For Foreign Investors, New Market Entrants, and HR/Legal Teams

The Vietnam Labor Law 2026 introduces major reforms aimed at modernizing the labor market, supporting foreign investment, and increasing workforce protection. These updates focus on digitalization, safety, flexibility, and transparency—making it easier for international businesses to operate responsibly and efficiently.

Key Updates at a Glance

• Digital Contracts Legalized: Electronic signatures and digital HR documentation now fully accepted.
• Higher Overtime Limits: More flexibility for manufacturing and export industries, along with higher overtime pay rates.
• Minimum Wage Reform: Annual inflation-linked wage adjustments and region-based salary brackets clarified.
• Foreign Worker Rules Simplified: Faster work permit processing, new exemptions for specialists, and clearer renewal rules.
• Workplace Safety Reinforced: Mandatory audits, stricter penalties, and expanded EHS compliance.
• Remote Work Recognized: Digital attendance, hybrid work policies, and employer responsibility guidelines included.
• Expanded Social Insurance: New coverage categories plus employer contribution adjustments.
• Simplified Compliance for SMEs & Startups: Faster registrations and reduced reporting obligations.

Overall, these changes aim to support Vietnam’s booming FDI environment by improving legal clarity, enhancing workforce competitiveness, and reducing compliance friction for foreign companies.

I. Pre-Entry HR Due Diligence Checklist

Before incorporating or hiring your first employee, complete the following:

Legal Structure & Registration

• Select business structure (LLC, JSC, FIE, Representative Office)
• Register with Department of Planning & Investment (DPI)
• Obtain Investment Registration Certificate (IRC)
• Obtain Enterprise Registration Certificate (ERC)
• Declare business lines aligned with labor usage (e.g., manufacturing, tech)

HR & Labor Requirements

• Understand Vietnam Labor Code 2026
• Identify roles requiring Vietnamese labor vs. foreign specialists
• Verify foreign labor quotas (if applicable)
• Build projected hiring plan for first 12–24 months

Internal HR Capacity

• Decide between in-house HR, professional employer organization (PEO), or outsourced payroll
• Assign local HR/legal representative
• Evaluate multilingual support needs (Vietnamese–English)

II. Workforce Planning Guide (Foreign & Local)

Local Employees

Vietnam encourages hiring local employees first.

Plan for:

• Competitive salary benchmarks
• Region-based minimum wages
• Mandatory insurance contributions
• Training & onboarding programs
• Probation periods (up to 180 days for high-skill roles in 2026)

Foreign Employees

2026 updates simplify foreign hires, but compliance is strict.

Foreign Hiring Requirements

• Role must require specialized skills
• Labor demand report filed 30 days before hiring
• Work permit application submitted no later than 15 days before employment
• Skills-transfer plan required (documented)

Foreign Worker Documents

• University degree or equivalent
• 3–5 years relevant experience
• Criminal record certificate
• Passport copy
• Health check (Vietnam hospital or approved overseas clinics)

III. HR Policy Setup Toolkit

Your new Vietnam entity must build or update the following:

Mandatory Internal Policies (Required by Law)

• Internal Labor Regulations (ILR)
• Salary & Bonus Policy
• Working Time & Overtime Rules
• Occupational Safety & Health Regulation
• Anti-harassment & Anti-discrimination policy
• Complaint Handling Procedure
• Disciplinary Policy

Recommended Additional Policies

• Remote & Hybrid Work Policy (newly recognized 2026)
• Travel & Expense Reimbursement
• Data Privacy & Confidentiality
• IT Security Guidelines
• Employee Handbook (English + Vietnamese)

IV. Employment Contract Templates (2026 Standards)

You must prepare compliant employment contracts using updated clauses.

Mandatory Clauses

• Employee role, duties, work location
• Salary structure (base salary + allowances)
• Working hours, rest breaks, overtime
• Social insurance contributions
• Termination rules under the 2026 framework
• Personal data use & consent
• Occupational safety duties

Optional Clauses

• Remote work arrangements
• Non-competition / non-solicitation
• Training or relocation agreements
• Equipment allowance terms

Contract Types Allowed in 2026

• Indefinite-term contract
• Fixed-term contract (up to 36 months)
• Freelance/Service contract (strictly limited)
• Digital contract (new 2026 legalization)

V. Payroll Compliance Framework

Payroll Components

• Base salary (must meet regional minimum wage)
• Mandatory allowances (if applicable)
• Optional allowances (housing, meals, phone)
• Bonuses (13th-month or performance-based)

Mandatory Withholding

• Social Insurance (SI)
• Health Insurance (HI)
• Unemployment Insurance (UI)
• Personal Income Tax (PIT)

Employer Contribution Rates (approx.)

• SI: 17.5%
• HI: 3%
• UI: 1%

(May vary depending on industry—update annually.)

VI. Work Permit & Visa Compliance Pack (Foreigners)

Types of Permits

• Work Permit (WP)
• Work Permit Exemption (WPE)
• Temporary Residence Card (TRC)

2026 Fast-Track Categories

• AI, digital economy, fintech specialists
• R&D managers
• Manufacturing process engineers
• Green energy/renewables professionals

Process Flow

1. Demand approval
2. Prepare foreign worker documents
3. Submit WP/WPE application
4. Receive permit
5. Apply for TRC (optional)

VII. Mandatory Registration & Reporting Calendar

VIII. Workplace Safety & EHS Setup (Stricter 2026 Rules)

Required for All Foreign Employers

• Annual safety training
• Safety officer designation
• Workplace hazard assessment
• Fire safety equipment & compliance
• Incident reporting system

High-Risk Industries (Manufacturing, Logistics)

• Additional PPE requirements
• Shift rotation rules
• Maximum overtime limits
• Machinery inspection logs

IX. Onboarding Process Flowchart (Ready to Use)

Step 1: Collect employee documents
Step 2: Prepare digital contract
Step 3: Register insurance
Step 4: Assign equipment / workstation
Step 5: Job-specific training
Step 6: Compliance briefing
Step 7: Manager introduction
Step 8: 30-day probation review

X. Termination & Offboarding Compliance (2026 Rules)

Vietnam requires strict adherence during termination.

Permitted Termination Reasons

• Performance failure (with evidence)
• Restructuring
• Misconduct (with proper disciplinary process)
• Mutual agreement

Mandatory Steps

• Notice period compliance
• Documentation of meetings
• Final payroll and insurance closing
• Return of company assets
• Termination report to authorities (in specific cases)

XI. Risk Prevention Checklist (2026 Hot Spots)

Avoid the most common legal violations:

• Incorrect overtime payment
• Hiring foreign workers without proper permits
• Misclassifying labor as contractors
• Failing safety audit
• Using outdated contracts (pre-2026)
• Not translating HR documents into Vietnamese
• Incorrect minimum wage region classification

The Vietnam Labor Law 2026 Updates for Foreign Investors represent a major step forward for businesses looking to expand or operate within Vietnam. The new regulations promote transparency, improve worker protections, and create more flexible pathways for foreign companies to manage their workforce effectively. By learning these updates and adapting HR policies early, foreign investors can reduce legal risks, enhance productivity, and maintain long-term success in Vietnam’s rapidly growing economy.