Labor compliance services vietnam

Faro Vietnam advises employers on labor law compliance and human resources legal issues in Vietnam, from structuring contracts and complying with work permit regulations to social insurance, contract termination procedures, and obligations to trade unions.

1. Labor Contracts in Vietnam: What Employers Need to Know

Vietnamese law permits two types of labor contracts: fixed-term contracts not exceeding 36 months, and indefinite-term contracts. Regulations regarding contract renewal, conversion of contract types, and mandatory content for each type of contract are specifically stipulated.

The areas that most frequently cause problems for foreign-invested enterprises (FIEs):

• Renewal of fixed-term contracts when the number of renewals or specific circumstances lead to conversion into indefinite-term contracts under the Labor Code, resulting in corresponding changes to the right to terminate the contract.
• Probationary arrangements when the duration or conditions of the probationary period do not comply with the legal requirements for the type of job position.
• Salary and bonus structures when the method of determining the nature of allowances creates a discrepancy between contractual benefits and social insurance contributions.
• Bilingual contracts when there are differences between the Vietnamese and English versions, leading to disputes over the interpretation of the parties' actual obligations.

From July 1, 2026, all electronic labor contracts must be signed and stored through the Government's centralized digital system according to Decree 337/2025. Employers currently using their own electronic systems or paper contracts need to assess the requirements this transition places on them.
 

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2. Work Permits for Foreign Workers in Vietnam

The majority of foreign nationals working in Vietnam require a valid work permit issued by the competent provincial authority. The Labor Code and Decree 219/2025/ND-CP stipulate exemptions for work permits for certain groups, including short-term assignments under 90 days, internal transfers within enterprises, and key management positions, but even exempted workers still need written confirmation from the labor authority before starting work.

According to Decree 219/2025, effective from August 7, 2025, the process for approving the need to employ foreign workers and the process for applying for work permits have been integrated into a single process. Applications must be submitted at least ten working days before the employee's expected start date, and approval is granted within ten working days. Work permits are tied to each specific employer: a new permit is required when changing job positions or employers.

Failure to comply results in administrative penalties for both employers and foreign workers. Labor inspections of foreign-invested enterprises consistently uncover work permit deficiencies, a key finding.

3.  Social Insurance: Silently Accumulating Compliance Risks

Failures in social insurance compliance at foreign-invested enterprises rarely manifest as a single, obvious error. They accumulate over time through incorrect contribution levels, misclassified allowances, and employees who should be registered but are not. When a labor inspection or dispute with employees reveals these issues, the liability for retroactive collection can be substantial.

The Social Insurance Law 2024, effective July 1, 2025, has expanded coverage to groups previously excluded from participation:

• Short-term employment contracts of one to three months; 
• Part-time workers with income at or above the level of salary used as the basis for mandatory social insurance contributions; Business managers and executives receiving salaries;
• Employers with a workforce belonging to any of the above groups, but whose current social insurance registration records do not cover these groups, will face a gap resulting in liability for retroactive collection.

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4. Termination of employment contracts in Vietnam: Where FDI businesses often encounter difficulties.

The procedures for terminating employment contracts in Vietnam are much stricter than most foreign-invested enterprise management anticipate. The Labor Code specifically stipulates the grounds and step-by-step procedures for contract termination, including notice periods, severance pay calculation methods, and in some cases, disciplinary procedures that must be carried out before dismissal.

Even a business-wise termination decision with procedural errors can lead to the employee being reinstated and held liable for wages for the entire period since the dismissal. The most common procedural errors include:

• Errors regarding notice periods when the actual notice period does not comply with legal requirements for the specific type of contract and grounds for termination.
• Errors in disciplinary procedures when mandatory procedures before dismissal for disciplinary reasons are not followed correctly.
• Errors in calculating severance pay when the working time, salary used as a basis, or the formula applied are incorrect.
• Termination of contracts based on grounds not recognized by Vietnamese law, or based on grounds requiring a prior documented process that was not followed.

The Vietnamese labor legal framework generally tends to protect employees in contract termination disputes. The burden of proof rests with the employer, who must demonstrate that the termination was both substantiated and procedurally correct.

Faro Vietnam advises employers on the labor legal framework, contract structuring, work permit compliance, and HR policies that can withstand inspections and disputes. Our labor litigation department means our compliance advice is built on a foundation of practical understanding of how labor disputes in Vietnam are actually resolved.

For any inquiries regarding labor law or HR compliance in Vietnam, please contact us via email at service@farovietnam.com.vn to schedule a confidential consultation.
Faro Vietnam

• Email: service@farovietnam.com.vn

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• Tel: + 84 24 3974 3091

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