manufacturing. AI roles have seen a 41 per cent increase in demand, with employers offering salaries 10–50 per cent higher than for equivalent traditional IT positions. This is driven by Vietnam's strong digital transformation agenda and heavy public and private sector investment, including partnerships with major global technology companies.

The Law on Personal Data Protection 2025 will further stimulate demand for data protection and privacy roles as organisations work to achieve compliance by the 1 January 2026 effective date. Circulars providing further implementation guidance on both Decree 13 and the PDPL are expected to be issued. Employers operating in Vietnam should treat data protection compliance as an active programme rather than a one-time exercise, particularly given the expanding use of AI and automated systems in employment management.