Vietnam has become one of the most sought-after expansion destinations in Asia: a manufacturing base for global electronics and apparel brands, a fast-maturing software and services hub, and a domestic market of more than 100 million people with a young, urbanising workforce. Foreign direct investment keeps arriving, and with it a steady flow of companies asking the same question: how do we actually hire and pay people here, compliantly, without losing a year to paperwork?
This guide covers the workforce side of a Vietnam expansion, the part that decides whether your first hires are productive in weeks or stuck waiting on licences for months.
Why Vietnam? The Business Case
Vietnam’s appeal is not only cost. It is the combination of cost, scale and momentum:
- A deep manufacturing and engineering base. The corridors around Ho Chi Minh City (which absorbed Binh Duong and Ba Ria-Vung Tau in the 2025 provincial merger), Hanoi, Bac Ninh and Hai Phong in the north, and Da Nang in the centre host suppliers for the world’s largest electronics, footwear and furniture brands.
- A rising technology sector. Vietnamese software teams now serve clients across Japan, Korea, Singapore and the US, and IT staff augmentation from Vietnam is a mainstream model for regional companies.
- A young workforce. The median age is in the early thirties, English proficiency among graduates is improving quickly, and salaries for skilled roles remain well below Singapore, Kuala Lumpur or Bangkok.
- Trade access. Membership of the CPTPP, the EU-Vietnam FTA and RCEP makes Vietnam a natural export platform, not just a domestic play.
The Biggest Challenges of Expanding Into Vietnam
Most companies underestimate how procedural Vietnam is. The rules are clear, but they are enforced literally, and the sequencing matters. The issues we see most often:
- Entity setup takes longer than the brochure says. A foreign-invested company needs an Investment Registration Certificate and then an Enterprise Registration Certificate, followed by tax registration, a company seal, a bank account and, for regulated activities, sub-licences. Realistic planning is two to four months before you can legally sign an employment contract.
- Statutory contributions are significant and specific. In 2026 employers contribute 17.5% social insurance, 3% health insurance and 1% unemployment insurance, plus a 2% trade union fee. That is 23.5% on top of salary, capped at 20 times the statutory base salary (VND 46.8 million a month). Employees contribute 10.5%. Foreign employees on work permits are exempt from unemployment insurance, so their rates are 22.5% and 9.5% respectively.
- Minimum wages are regional, and they moved on 1 January 2026. Decree 293/2025/ND-CP set Region I (Hanoi, HCMC, Hai Phong, Da Nang) at VND 5.31 million a month, Region II at VND 4.73 million, Region III at VND 4.14 million and Region IV at VND 3.70 million, an average increase of 7.2%. Trained workers must be paid above the regional floor.
- Personal income tax is changing mid-year. The personal deduction rose to VND 15.5 million a month from January 2026, and a simplified five-bracket PIT schedule (5% to 35%) takes effect on 1 July 2026. Payroll systems built on 2025 assumptions will be wrong.
- Contracts and probation are tightly defined. The Labour Code 2019 caps probation at 60 days for most professional roles (180 days for enterprise managers) at no less than 85% of the agreed salary, and limits fixed-term contracts to two consecutive terms before the role becomes indefinite.
- Finding talent in a hot market. HCMC and Hanoi are competitive for bilingual, mid-to-senior professionals. Good candidates are employed, expect fast processes, and are sensitive to employer reputation, which a newly arrived company does not yet have.
Employer of Record: Hiring in Vietnam Before You Have an Entity
An Employer of Record (EOR) legally employs your Vietnam team on your behalf. You manage the work; the EOR holds the labour contracts, runs payroll, remits social, health and unemployment insurance, files PIT, and keeps the contracts compliant with the Labour Code.
Vietnam has one important wrinkle here: supplying labour to another company is a licensed activity. Only a provider holding a labour outsourcing (labour leasing) licence issued under the Labour Code may legally place staff with a client. Many “EOR” offers in Vietnam are unlicensed, which puts your employees, and your ability to enforce the arrangement, at risk. Always ask to see the licence.
For companies testing the market, hiring a country manager ahead of incorporation, or building a small team quickly, EOR gets you operational in days rather than months. People Profilers Vietnam is a licensed provider. See our EOR services in Vietnam.
Payroll Outsourcing: Staying Compliant Without a Local Finance Team
Even once your Vietnamese entity is live, monthly payroll is more demanding than in Singapore or Malaysia:
- Insurance contributions are declared and paid monthly, with separate reporting when headcount or salaries change
- PIT is withheld monthly and finalised annually, with new brackets arriving on 1 July 2026
- Overtime is capped (40 hours a month, 200 hours a year in most sectors, 300 by exception) and paid at 150% to 300% depending on when it is worked
- Thirteenth-month salary is customary and typically contractual, so it must be accrued
- Annual leave is 12 working days after a year of service, with statutory public holidays including Tet, when most of the country stops for a week
Outsourced payroll in Vietnam removes the compliance risk and the need to hire a dedicated in-house payroll specialist for a team of ten.
Work Permits: Bringing in Foreign Talent Under Decree 219/2025
If your expansion team includes expatriates, plan the work permit early. Decree 219/2025/ND-CP, effective from August 2025, simplified some steps but did not shorten the overall path:
- The employer must first obtain approval of its foreign labour demand, then apply for the work permit, then the LD visa and temporary residence card
- “Expert” applicants generally need a bachelor’s degree plus three years’ relevant experience (or five years’ experience plus a practising certificate); technical workers need one year of training plus three years’ experience
- Permits are issued for up to two years and can be extended once
- A useful new rule: short-term assignments of up to 90 cumulative days per calendar year are exempt from a work permit, replacing the old three-trips limit
- Realistic end-to-end timing, including document legalisation and consular steps abroad, is three to four months
Our work permit services in Vietnam handle the demand approval, permit, visa and residence card as one process.
Recruitment: Hiring the Right People in HCMC and Hanoi
Recruiting in Vietnam is relationship-driven. Salary matters, but so does the perception of stability, a clear title, and a hiring process that respects the candidate’s time. A few realities for newcomers:
- Job boards produce volume, not senior talent. Mid-to-senior and bilingual professionals are mostly passive and reached through networks and headhunters
- Notice periods are 30 days for fixed-term and 45 days for indefinite contracts, so plan start dates accordingly
- Compensation benchmarks differ sharply between HCMC, Hanoi and the provinces, and between foreign-invested and domestic companies
- Tet is a natural inflection point. Many candidates wait for their Tet bonus before moving, so Q1 is peak hiring season
A local partner with an existing candidate network shortens time-to-hire considerably. See our recruitment services in Vietnam and executive search in Vietnam.
A Quick Checklist Before You Hire in Vietnam
- Decide entity vs EOR for the first 6 to 12 months. You can switch later and transfer the team
- Budget 23.5% employer contributions plus 13th-month salary on top of gross pay
- Map roles to Region I to IV minimum wages under Decree 293 and check trained-worker uplifts
- Rebuild PIT assumptions for the 1 July 2026 five-bracket schedule
- If hiring expatriates, start the Decree 219 work permit process three to four months ahead
- Draft contracts and probation terms to the Labour Code 2019, in Vietnamese as well as English
- Choose a recruitment partner with a live network in HCMC and Hanoi
Ready to Expand Into Vietnam?
People Profilers has supported companies entering Southeast Asia for more than 20 years, and our Vietnam team in Ho Chi Minh City works alongside our offices in Singapore, Malaysia, Thailand and Indonesia. Whether you need a licensed EOR, outsourced payroll, work permits or recruitment, we can take you from decision to first hire without the delays.
