Vietnam Labor Law: Contracts, Hours & Annual Leave

For companies operating a legal entity in Vietnam or working with local employees, understanding Vietnamese labor law is essential. Vietnam's labor laws regulate a wide range of HR matters in detail, including employment contracts, working hours, leave, and severance pay, making an accurate understanding of these requirements particularly important for companies preparing to establish local operations or hire employees in Vietnam.

In this article, we cover the key provisions of Vietnamese labor law that HR teams need to know, including requirements for entering into employment contracts, working and rest hours, overtime and night work, and annual leave.

The Vietnam Labor Code is the primary legislation governing employment conditions and labor relations. It defines the rights and obligations of employees and employers and establishes standards covering the full range of HR operations, from entering into employment contracts to working hours, rest periods and holidays, annual leave, wages, and severance pay. It also sets out principles that employee representative organizations, employer organizations, and relevant workplace bodies must follow, as well as the state's role in labor administration, making it a key framework for business operations.

Vietnamese labor law treats employment contracts as the foundation of all employment relationships and clearly defines how they must be entered into and documented. As a general rule, an employment contract must be concluded in writing, with two copies prepared so that the employee and employer each retain one copy. As electronic signatures and digital documents have become more widely used, electronic employment contracts are also recognized as having the same legal validity as written contracts if they comply with Vietnam's law on electronic transactions.

When entering into an employment contract, employers must clearly specify not only basic terms such as the type of work and job duties, working hours, wages, workplace, and working conditions, but also required provisions such as the probationary period, part-time work status, rest periods, and holidays.

In particular, Vietnamese law allows the parties to agree on a probationary period based on the complexity and nature of the work, but in principle, only one probationary period is permitted for each job. Clear limits also apply by type of work, with maximum probationary periods of 180 days, 60 days, 30 days, or 6 days. In addition, probationary pay must be at least 85% of the wage for the relevant position, making it important to reflect these requirements clearly from the contract stage.

If an employment contract needs to be amended or supplemented, either party must notify the other party at least 3 working days in advance. If both parties agree, the changes may be made through an appendix to the existing contract or by entering into a new contract. If no agreement is reached, the existing employment contract remains unchanged, so the legally required procedure must also be followed during contract amendment discussions.

💡 Relevant Provisions
- Article 26 of the Labor Code — Probationary Salary: The employee's salary during the probationary period shall be agreed upon by both parties but must be at least 85% of the salary for the relevant job.
- Article 33 of the Labor Code — Amendments and Supplements to Employment Contracts: During the performance of an employment contract, a party requesting an amendment or supplement must notify the other party of the proposed changes at least 3 working days in advance.

Vietnamese labor law clearly establishes basic standards for working hours and rest periods, and all workplaces should develop their workforce plans based on these requirements. As a general rule, normal working hours may not exceed 8 hours per day and 48 hours per week.

Rules on rest periods are also in place to prevent excessively long periods of continuous work. Employees who work at least 6 hours per day must be provided with a continuous rest period of at least 30 minutes. For night work between 10:00 p.m. and 6:00 a.m. the following day, employees must receive at least 45 minutes of rest. In particular, for shift workers who work continuously for at least 6 hours, rest periods are counted as working time.

Employees must also be provided with at least 24 consecutive hours of weekly rest. If the nature of the work makes it difficult to provide a weekly day off in a particular week, employers must ensure an average of at least 4 days of rest per month. The weekly rest day is generally Sunday, but employers may designate another day depending on workplace circumstances and must specify this in their internal labor regulations.

💡 Relevant Provisions
- Article 105 of the Labor Code — Normal Working Hours: Normal working hours may not exceed 8 hours per day and 48 hours per week. Employers may determine working hours on a daily or weekly basis but must notify employees accordingly. If working hours are determined on a weekly basis, normal working hours may not exceed 10 hours per day and 48 hours per week.
- Article 109 of the Labor Code — Rest Breaks During Working Hours: Employees who work at least 6 hours per day under the working hours specified in Article 105 of this Code are entitled to a continuous rest break of at least 30 minutes during working hours, or at least 45 minutes if working at night. For shift workers who work continuously for at least 6 hours, the rest break during working hours is counted as working time.
- Article 111 of the Labor Code — Weekly Rest: Employees are entitled to at least 24 consecutive hours of rest each week. In special cases where the work cycle makes weekly rest impossible, employers must ensure that employees receive an average of at least 4 days of rest per month. Employers may designate Sunday or another day of the week as the weekly rest day but must specify it in their internal labor regulations.

Vietnamese labor law clearly establishes pay requirements for overtime and night work, including statutory premium rates designed to protect employee health and ensure fair compensation. Under the law, employees must be paid at least 150% on regular working days, 200% on weekly rest days, and 300% on public holidays and paid leave days.

Night work is also defined by specific hours. Under Vietnamese labor law, night work is work performed from 10:00 p.m. to 6:00 a.m. the following day, and employees working during these hours are entitled to additional compensation. However, there are also provisions allowing overtime limits to be waived in special circumstances. Employees may not refuse overtime when required to perform national defense or security duties in response to national needs, or when work is necessary to protect life or property during emergencies such as natural disasters, fires, or dangerous epidemics.

💡 Relevant Provisions
- Article 98 of the Labor Code — Overtime and Night Work Pay: Employees working overtime are paid based on the actual salary or wage rate for the work performed as follows: a) at least 150% on regular working days, b) at least 200% on weekly rest days, and c) at least 300% on public holidays, Tet holidays, and paid leave days, excluding the holiday or paid leave wages of employees paid on a daily basis.
- Article 106 of the Labor Code — Night Working Hours: Night working hours are from 10:00 p.m. to 6:00 a.m. the following day.
- Article 108 of the Labor Code — Overtime in Special Circumstances: In the following cases, employers have the right to require employees to work overtime at any time without being subject to the overtime limits specified in Article 107 of this Code, and employees may not refuse: when implementing mobilization orders to ensure national defense or security duties as prescribed by law, and when performing work to protect human life or the property of agencies, organizations, or individuals in preventing or addressing the consequences of natural disasters, fires, dangerous epidemics, and catastrophes, except where there is a risk to employees' life or health as prescribed by laws on occupational safety and health.

Vietnamese labor law clearly sets out annual leave entitlements based on an employee's length of service and the nature of their job. As a general rule, employees who have worked for the same employer for at least 12 months are entitled to paid annual leave, and most employees working under normal conditions are entitled to 12 days of paid leave per year.

An important point in annual leave administration arises when an employee resigns or their employment ends while they still have unused annual leave. Vietnamese labor law provides that employees in these circumstances are entitled to payment for the number of unused annual leave days. In other words, unused annual leave is not simply forfeited but is settled financially, so companies should accurately track annual leave accrual and usage.

💡 Relevant Provisions
- Article 113 of the Labor Code — Annual Leave: An employee who has worked for one employer for 12 months is entitled to paid annual leave under their employment contract as follows: a) 12 working days for employees working under normal conditions. If an employee resigns or loses their job without having taken annual leave or without having used all of their annual leave, they are entitled to payment for the unused days.

Vietnamese labor law clearly regulates most areas of HR operations, including employment contracts, working hours, overtime, and annual leave, making it an important framework for companies hiring and managing employees locally. Companies should understand these legal requirements accurately and reflect them in the design of their HR policies.