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Staff Recruitment in Vietnam

Vietnam’s population is relatively young with over half of its people (of more than 90 million) falling into the working age category. A key problem faced by foreign firms in Vietnam, however, is being able to recruit workers at the right skill level. Staff turnover is also found to be higher for foreign companies than local Vietnamese firms, particularly in more skilled positions. Vietnamese often lack proficiency in English to the level required by businesses, as well as the technical skills. This is largely to be expected in light of Vietnam’s fast-paced transition from a mainly agricultural economy to a manufacturing/service economy, which has not been matched by the educational system. As such, when considering investing in Vietnam, strategies to manage the lack of skills set should be thought about – providing specific training courses and English speaking lessons could be useful.

The Labour Code (2013) creates the legal framework that sets out the rights and obligations of employers and employees. Familiarisation will be necessary before recruiting, but the key points to be aware of are:

  • Foreign companies, both ROs and branches, must provide Vietnamese citizens with priority of employment. In the event of employing foreigners, the maximum duration for the work permits is 24 months, though they can be extended subject to certain conditions.

  • Contracts must comply with a prescribed form published by the Ministry of Labour, War Invalids and Social Affairs (MOLWSA). A contract must be signed by the legal representative of the employer before the employment begins.

  • Normal working hours should not exceed eight hours per day or 48 hours per week, and working on extended hours is mutually agreed and limited to 30 hours per month and 200 per year.

  • Minimum monthly salaries must be complied, which vary with region. For 2017, they range between VND2.6 million – VND3.75 million (US$114-165).

  • According to MOLWSA, Vietnam’s compulsory social, health & unemployment insurance (“SIHIUI”) will apply to employment of Vietnamese citizens. Mandatory contribution rate is 32.5% of monthly salary (22% to be paid by employer and 10.5% by employee).

  • Owing to changes to the 2014 Law on Social Insurance, three more groups of subjects are to be covered by compulsory social insurance as of January 2018, including foreigners working in Vietnam with work permits or practice certificates or practice licences granted by competent Vietnamese agencies.

  • All companies, with either Vietnamese or foreign-owned capital, must permit their employees to join a trade union. Besides, they are required to contribute 2% of total salary expenses into a trade union fund.

 

A Practical Guide to Doing Business in Vietnam

  1. Regulatory Environment
  2. Establishing a Presence
  3. Intellectual Property Protection
  4. Staff Recruitment
  5. Tax Considerations
  6. Import/Export Procedures
  7. Further Information


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