Vietnam has become one of Southeast Asia’s most active hiring markets for foreign companies, and it’s not hard to see why. The talent pool is large, costs are competitive, and the workforce is young and tech-literate. But Vietnamese payroll is more involved than it looks. You’re dealing with a four-tier minimum wage system, mandatory social insurance contributions, a progressive income tax with personal allowances, and strict rules on employment contracts. Get any of it wrong and you’re exposed to back-payment liability and potential fines. This guide walks you through exactly what you need to know.
Payroll frequency and pay date
Vietnam runs on a monthly payroll cycle. The standard pay date is the 28th of each month, with salary paid in Vietnamese đồng (VND). You’ll need to process payroll on this schedule consistently; Vietnamese labor law doesn’t give much flexibility on timing once an employment contract sets the terms.
Minimum wages in 2026
Vietnam uses a four-region minimum wage structure. The rates below are set by Decree 293/2025/ND-CP and took effect on January 1, 2026.
| Region | Who it covers | Monthly minimum | Hourly minimum |
|---|---|---|---|
| Region I | Inner Hanoi and Ho Chi Minh City | VND 5,310,000 | VND 25,500 |
| Region II | Outer Hanoi/HCMC, Da Nang, Hai Phong | VND 4,730,000 | VND 22,700 |
| Region III | Other provincial cities and towns | VND 4,140,000 | VND 20,000 |
| Region IV | Rural areas | VND 3,700,000 | VND 17,800 |
The region that applies is determined by where the work is performed, not where your company is registered. If you’re hiring across multiple locations, you’ll need to apply the correct regional rate for each employee.
Standard working hours are 40 hours per week, 8 hours per day, Monday through Friday.
How vietnamese payroll deductions work
Every Vietnamese payroll run involves two separate sets of deductions: contributions the employee pays (withheld from their salary by the employer) and contributions the employer pays on top. Here’s how each works.
Employee shui contributions
Employees contribute to the social health and unemployment insurance (SHUI) system through deductions withheld from their gross salary:
- Social insurance (SI): 8%
- Health insurance (HI): 1.5%
- Unemployment insurance (UI): 1%
These deductions reduce the employee’s taxable income before personal income tax is calculated, which matters when you’re running the PIT withholding calculation below.
Personal income tax withholding
Vietnam uses a progressive personal income tax (PIT) system. Before calculating tax, employees are entitled to deductions:
- Personal allowance: VND 15,500,000 per month
- Dependent allowance: VND 6,200,000 per month per registered dependent
These figures come from Resolution 110/2025/UBTVQH15, effective for 2026. Once allowances are subtracted from net taxable income, the progressive rates apply:
| Monthly taxable income | Tax rate |
|---|---|
| Up to VND 10,000,000 | 5% |
| VND 10,000,001 to VND 20,000,000 | 10% |
| VND 20,000,001 to VND 40,000,000 | 15% |
| VND 40,000,001 to VND 60,000,000 | 20% |
| VND 60,000,001 to VND 80,000,000 | 25% |
| VND 80,000,001 to VND 100,000,000 | 30% |
| Above VND 100,000,000 | 35% |
As the employer, you’re responsible for calculating and withholding the correct amount each month. Errors in PIT withholding are one of the most common compliance issues foreign employers run into.
Employer contributions and on-costs
On top of gross salary, you’ll owe the following employer-side contributions:
- Social insurance (SI): 17.5%
- Health insurance (HI): 3%
- Unemployment insurance (UI): 1%
- Trade union fee: 2%
That’s a total on-cost of approximately 23.5% of gross salary. There are caps to be aware of: SI and HI contributions are capped at a salary base of VND 46,800,000 per month, while UI contributions are capped at 20 times the applicable regional minimum wage. For employees earning above those thresholds, contributions are calculated on the cap, not the full salary.
These aren’t optional. Even if an employee doesn’t join the trade union, you’re still obligated to pay the 2% trade union fee.
Employment contracts and probation
Vietnamese labor law has specific requirements for employment contracts that catch many foreign employers off guard.
Contracts must be in Vietnamese. For foreign nationals, bilingual versions are required, but Vietnamese remains the controlling language. You can’t simply issue an English-language contract and call it done.
On fixed-term contracts, the rules are strict: you can sign a maximum of two consecutive fixed-term contracts with the same employee. After that, the relationship automatically converts to an indefinite-term contract. There’s no workaround for this.
Probation periods depend on the role:
- Basic roles: 6 working days
- Skilled and technical roles: 30 days
- High-skill and management roles: up to 60 days
Only one probation period is allowed per employment contract, and employees can’t be put on probation twice for the same position.
Tết bonus and customary payments
Vietnam doesn’t have a statutory 13th month payment. There’s no legal obligation to pay it. That said, Tết bonuses (paid around the Lunar New Year) are deeply customary and widely expected by employees. Most employers in Vietnam pay a bonus equivalent to at least one month’s salary at Tết, and in many industries, two months or more is standard.
Skipping the Tết bonus when it’s been offered in previous years creates real retention risk. It’s worth treating it as a near-mandatory cost even though it isn’t technically required.
Running vietnamese payroll as a foreign employer
Here’s the practical problem: foreign companies can’t run payroll in Vietnam without a legal entity in the country. You need a registered presence to enter into employment contracts, withhold PIT, and make SHUI contributions. Setting up a wholly foreign-owned enterprise (WFOE) or representative office takes months and involves significant administrative overhead.
The faster route is to use an Employer of Record (EOR). An EOR is already incorporated in Vietnam and acts as the legal employer on your behalf. You direct the work; the EOR handles contracts, payroll processing, tax withholding, and SHUI contributions. Your team member works for you in practice, but the employment relationship sits with the EOR from a legal standpoint.
If you want to understand more about how this model works before committing, this explainer on what an EOR is covers the key questions. And if you’re evaluating providers, this guide to EOR services compares what to look for.
Book a demo to see how RemotePass handles Vietnamese payroll and compliance end to end.
Frequently asked questions
What is the payroll tax rate for employers in vietnam?
Employer contributions to social, health, and unemployment insurance total approximately 23.5% of gross salary, plus a 2% trade union fee. The exact cost depends on the employee’s salary relative to the SI/HI cap of VND 46,800,000 per month and the UI cap of 20 times the regional minimum wage.
Do I have to pay a 13th month salary in vietnam?
No. Vietnam doesn’t have a statutory 13th month requirement. However, Tết bonuses are customary and widely expected. Most employers pay at least one month’s additional salary around the Lunar New Year, and many pay more depending on the industry and seniority of the role.
Can a foreign company hire employees in vietnam without a local entity?
You can’t employ someone in Vietnam directly without a registered legal entity there. To hire without setting up your own entity, you’d use an Employer of Record, which holds the employment relationship on your behalf and handles all payroll and compliance obligations locally.
How many fixed-term contracts can I offer in vietnam?
You can offer a maximum of two consecutive fixed-term contracts with the same employee. After the second fixed-term contract expires, any continuation of employment must be on an indefinite-term basis. You can’t reset this limit by inserting a gap between contracts.
