Short answer. Four areas govern most of the day-to-day compliance work for a foreign-owned employer in Vietnam. Probation periods are scaled to role complexity — up to 180 days for executive positions, 60 days for roles requiring a degree or specialised technical qualification, 30 days for secondary vocational or technician roles, and 6 working days for other roles — with minimum probation pay set at 85% of the agreed salary. Termination requires statutory notice that varies by contract type and who is initiating it, commonly 45 days for indefinite contracts and 30 days for fixed-term contracts between 12 and 36 months. Severance pay, where applicable, follows a defined formula: at least two months' salary plus one additional month for each further year of service, based on the average monthly salary over the preceding six months. Mandatory insurance contributions are split between employer and employee across three schemes — social insurance (17.5% employer / 8% employee), health insurance (3% employer / 1.5% employee), and unemployment insurance (1% employer / 1% employee) — each capped at 20 times the relevant statutory minimum wage, with an additional trade union contribution of 2% (employer) and 0.5% (employee) where applicable.
Probation periods and pay
Vietnamese labour law scales the permitted probation period to the complexity of the role rather than applying a single uniform limit: up to 180 days for executive and managerial positions, up to 60 days for roles requiring a university degree or specialised technical qualification, up to 30 days for secondary vocational or technician-level roles, and up to 6 working days for other, lower-complexity roles. During probation, an employee must be paid at least 85% of the salary agreed for the substantive role — a floor employers should build into offer calculations from the outset rather than treating probation as a materially discounted period.
Termination notice and severance
Statutory notice periods depend on both the contract type and which party is initiating termination. For indefinite-term contracts, the general standard is 45 days' notice; for fixed-term contracts running 12 to 36 months, 30 days is the general standard; shorter contracts under 12 months carry a shorter notice requirement. Where severance is due, the formula is defined rather than discretionary: at least two months' salary plus one additional month's salary for each further year of service, calculated against the average monthly salary over the preceding six months. Getting a termination process wrong procedurally — insufficient notice, an incorrectly calculated severance figure, or missing documentation — is one of the more common and costly compliance failures among foreign-owned employers in Vietnam, and is considerably cheaper to get right the first time than to remediate after the fact.
Mandatory insurance contributions
Three mandatory insurance schemes apply to employment relationships in Vietnam, each split between employer and employee and each capped at 20 times the relevant statutory minimum wage: social insurance at 17.5% (employer) and 8% (employee); health insurance at 3% (employer) and 1.5% (employee); and unemployment insurance at 1% (employer) and 1% (employee). Where a trade union is present, an additional contribution of 2% (employer) and 0.5% (employee) applies. Collectively, employer-side statutory contributions add a material percentage to base salary cost — commonly budgeted at roughly 21.5% of gross salary before the trade union component — and should be modelled explicitly into total employment cost from the outset rather than treated as a rounding item on top of headline salary.
What is the maximum probation period allowed in Vietnam?
Up to 180 days for executive and managerial positions — the longest of the four tiers, which also include 60 days for degree/technical roles, 30 days for vocational/technician roles, and 6 working days for other roles.
How much notice does an employer need to give to terminate an employee in Vietnam?
Generally 45 days for indefinite-term contracts and 30 days for fixed-term contracts of 12 to 36 months, though the precise requirement depends on the specific circumstances of the termination and contract type.
How is severance pay calculated in Vietnam?
At least two months' salary plus one additional month for each further year of service, based on the average monthly salary over the preceding six months — a defined statutory formula, not a discretionary figure.
What percentage of salary does an employer pay in mandatory insurance contributions?
Employer-side contributions across social, health, and unemployment insurance total approximately 21.5% of gross salary (17.5% + 3% + 1%), before any applicable trade union contribution, each capped at 20 times the relevant statutory minimum wage.
Do foreign employees working in Vietnam also pay into the Vietnamese social insurance system?
In many cases yes, subject to specific rules and any applicable bilateral social security agreements — this should be confirmed for each foreign employee's specific nationality and circumstances rather than assumed.
How does JMT Private & Partners assist with labour law compliance?
JMT advises on employment contract structuring, probation and termination compliance, and mandatory insurance registration for foreign-owned employers, as part of its Business Related Advisory and ongoing maintenance service lines.
