Vietnam employment compliance in 2026

The PIT reform reduces the bracket count but keeps the top rate at 35% on annual income above VND 1.2 billion. The new personal deduction of VND 15.5 million per month is a meaningful uplift from the prior VND 11 million. Employers running monthly payroll must update their withholding logic for the new bracket thresholds from 1 January 2026. (PwC Vietnam PIT summary)

Under Labour Code 2019 (Law No. 45/2019/QH14), an employer may only terminate an employment contract on grounds listed in Article 36. Common lawful grounds include:

• The employee repeatedly fails to complete assigned work as specified in the contract
• The employee is disciplined by dismissal following the statutory disciplinary procedure
• The employee has been absent without permission beyond the statutory threshold
• Natural disaster, fire, epidemic, or force majeure where the employer has taken all remedial measures
• Restructuring or economic reasons (with advance notice to the provincial People's Committee)

Consequences of illegal termination

An employer that terminates a contract outside these lawful grounds must reinstate the employee and pay wages for the period they were not working. The employer must also pay an additional sum. No fixed monetary cap applies; courts set the award. The Labour Code sets a minimum compensation floor for unlawful dismissal. (ASL Law procedural guide)

Probation: a separate window

During probation, either party may end the arrangement without advance notice. The maximum probation period is 2 months for degree-level roles. Executive roles may have up to 6 months. Probation ends the moment the maximum period passes; automatic contract conversion into the agreed employment type follows.

1. Confirm the lawful termination ground

   Every dismissal requires a ground listed in Labour Code 2019 Article 36. Document it before issuing any notice.

2. Follow the statutory disciplinary procedure

   Disciplinary dismissal requires a formal hearing with the trade union representative (if one exists) and the employee. Missing this step makes the dismissal illegal.

3. Issue notice and settle final pay

   For restructuring or economic terminations, notify the provincial People's Committee at least 30 days in advance. Final pay must be settled within 14 days of contract end.

4. Calculate and pay the correct severance

   Employees with at least one full year of service are owed a severance allowance. For economic restructuring, a job-loss allowance applies instead, at a higher rate with a minimum floor.

5. Update payroll for 2026 PIT and SI changes

   Apply the new five-bracket PIT schedule from 1 January 2026 and the revised social insurance contribution cap from 1 July 2026. Both affect every monthly payroll run.

Key prohibition under the Labour Code 2019:

• Direct discrimination in recruitment, pay, promotion, training, and termination on the basis of listed characteristics is prohibited.
• Sexual harassment in the workplace is expressly prohibited and employers have a positive duty to prevent it.
• Pregnant employees and those on maternity leave have specific protection from termination during pregnancy and maternity leave.
• Employees with HIV/AIDS may not be terminated on that basis alone.
• Trade union membership is a protected characteristic; retaliation for union activity is unlawful.

Gender equality obligations

The Law on Gender Equality 2006 obliges employers to ensure equal treatment in hiring, pay, working conditions, and training. Businesses with 1,000 or more female employees must develop gender equality plans. The Ministry of Labour, Invalids and Social Affairs (MOLISA) monitors compliance.

Enforcement

Employees may file complaints with MOLISA labour inspectors, pursue conciliation, or bring claims before the People's Court. Compensation is set by the court. There is no fixed monetary cap on discrimination awards in Vietnam, though awards are typically measured against salary losses and damages suffered.

The Law on Denunciations 2018 sets out a general framework for reporting unlawful conduct to state authorities. Key features:

• Any citizen may denounce violations of law to the competent state authority.
• The denouncer is entitled to protection from retaliation, including from dismissal, demotion, or harassment.
• The receiving authority must keep the identity of the denouncer confidential where requested.
• False denunciations made in bad faith may expose the reporter to liability.

Workplace-level protection

The Labour Code 2019 protects employees who report violations of labour law to MOLISA labour inspectors or trade union representatives. Retaliation against an employee for making a complaint to the inspectorate is treated as an adverse employment action and may trigger claims for reinstatement or compensation.

Anti-corruption context

The Law on Anti-Corruption 2018 obliges public officials to report corruption and sets out protections for those who do. For private-sector employers in regulated industries (banking, securities, insurance), sector regulators issue additional guidance on internal reporting channels. Multinational employers commonly operate their own internal reporting lines as a complement to the statutory framework.

Practical implications for employers in Vietnam:

• Consent. Processing employee personal data requires consent in most cases. Consent must be specific, voluntary, and informed. It may be withdrawn at any time.
• Privacy notice. Employees must be informed of the purpose, scope, and legal basis for processing their data before or at the time of collection.
• Data subject rights. Employees may access, correct, delete, and object to processing of their personal data. Employers must respond to requests within a reasonable time (the Decree does not set a hard deadline equivalent to GDPR's one month, but failure to respond is an administrative violation).
• Security. Employers must implement appropriate technical and organisational measures to protect personal data from loss, unauthorised access, or disclosure.
• Data breach notification. Breaches involving personal data must be notified to the Ministry of Public Security within 72 hours of discovery.
• Cross-border transfers. Transferring employee data outside Vietnam requires either a government-approved impact assessment (DPIA) or one of the lawful transfer mechanisms listed in the Decree.

Vietnam's data protection regime is newer and developing. The Ministry of Public Security is the primary regulator. Penalties for non-compliance range from administrative fines to criminal liability for serious breaches. Employers with regional data flows between Vietnam, Singapore, or other APAC hubs should document their transfer mechanisms before employees start work.

Three frameworks that affect employers:

• Trade Union Law 2012 (amended). Governs union formation, rights, and employer obligations. Employers may not obstruct trade union activities or retaliate against union members or officers.
• Collective bargaining. Where a workplace union exists, the employer must negotiate and sign a Collective Labour Agreement (CLA) if the union requests it. CLAs bind both parties and may set terms above the statutory minimum.
• Statutory trade union financial contribution. Employers must contribute 2% of the monthly payroll fund to the trade union, regardless of whether a workplace union has been established. This is a payroll-level obligation, not optional.

Representative organisations and collective redundancy

The Labour Code 2019 requires employers planning collective reductions (restructuring, economic reasons) to consult with the workplace trade union or employee representative body before proceeding. The employer must also notify the provincial People's Committee at least 30 days in advance. This is a hard procedural requirement, not an optional consultation. (Mondaq restructuring guide)

EOR implications

When hiring through an EOR in Vietnam, the EOR is the legal employer and holds the primary labour obligations, including any trade union contribution and CLA obligations. If you move employees from one EOR to another, continuity of employment terms is relevant under Vietnamese labour law even though TUPE (the UK-style regulation) does not apply. Terms and service history transfer on a contractual basis. Most EOR-to-EOR moves are agreed by mutual consent with the employee.

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Vietnam's 2026 changes are already in the compliance calendar. The new PIT brackets are wired into payroll from 1 January. The July 2026 base salary uplift updates social insurance caps automatically on the same date. Day-one unfair dismissal risk is built into the onboarding and disciplinary workflow from the start, not flagged at review time.

Start from the Vietnam hiring overview. Each child guide covers one layer of Vietnam employment law. Key sources: Labour Code 2019 (Law No. 45/2019/QH14) and PwC Vietnam tax summary.