Vietnam November 8, 2026

Hiring in Vietnam 2026 for US and Foreign Employers: Why You Cannot Fire At Will, the 2% Union Levy, 32% Social Insurance and Wildcat Strikes

Po-Chang Yu (Raymond Yu) Chief Lawyer / Founder and CEO of Louis Group

Hiring in Vietnam 2026 for US and Foreign Employers

Key takeaways

Vietnam has no at-will employment. An employer may terminate unilaterally only on the seven grounds in Article 36 of the Labor Code, with 45 days' notice on an indefinite contract, and a wrongful termination means reinstatement plus at least two months' salary.
Disciplinary dismissal for theft, serious misconduct or absence is a separate track under Article 125 with its own hearing procedure. Using the wrong track is the most common way foreign employers lose.
The 2026 regional minimum wage rose about 7.2 per cent under Decree 293/2025. Region I, which covers Hanoi and Ho Chi Minh City, is VND 5,310,000 a month.
Overtime is paid at 150, 200 and 300 per cent and capped at 40 hours a month and 200 hours a year, 300 in listed industries. Night work adds 30 per cent.
Statutory contributions come to roughly 32 per cent of salary for Vietnamese staff, about 21.5 per cent paid by the employer, plus a 2 per cent trade union levy that applies whether or not a union exists at the company.
Foreign employees on contracts of 12 months or more join social and health insurance since the 2024 Social Insurance Law took effect on 1 July 2025, unless they are intra-company transferees.
Almost every strike in Vietnam is a wildcat strike. The Vietnam General Confederation of Labor recorded 55 collective work stoppages in 2025, none of them lawful, and most were settled by negotiation on site.
A work permit under Decree 219/2025 is issued in 10 working days through a single filing, for up to two years, and visitors working fewer than 90 days in a calendar year are exempt.

For a US company, the surprise in Vietnam is rarely the cost of labor. It is how much the law constrains what you can do once people are on the payroll. Setting up the entity, the investment licence and the factory is covered in our guide The Complete Guide to Establishing Your Business in Vietnam for Taiwanese Companies 2026 , which applies to any foreign investor. This article is about the part that comes after: hiring, paying, disciplining, letting people go, and what happens when a production line stops without warning.

1. The four differences a US employer meets first

Issue	United States (typical)	Vietnam
Ending employment	At-will in most states, no reason required	Only the seven grounds in Article 36, or disciplinary dismissal under Article 125, each with notice or a hearing
Statutory severance	None	Half a month's salary per year of service, reduced by years covered by unemployment insurance
Overtime premium	1.5 times after 40 hours a week	150 per cent on weekdays, 200 per cent on weekly rest days, 300 per cent on public holidays, 30 per cent extra at night
Union money	Dues paid by members who join	Employer pays a 2 per cent levy on the social insurance salary fund, union or no union, and members pay their own dues on top

The legal core is the Labor Code 2019, Law No. 45/2019/QH14, in force since 2021. Around it, four instruments changed in 2025 and 2026: Decree 293/2025 on minimum wages from 1 January 2026, the Social Insurance Law 2024 from 1 July 2025, the Trade Union Law 2024 from the same date, and Decree 219/2025 on work permits from 7 August 2025. The Employment Law 2025 followed on 1 January 2026. In 2025 the Ministry of Labour was also folded into the Ministry of Home Affairs, so older forms and letterheads name an agency that no longer exists.

2. Minimum wage and working hours in 2026

Region, from 1 January 2026	Monthly minimum	Typical areas
Region I	VND 5,310,000	Hanoi, Ho Chi Minh City, Hai Phong, Da Nang and surrounding districts
Region II	VND 4,730,000	Provincial capitals and major industrial cities
Region III	VND 4,140,000	Other districts and towns
Region IV	VND 3,700,000	Remaining areas

Hourly minimums are set alongside the monthly figures. An industrial park that straddles two regions pays the higher one. The government has signalled a further rise for 2027, but the figure is not law until the decree is published, so budget for it without writing it into contracts.

The standard working week is 48 hours. Under Article 107 of the Labor Code, overtime needs the employee's consent and may not exceed 50 per cent of normal daily hours, 40 hours a month and 200 hours a year. Textiles, garments, footwear, electronics, agricultural and seafood processing and a few other listed sectors may go to 300 hours a year. Article 98 sets the premiums: at least 150 per cent on normal days, 200 per cent on weekly days off, 300 per cent on public holidays and paid leave, plus 30 per cent for night work and a further 20 per cent for overtime at night. Overtime hours and premiums are the first thing a labor inspector checks at a foreign factory and the most frequent trigger for a strike.

3. Two tracks for ending employment, and why mixing them costs you

Contracts are either indefinite or fixed term, and a fixed term runs at most 36 months. Under Article 20, after two consecutive fixed-term contracts the third must be indefinite. Many foreign plants roll one-year contracts for years and discover at termination that the employee has been on an indefinite contract in law all along.

Point	Unilateral termination, Article 36	Disciplinary dismissal, Article 125
When it applies	Repeated failure to meet written performance criteria, long illness, natural disaster or restructuring ordered by an authority, absence after the suspension period, retirement age, unexplained absence for five consecutive working days, or false information at hiring	Theft, embezzlement, gambling, violence or drugs at work; disclosure of secrets or serious damage to the employer; sexual harassment; repeat of a violation already disciplined; unexplained absence totalling five days in 30 days or twenty days in a year
What you must show	The ground on the list, performance criteria adopted after consulting the employee representative body, and the notice period: 45 days on an indefinite contract, 30 days on a 12 to 36 month contract, 3 working days on a shorter one	A disciplinary meeting with the employee and the union representative invited, written minutes, and action within the limitation period
Typical mistake	Using it for misconduct	Using it for poor performance
If you get it wrong	Reinstatement, back pay with social, health and unemployment insurance for the period out of work, plus at least two months' salary under Article 41	The same

The two tracks cannot be combined. A dismissal for misconduct handled as a performance termination, or a performance problem handled as discipline, is treated as wrongful even if the underlying facts were true. A mutual termination agreement under Article 34 is valid, but one signed under pressure with a low payment can be set aside, which puts the employer back at reinstatement. Where the misconduct is theft or embezzlement, the disciplinary clock and the criminal complaint run on separate deadlines; see Fraud and Employee Embezzlement in Vietnam 2026 for the evidence to preserve before the meeting.

4. Severance and redundancy pay

Point	Severance allowance, Article 46	Redundancy allowance, Article 47
Trigger	Contract ends by expiry, agreement, lawful unilateral termination and the other cases listed	Position eliminated by restructuring, technology change, merger or economic reasons
Amount	Half a month's salary per year of service	One month's salary per year of service, with a floor of two months
Deduction	Years in which the employee was covered by unemployment insurance, and years already paid out	The same
Salary base	Average contract salary of the last six months	The same
Eligibility	At least 12 months of regular work	At least 12 months of regular work

Because unemployment insurance has covered most employees since 2009, the employer's own severance bill is often smaller than foreign managers fear. The expensive case is redundancy, which carries a one-month-per-year rate, a two-month floor and a consultation procedure with the employee representative body before anyone is let go.

5. Social insurance after the 2024 law

The Social Insurance Law 2024, Law No. 41/2024/QH15, and Decree 158/2025 took effect on 1 July 2025. For an employer the changes are these.

Coverage now reaches contracts of one month or more, arrangements that are employment in substance whatever they are called, and Vietnamese managers and capital representatives even when unpaid.
The contribution base is salary plus allowances and regular fixed payments. The old practice of a low base salary topped up with allowances no longer keeps contributions down.
Foreign employees on contracts of 12 months or more join compulsory social insurance and health insurance. Intra-company transferees and employees already at retirement age when they sign are outside it. The United States has no social security agreement with Vietnam, so an American hired locally on a Vietnamese contract contributes.
Foreign employees do not join unemployment insurance. The Employment Law 2025 keeps that scheme for Vietnamese employees, with the employer paying up to 1 per cent and the employee 1 per cent.
Employees who first join after 1 July 2025 can no longer withdraw their social insurance as a lump sum on leaving, with narrow exceptions, which changes how often people resign to cash out.

Taken together, statutory contributions for a Vietnamese employee are about 21.5 per cent for the employer and 10.5 per cent for the employee, across social, health and unemployment insurance. For a foreign employee the figures are about 20.5 and 9.5 per cent because unemployment insurance does not apply. Contributions are capped at 20 times the reference level, and the cap moves when the government adjusts it. Treat the whole amount as a fixed cost of headcount.

6. Unions and the 2 per cent levy

The Trade Union Law 2024, Law No. 50/2024/QH15, replaced the 2012 law on 1 July 2025.

Every employer pays a union levy of 2 per cent of the salary fund used for social insurance under Article 29. It is due whether or not a grassroots union has been formed at the company.
Members pay their own dues at the rate set by the federation, which has been cut for some groups since mid-2025. Foreign employees on contracts of 12 months or more may now join a grassroots union, though not hold office.
An employer in financial difficulty or hit by force majeure can apply to reduce or defer the levy under Article 30.
Part-time union officials have extra protection against dismissal and transfer, and retaliation for union activity is prohibited.
Enterprise-level worker organisations outside the official federation, promised under the CPTPP and the EU trade agreement, may affiliate to the federation, so the shape of workplace representation is still changing.

7. Why almost every strike is a wildcat strike

The Labor Code allows strikes, but only after a collective interest dispute has gone through mediation and, where required, arbitration, and only when called by the employee representative organisation after a ballot of the workforce under Articles 199 to 202. In practice nobody completes that sequence. The US State Department's 2026 Investment Climate Statement, citing the Vietnam General Confederation of Labor, counts 55 collective work stoppages in 2025, 21 fewer than in 2024, and notes that there were no legal strikes; the stoppages that did occur were organised by ad hoc groups and resolved by negotiation with management.

What that means on the ground: workers who feel short-changed on a bonus, an overtime calculation, a wage adjustment or canteen food stop work, usually peacefully, and often one plant sets off its neighbours. Strikes are prohibited in workplaces on a government list under Article 209, and a provincial chairman can suspend a strike that threatens the economy or public order under Article 210, but neither helps a factory on an ordinary Tuesday. Local authorities, whose priority is stability, tend to lean toward the workers when they arrive. Prevention is cheaper than concession: a functioning dialogue mechanism, a quick answer on pay disputes, and never importing the command-and-control style that works elsewhere in Asia.

8. Work permits for American and other foreign staff

Decree 219/2025/ND-CP has governed work permits since 7 August 2025, replacing Decrees 152/2020 and 70/2023.

The labor-demand explanation and the work permit application are now one filing, lodged 10 to 60 days before the start date, and the permit is issued within 10 working days of a complete dossier.
Permits run for the term of the assignment up to two years and are issued by the provincial People's Committee where the employer's head office is located, which also covers staff working in several provinces.
Four categories remain: manager, executive director, expert and technical worker. An expert needs a bachelor's degree and two years of relevant experience, one year in priority sectors such as technology and digital transformation. A technician needs three years' experience, or one year of training plus two years' experience.
A foreigner working in Vietnam for fewer than 90 days in a calendar year is exempt, with no limit on the number of entries. Exemption certificates can now be renewed once for up to two years.
A visa-free or e-visa entry does not allow work. The sequence is work permit, then the LD work visa, then the temporary residence card.

An American on a local contract of 12 months or more also enters the social insurance system described in section 5, and becomes a Vietnamese tax resident after 183 days, which should be planned before the assignment letter is signed.

9. Compliance checklist for a foreign employer

Register the employment contract templates and the internal labor regulations; without registered regulations you cannot discipline anyone.
Rebuild the salary structure so the social insurance base matches what people are actually paid.
Adopt written performance criteria, after consulting the employee representative body, before you ever need Article 36.
Write a disciplinary procedure with meeting notice, union invitation and minutes, and train line managers to use it.
Set up a dialogue channel with workers and a fixed process for answering pay and overtime complaints within days, not weeks.
Budget the 2 per cent union levy and the full contribution rates as fixed cost.
Check that HR systems and cross-border transfers of employee data comply with the Personal Data Protection Law 2025 and its decrees.

Frequently asked questions (FAQ)

Can we use our US at-will offer letter and employee handbook in Vietnam?

No. An at-will clause is void. Contracts must be in Vietnamese, or bilingual with the Vietnamese text prevailing, follow the Labor Code's mandatory content, and the handbook must be registered as internal labor regulations before any disciplinary action is possible.

Can we run an unpaid trial period?

No. Probation is capped at 180 days for enterprise executives, 60 days for jobs requiring a junior college degree or higher, 30 days for technical and skilled jobs and six working days for the rest, and probation pay must be at least 85 per cent of the wage for the job.

How long does a work permit take?

Ten working days from a complete filing under Decree 219, submitted 10 to 60 days before the start date. Allow about three weeks end to end, then the LD visa and residence card.

Can a foreign employee get social insurance contributions back on leaving?

Employees who first joined before 1 July 2025 keep the old lump-sum option. Those who joined after that date generally cannot withdraw, except in narrow cases such as emigration or a serious loss of working capacity. Check the rule in force at the time of departure.

Can we dismiss the workers who led a wildcat strike?

Not safely. Participation in a strike, even an unlawful one, is not on the Article 125 list, and a dismissal timed to a stoppage is read as retaliation. The lawful responses are to request the authorities to declare the strike unlawful, to negotiate, and to document any separate misconduct such as damage to property.

Will the minimum wage rise again in 2027?

A further increase has been proposed, but it takes effect only when the government issues the decree. Build an assumption into the budget and leave contracts referring to the statutory regional minimum rather than a number.

How Louis Group can help

Louis Group has offices in Hanoi and Ho Chi Minh City and works with foreign employers on contract and labor regulation registration, terminations and labor disputes, social insurance and union compliance, strike prevention and negotiation, and work permits for expatriate staff. If you are setting up or restructuring a workforce in Vietnam, contact our Hanoi or Ho Chi Minh City office.

Sources

Labor Code 2019, Law No. 45/2019/QH14, English translation published by the ASEAN Secretariat: Labor Code No. 45 Year 2019 (PDF)
Vietnam Briefing, 2025 and 2026: Vietnam's Regional Minimum Wage Effective from January 1, 2026 and Vietnam Work Permit Regulations: New Rules from August 2025
Vietnam Law Magazine: Trade Union Law: notable provisions on structure and members' rights
U.S. Department of State: 2026 Investment Climate Statements: Vietnam