Complete guide to hiring employees in Vietnam. From taxation to salary standards, here's everything you need to know about having employees in Vietnam.
There are four main types of employment contracts in Vietnam.
Probation contract. Probationary contract is valid for a maximum of two months. This is understood as the “trial” period for both the company and the employee. The probation contract is not subject to the Labor Code and the company does not have to follow the prior-notice rule and there is no need to pay for Social Security for the employees.
Fixed term contract. A contract in which the two parties determine the term and the time of termination of the contract’s validity for 3-36 months from the effective date of the contract. A one-year contract is the most common type in Vietnam. A Company can sign a fixed term contract twice, after that it has to enter into an Infinitive contract with the employee. This contract has a 30-day prior notice rule.
Infinitive contract. A contract in which the two parties do not determine the term and the time of termination of the contract’s validity. This contract has a 45 days prior notice rule and more strict regulations on terminating it.
Service contract. A contract signed between the company and the individual to complete a certain job/task or project. The project is understood as a short-term, irregular job and an unstable income. This type of contract is not considered a labor contract and the individual is not the employee of the company. Social security will not be subject to this contract. The personal income tax is applied at a flat rate(10% or 20%).