Vietnam Labour Law for Manufacturers
By Michael Lee, Viora (Tien) Tran
Who this article is for
HR managers, compliance officers, and operations directors at manufacturing facilities — including foreign-invested enterprises ("FIEs") — operating in Vietnam under the 2019 Labour Code.
1. Labour Contracts: Essential Clauses for Manufacturing Employers
Labour contracts with employees must be in writing. Four provisions deserve particular attention in a manufacturing context — because getting them wrong creates compliance exposure that compounds over time.
Working hours and shift schedules — Manufacturing employees typically work in shifts. The contract must specify shift schedules (day, night, rotating), start and end times, weekly or monthly rotation plans, and the procedure for temporary adjustments. Seasonal fluctuations in workload should also be addressed. The schedule must keep within the statutory maximum hours.
Overtime — Vietnam strictly regulates overtime and the rules are subject to change. Rather than specifying a fixed overtime rate in the contract, the safest approach is to state that overtime is governed by applicable law and the employer's internal labour rules. This avoids a contractual conflict every time the legal rate is amended.
Salary, wages, and method of compensation — The contract must state the base salary, allowances, and any supplementary payments. The base salary must meet the statutory minimum wage for the relevant region. For piece-rate pay — common on factory floors — the contract must specify the monthly time-based salary used as the benchmark, the product standard, and the unit price per product.
Occupational safety obligations — The contract must include the employee's responsibility to comply with all occupational safety regulations — including training requirements, maintenance procedures, and internal health and safety rules. This protects the employer in the event of an accident investigation.
2. Working Hours, Overtime, and Leave
Regular working hours — For employees on a daily schedule, regular working hours must not exceed 8 hours per day and 48 hours per week. For employers applying a weekly schedule, the maximum is 10 hours per day and 48 hours per week.
Overtime limits — Employers must obtain employee consent before requiring overtime. Three hard caps apply:
| Limit | Cap | Exception |
|---|---|---|
| Daily | 50% of regular daily hours (max 12 hours total including OT) | — |
| Monthly | 40 hours | — |
| Annual | 200 hours | 300 hours for textiles, garments, leather, footwear, electronics, agriculture, and aquatic products |
The 300-hour annual exception is significant for garment and footwear manufacturers. It does not apply automatically — check whether the employer's sector code qualifies.
Public holidays — Vietnam observes eleven public holidays. If a public holiday falls on a weekend, employees are entitled to take the next weekday off.
| Holiday | Duration |
|---|---|
| New Year | 1 day (January 1) |
| Lunar New Year (Tet) | 5 days |
| Hung King Day | 1 day (March 10 lunar calendar) |
| Victory Day | 1 day (April 30) |
| Labour Day | 1 day (May 1) |
| Independence Day | 2 days (September 2 and the preceding or following day) |
Annual and special leave — Minimum paid annual leave is 12 days per year (standard conditions), rising by one day for every five years of employment. Employees in hazardous conditions or under age 18 receive 14 days. Employees who have worked less than 12 months receive leave proportional to months worked.
Special paid leave: 3 days for own marriage; 1 day when a child marries; 3 days for death of a parent, parent-in-law, spouse, or child; 6 months minimum maternity leave; 5 to 14 days paternity leave depending on circumstances.
3. Minimum Wage and Compensation in Manufacturing
Minimum wages are set annually at the regional level, typically increasing by 5–6% per year. All employee base salaries must meet or exceed the applicable regional minimum. Rates from July 1, 2024:
| Region | Minimum monthly wage |
|---|---|
| Region I | VND 4,960,000 |
| Region II | VND 4,410,000 |
| Region III | VND 3,860,000 |
| Region IV | VND 3,450,000 |
From July 1, 2025, Region I includes the urban areas of Hanoi, Ho Chi Minh City, Quang Ninh, Hai Phong, Dong Nai, and Tay Ninh. Region II covers specific areas of Hanoi, Ho Chi Minh City, and a range of provincial cities. Region III includes provincial cities and certain districts. Region IV covers the remaining localities.
Piece-rate pay — a common manufacturing structure. If compensation is product-based, the contract must specify a monthly time-based salary, a product standard per time unit, and the unit wage per product. The time-based salary used in the contract must still meet the applicable minimum wage.
4. Social Insurance and Benefits
Vietnamese employees with contracts of one month or longer must contribute to the social insurance scheme. Foreign employees with contracts of twelve months or longer are also required to contribute.
| Party | Rate | Deducted from salary? |
|---|---|---|
| Employer | 17% | No — employer bears this cost |
| Employee | 8% | Yes — deducted from gross salary |
The scheme covers sick leave, maternity leave, retirement, work-related accidents, occupational disease, and unemployment. Contributions are subject to a statutory salary cap.
The salary used as the basis for social insurance contributions may exclude certain allowances explicitly set out in the labour contract — but must not fall below the applicable minimum wage.
5. Work Permits and Other Requirements for Foreign Employees
Who needs a work permit — Before employing a foreign national for 90 days or more, the employer must obtain a work permit or a work permit exemption certificate. Qualifications required depend on the position:
| Position | Requirements |
|---|---|
| Manager | Holding a qualifying management position (legal representative, director, chair) |
| Expert | University degree relevant to the role, plus at least 2 years of relevant experience (or 1 year in designated fields) |
| Technical worker | Either (a) 1 year of relevant training plus 2 years of experience, or (b) 3 years of relevant experience |
Foreign employees transferred from an offshore parent entity must have been employed by the parent for at least 12 consecutive months before the transfer date.
Exempt categories must either submit a work permit waiver application at least 10 days before starting work, or notify authorities at least 3 working days before commencement.
Term and renewal — The work permit or waiver term cannot exceed the labour contract term or two years, whichever is shorter. One renewal is permitted, for a maximum of two additional years. After that, a new work permit must be obtained.
Visa and Temporary Residence Card (TRC) — Foreign workers must enter Vietnam on a working visa. A Temporary Residence Card ("TRC") functions as a multiple-entry visa and is available to employees with a valid work permit or exemption certificate, and to their legal spouse and children under 18. Current TRC processing time is five business days from filing. Applicants who entered on a tourist visa do not qualify.
Reporting obligations — Companies employing foreign workers must submit a report on foreign labour employment to the Department of Home Affairs by July 5 and January 5 each year, covering the preceding half-year period.
6. Health, Safety, and Occupational Accidents
Core employer obligations — Employers must organise and document occupational safety training, supply adequate safety equipment, provide health care services, conduct periodic occupational disease examinations, and implement all applicable regimes for employees suffering occupational accidents or diseases.
Annual risk assessment — Employers in the following sectors must conduct an annual occupational safety and health risk assessment: petroleum mining and refining; plastic and rubber-based chemical production; metal and metal products; mining of nonmetallic minerals; construction; shipbuilding; power generation and distribution; fisheries processing; garments, leather, and shoes; scrap recycling; and environmental cleaning.
Occupational accidents — employer liability — The employer and the Social Insurance Fund are jointly liable for compensation. The employer's portion depends on the degree of the employee's reduced working capacity and fault:
| Reduced working capacity | Employee not at fault | Employee entirely at fault |
|---|---|---|
| 5%–10% | ≥ 1.5 months' salary | ≥ 0.6 months' salary |
| 11%–80% | Add 0.4 months' salary per additional 1% reduction | 40% of the 'not at fault' rate |
| 81%+ or death | ≥ 30 months' contracted salary | ≥ 12 months' contracted salary |
7. Collective Labour Agreements and Unions
Collective Labour Agreements (CLAs) — A CLA is a written agreement resulting from collective bargaining between an employer and its employees. It is not a legal requirement, but is common in large manufacturing enterprises. A CLA may only be signed when more than 50% of the employer's employees vote in favour. Within 10 days of signing, the employer must submit a copy to the labour authority under the Provincial People's Committee.
Trade unions — Grassroots trade unions represent employees in collective bargaining. Participation and establishment are voluntary. Employers must contribute 2% of the total salary fund to the Trade Union Fund — regardless of whether a union exists at the workplace.
Need advice on your Vietnam manufacturing operations?
Dilinh Legal advises manufacturing employers across garments, footwear, electronics, and industrial sectors on labour compliance, employment contracts, and workforce restructuring. Contact us at contact@dilinh.com.
Michael Lee — Partner, Dilinh Legal. Michael Lee brings over a decade of experience from two international law firms in Vietnam. He advises on Corporate & M&A, FDI, and regulatory matters, and was ranked by Chambers Asia and Legal500 as a leading lawyer in Corporate & M&A from 2014 to 2019.