Hiring Employees in Vietnam: Contracts, Probation & Salary

Foreign-invested enterprises hiring in Vietnam must execute written labor contracts per Labor Code 2019 (Law 45/2019/QH14), comply with probation period limits ranging 60-180 days with 85% salary minimums, and structure gross salaries accounting for 21.5% employer social insurance contributions. Vietnamese nationals require only labor contracts and social insurance registration. Foreign employees need work permits before contract execution, with 30-day public recruitment advertisements and 15-20 day Department of Labor, Invalids and Social Affairs (DOLISA) processing per Decree 152/2020/ND-CP. 

From July 1, 2026, all new contracts require registration on the National Enterprise Labor Contract Platform (NELCP) with digital signatures under Decree 337/2025/ND-CP—unregistered contracts trigger administrative penalties reaching VND 10-50 million.

This guide covers contract types and auto-conversion rules, written contract requirements with bilingual obligations, the 2026 NELCP digital mandate, probation rules with regional wage compliance, and common Ministry of Labour – Invalids and Social Affairs (MOLISA) inspection violations. Understanding these fundamentals prevents costly compliance gaps when hiring and scaling in Vietnam.

Hiring Employees in Vietnam: Process Overview

Foreign-invested enterprises follow distinct sequences by employee nationality. 

• Vietnamese nationals: recruitment → contract execution → probation → social insurance registration → employment. 
• Foreign nationals: 30-day public job posting → work permit application → DOLISA processing (15-20 days) → contract execution → employment.

Work permits require criminal clearance from home countries, health examinations from Vietnamese facilities, and labor demand justification demonstrating unavailable qualified Vietnamese candidates. 

Critical sequencing: Vietnam requires work permit approval before contracts become valid. Unlike Singapore or Thailand where permits follow contract execution, Vietnamese enforcement invalidates contracts signed without valid permits—creating VND 50-75 million penalties under Decree 12/2022/ND-CP plus deportation risk. 

This guide focuses on contract execution, probation rules, and salary structuring applicable to all employees—foreign hiring specifics detailed in Work Permits section below. Once hiring sequences complete, contract structuring determines long-term obligations.

For comprehensive coverage of all employment obligations, refer to Vietnam employment law and HR compliance.

Employment Contract Types

Vietnam requires one of three contract types: indefinite-term (no end date), fixed-term (maximum 36 months), or seasonal/specific-work (under 12 months). Selection matters—each carries different termination rights. But here’s what catches foreign enterprises: execute two consecutive fixed-term contracts, and Labor Code 2019 Article 20 mandates automatic conversion to indefinite-term status.

The conversion operates automatically when employees continue working after first fixed-term contracts expire and employers execute second agreements. No employer discretion. Once converted, you lose termination flexibility and must follow indefinite-term separation procedures including severance. Most FDI companies default to fixed-term for all positions, assuming renewable arrangements provide flexibility. This creates unintended indefinite-term conversions across workforces.

Common pattern: HR renews 24-month contracts for second 24-month terms, triggering conversion on day one of the second period. Employers only discover this during MOLISA inspections or when employees file severance claims. Inspections target renewal patterns—cross-referencing employee start dates against stated contract types.

Retroactive liability includes back-payment of benefits on indefinite-term basis, severance exposure if terminations occurred, and penalties for misclassification. For enterprises with 50+ employees, fines reach VND 30-50 million under Decree 12/2022/ND-CP Article 17. Once types establish relationships, proper documentation becomes critical.

Written Contract Requirements

All employment requires written contracts before work commences—not during probation, not after employees start. Two copies are mandatory per Labor Code 2019 Article 14: one for employer, one for the employee within 3 days of signature. Timing matters. Many companies sign after probation, assuming probation operates outside formal employment. This violates the mandate and creates ambiguity about status during initial weeks.

Contracts need at least 11 mandatory clauses: employer name and legal representative, employee ID and residence, job description and workplace, contract duration, salary structure with payment schedule, working hours and rest periods, social insurance registration, probation terms if applicable, termination conditions, dispute resolution, and signature date.

Foreign-invested companies must prepare Vietnamese versions as legally binding. Optional foreign language versions are allowed, but Vietnamese text prevails when conflicts arise. Translation quality impacts enforceability. Vague descriptions like “general duties” create termination difficulties, missing probation terms prevent lawful separations, and stating net salary instead of gross triggers insurance disputes.

Missing clauses renders contracts invalid under Article 16. Invalid contracts default to indefinite-term status immediately with full protections—no probation rights, full severance obligations, and retroactive benefits from work start dates. MOLISA inspections focus on completeness. Decree 145/2020/ND-CP Article 5 requires bilingual compliance—inspectors verify Vietnamese quality and translation accuracy. But even proper contracts face new requirements under 2026 digital mandates.

2026 E-Contract Platform Integration

NELCP integration becomes mandatory July 1, 2026 for all new contracts. The platform enables real-time monitoring under Ministry of Labor management per Decree 337/2025/ND-CP. Both employer and employee digital signatures required—no paper contracts accepted after July.

You need corporate e-ID authentication first. Approval runs 4-6 weeks through authorized providers. Companies waiting until June won’t achieve July readiness. Start infrastructure in Q2 2026.

Registration requires three steps: sign digitally using e-ID credentials, upload to NELCP within 5 working days per Article 8, and system timestamps validate while MOLISA monitors. The 5-day window applies strictly—contracts signed Monday need upload by next Monday.

Post-July 1 unregistered contracts trigger violations. Enforcement relies on remote monitoring. The system cross-checks registration against Vietnam Social Security (VSS) databases. When you register insurance but contracts don’t appear in NELCP within windows, automated flags alert authorities. This changes enforcement—no escape through geography. VSS may reject insurance registrations for employees lacking NELCP contracts starting Q3 2026. This creates deadlock—can’t employ without insurance, can’t get insurance without NELCP. Solution: establish infrastructure Q2, pilot test workflows before July. Once registration handles documentation, probation structuring determines early-stage terms.

Probation Period Rules

Probation ranges 60-180 days by position, with salary minimums at 85% of contracted wages per Labor Code 2019 Article 24. Senior management allows 180 days maximum. College degree holders, technical positions, and skilled workers get 60 days. General labor also limited to 60 days. No extensions—adding “training periods” after probation violates regulations.

The 85% minimum applies to gross, not net. For 2026, comply with regional floors from Decree 293/2025/ND-CP (see below) and calculate minimums against whichever applies highest.

Regional minimum wages increased 7.2% from January 1, 2026—see Vietnam’s 2026 minimum wage increases for updated rates.

Probation salary bases insurance calculations. Employers pay 21.5% from employment start. Common violation: delaying registration until probation completion. VSS cross-checks contract dates against registration timing. Late penalties accumulate from contract start. You owe retroactive 21.5% on probation salary plus VND 5-10 million fines under Decree 12/2022/ND-CP Article 18.

Both parties hold termination rights during probation without notice or severance. But termination must relate to performance—discriminatory dismissals violate protections. Document issues weekly. Employees frequently file discrimination complaints when terminations lack justification. After probation establishes relationships, compliance risk patterns emerge.

Compliance Risks & Common Pitfalls

Three violations dominate findings: contract misclassification through consecutive renewals, probation violations including extensions and delayed registration, and underreporting gross salaries via net arrangements or below-minimum payments.

Misclassification follows patterns: HR renews fixed-term without tracking auto-conversion. The second execution immediately converts the employee’s status under Article 20, regardless of the employer’s intent. 

Employees discover during severance disputes. Claims demand indefinite-term recognition retroactive to the second contract start, severance on corrected status if termination occurred, and restored protections. MOLISA positions conversion as mandatory—oversight provides no defense.

Understanding employee termination legal grounds and severance calculation procedures prevents costly disputes during contract misclassification scenarios.

Probation violations stem from assuming probation exempts coverage. Correct: Register with VSS within 30 days from contract signature under Law 58/2014/QH13 Article 6. Contract signature triggers countdown, not completion. Late registration generates penalties from signature through registration. You owe 21.5% on probation salary during gaps plus administrative fines.

NELCP non-compliance escalates post-July 2026. Executing without registration faces real-time enforcement. Platform detects unregistered contracts via VSS integration—when you register insurance but contracts don’t appear, flags alert authorities. Unlike physical inspections, NELCP operates remotely and continuously. VSS may reject registrations for employees lacking NELCP contracts Q3 2026. This creates deadlock—can’t employ without insurance, can’t get insurance without NELCP. Establish infrastructure Q2, pilot test workflows before July. Beyond contract compliance, salary structuring creates exposure.

Gross vs Net Salary Structure

Gross salary stated in contracts bases 21.5% employer contributions. This comprises Social Insurance at 17.5% (retirement, maternity, sickness, injury), Health Insurance at 3% (medical coverage), and Unemployment Insurance at 1% (Vietnamese only—foreigners exempt). Total employer cost reaches 135-145% of gross including overhead.

Employees contribute 10.5% from gross: 8% SI, 1.5% HI, 1% UI (Vietnamese only). Net equals gross minus contributions (10.5%) minus Personal Income Tax. Foreign investors misunderstand this, creating “net arrangements” guaranteeing fixed take-home while manipulating stated gross. These create audit exposure when investigators uncover evidence.

Critical: Always state offers in gross during negotiations and documentation. Contracts must show “gross monthly salary of VND [X]” without net guarantees. Payslips display: Gross → Minus contributions → Minus PIT → Equals net. 

VSS cross-checks contract salaries against monthly declarations. Red flags emerge when salaries fall below market rates or multiple employees show identical figures suggesting underreporting. 

MOLISA inspections seek “net arrangement” documentation through email discovery. 

See Vietnam Payroll Structure: Gross-to-Net & SHUI for complete calculations and compliance practices.

Social Insurance Registration & Contributions

Register employees from probation start—not completion. Timeline: within 30 days from contract signature per Law 58/2014/QH13 Article 6. Rates split employer (21.5% of gross) and employee (10.5%), calculated monthly.

Three types operate: 

• Social Insurance at 17.5% employer (8% employee) covers retirement, maternity, sickness, and injury; 
• Health Insurance at 3% employer (1.5% employee) provides medical coverage at public and designated private facilities; 
• Unemployment Insurance at 1% employer (1% employee) applies only to Vietnamese nationals on contracts exceeding 3 months.

Beyond SHUI contributions, employers must contribute 2% trade union fee calculated on social insurance salary base, regardless of grassroots union existence

Registration requires provincial VSS submission: contract copies, employee ID/passport, and declaration forms. Late registration triggers penalties from signature through registration. Back-payment includes contributions on salary during delays plus fines. 

For Reference Level ceiling calculations, lump-sum refunds, and VSS reconciliation procedures, see Vietnam social insurance 2026 compliance framework.

Personal Income Tax for Employees

PIT levies on gross minus SI contributions (the 10.5% employee portion). Tax structure varies by residency under Law 04/2007/QH12 as amended. Tax residents (183+ days in Vietnam) face progressive 5-35% rates. Non-residents pay flat 20% on Vietnam-sourced income.

Monthly deductions: VND 15.5 million personal allowance plus VND 6.2 million per qualified dependent (children under 18, students under 25, incapacitated). Calculation: (Gross – SI – allowances) × rate = PIT due.

Employers withhold PIT monthly, file quarterly declarations by 30th day of following quarter’s first month, and complete annual finalization by March 31 per Circular 111/2013/TT-BTC. Foreign employees departing before year-end must finalize before departure for tax clearance.

Foreign employees subject to progressive tax rates must finalize personal income tax annually under 183-day residency rules with proper documentation

Work Permits for Foreign Employees

Foreign employees need valid permits before contract execution under Labor Code Article 169. Specs: 2-year validity (renewable once), processing spanning 30-day recruitment announcement + 15-day application + 10-day review, costs VND 2-4 million.

Critical: permit approval precedes contract signature. Contracts without permits create VND 50-75 million penalties under Decree 12/2022/ND-CP for employing unpermitted workers. Employees face 15-day deportation. Timelines must account for 55-day minimum processing before employment commences.

Exemptions exist: VND 3 billion capital contributors (USD 130,400) under investment certificates, intra-company transfers under WTO commitments, and short-term specialists under 3 cumulative months annually. 

For comprehensive work permit procedures, labor market testing requirements, document legalization, and exemption criteria, see Vietnam work permit requirements and compliance guide 2026.

Outsourcing HR & Payroll Services

Many FDI enterprises outsource Vietnam HR and payroll during entry and scaling. Outsourcing covers contract drafting with bilingual translation, probation management with documentation, monthly payroll with SI/HI/UI accuracy, PIT withholding and quarterly declarations, annual finalization meeting deadlines, and NELCP registration with digital signature support from July 2026.

Advantages include compliance accuracy from providers maintaining current regulatory knowledge—Decree 337/2025/ND-CP (NELCP) and Law 13/2024/QH15 (UI expansion) illustrate pace. Cost efficiency avoids building in-house infrastructure during early stages under 50 employees. Risk mitigation provides professional oversight reducing audit exposure. Scalability offers flexible expansion as workforce grows.

Indochina Link Vietnam provides comprehensive HR compliance and payroll outsourcing. Services include contract structuring complying with three-type rules and auto-conversion prevention, insurance registration within 30-day mandates, monthly payroll with accurate calculations, and 2026 NELCP integration with digital signature setup. Contact our HR team for tailored solutions addressing your operational requirements.

Conclusion

Labor contract compliance requires understanding three contract types with auto-conversion prevention, probation limits 60-180 days with 85% minimums above regional floors, gross structuring affecting 21.5% contributions, and 2026 NELCP integration requiring infrastructure before July. Register employees for insurance from probation start, maintain bilingual documentation meeting 11 mandatory clauses, and prepare e-ID authentication in Q2 2026.

Beyond contracts, Vietnam employment encompasses termination with severance, annual leave by tenure, workplace safety under inspection frameworks, disciplinary procedures requiring documentation, and collective bargaining in unionized workplaces.

Professional Disclaimer: This guide provides general information about Vietnam labor regulations effective January 2026. Specific situations require professional legal and HR consulting adapted to enterprise circumstances.