Article by Sebastian Schlitter - Partner, JP contagi Asia
What You Should Know When Hiring Employees in Vietnam
Once upon a time in Vietnam, hiring was simple. A vast, affordable, and eager talent pool meant foreign companies could fill positions with relative ease. That storybook era is over. Today, Vietnam is a highly competitive, candidate-driven market. Navigating its hiring landscape requires a deep understanding of its legal framework, cultural nuances, and the evolving expectations of its workforce. For European companies, overlooking these complexities is a costly mistake.
A Market of Strategic Roles
Vietnam’s labor market is not monolithic. While hiring for blue-collar or entry-level jobs can still be straightforward, the real challenge lies in securing strategic key roles. These include not only executives but also managers, engineers, specialists, and indispensable support staff such as personal assistants. Each of these positions is essential for sustainable operations, and competition for qualified candidates is fierce.
1. What You Should Know When Hiring in Vietnam
The Vietnamese Labor Code is prescriptive and strongly protective of employee rights. A formal, written contract is mandatory and must be in Vietnamese, though bilingual versions are common. Contract types are regulated: after two fixed-term agreements, the next must be indefinite, granting the employee significant job security.
Every hiring process touches three central themes: Recruiting, Retaining, and Developing talent. Recruitment requires speed and local insight to secure scarce candidates. Retention depends on aligning with cultural expectations and offering a clear career path. Development means investing in skills so employees grow with the company rather than moving on.
2. Salary Structures and the “Gross-Up” Effect
A frequent pitfall is misunderstanding how salaries are calculated. Professionals often negotiate based on “net” (take-home) pay. The employer must then calculate and pay the “gross” salary, which includes mandatory contributions for social, health, and unemployment insurance. These costs add significantly to the overall employment budget and must be planned for.
3. The Tet Bonus: A Cultural Cornerstone
What is often called a “13th-month salary” is in fact the Bonus Tet, the Lunar New Year bonus. Tet is the most important holiday in Vietnam, and the bonus is not discretionary. It is expected and enables employees to celebrate properly. For many, it carries the same weight as their monthly wage.
Conclusion: Understanding the Vietnamese Way
Hiring in Vietnam is more than a legal or administrative process; it is entry into a cultural context. Vietnam’s national motto, Doc lap – Tu do – Hanh phuc (Independence – Freedom – Happiness), offers a useful lens. Strict contract rules provide freedom from insecurity. Clear net-based salary structures support financial independence. The Tet bonus ensures personal happiness.
Key Takeaway for Your Business
Do not assume European hiring practices apply uniformly in Vietnam. The market is candidate-driven across all strategic positions. Contracts are tightly regulated, salary structures must be clearly understood, and cultural expectations around compensation and retention are paramount. Companies that invest in recruiting, retaining, and developing talent will secure the people who drive long-term success.
For more information, visit JP contagi Asia at https://contagi.ch/