Vietnam’s economic growth and skilled workforce make it an attractive destination for international businesses. However, understanding payroll regulations is essential for compliance and smooth operations. This guide covers key aspects of Vietnam payroll, including legal requirements, salary structures, contributions, and payroll processing.
1. Location and Economic Landscape
Vietnam is strategically located in Southeast Asia, bordered by China, Laos, and Cambodia, with a long coastline along the South China Sea. It has three main economic regions:
- Northern Region: Political and economic hub with Hanoi as the capital.
- Central Region: Focused on agriculture, forestry, and tourism.
- Southern Region: Home to Ho Chi Minh City, the country’s largest economic center.
Vietnam’s diverse geography supports different industries, from agriculture in the Mekong Delta to manufacturing in urban centers.
Read more: Manufacturing in Vietnam: An Unexplored Goldmine for Global Investors
2. Vietnam Currency and Payment Methods
The official currency is the Vietnamese Đồng (VND – ₫). Businesses operating in Vietnam must pay employees in VND. Key currency considerations include:
- Denominations: Banknotes range from 1,000₫ to 500,000₫.
- Cash-Based Economy: While digital payments are growing, cash remains dominant.
- Exchange Rate Management: The đồng is managed by the State Bank of Vietnam, impacting trade and payroll planning.
- Digital Payment Growth: Urban areas are adopting mobile and contactless payments.
3. Vietnam Workforce and Employment Trends
- Population: Vietnam has a population of approximately 102,028,000 (2025).
- Urbanization: 41.4% of the population resides in cities, projected to exceed 50% by 2030.
- Workforce: Young and cost-effective labor force with increasing specialization in technology, manufacturing, and services.
4. Vietnam Payroll Calculation and Salary Structure
Vietnam’s payroll system is influenced by labor laws and regional minimum wage differences.
Minimum Monthly Salaries (2025)
| Region | Minimum Salary (VND) | Approximate (USD) |
| Urban Hanoi & Ho Chi Minh City | 4,180,000 | 180 |
| Rural Hanoi, Ho Chi Minh City, Urban Can Tho, Da Nang, Hai Phong | 3,170,000 | 159 |
| Provincial cities and districts (Bac Ninh, Bac Giang, Hai Duong, Binh Phuoc) | 3,250,000 | 140 |
| Other localities | 2,920,000 | 125 |
Overtime Pay
| Overtime Type | Rate (%) |
| Weekday – daytime | 150% |
| Weekday – night-time | 150% + 30% |
| Weekend – daytime | 200% |
| Public holidays & paid leave days | 300% |
Salary Components
- Gross Salary: Total salary before deductions (taxes, insurance contributions).
- Net Salary: Salary after mandatory deductions.
- Basic Salary: Forms 35-50% of total salary.
- Fringe Benefits: Includes allowances and bonuses.
5. Vietnam Payroll Setup
Businesses must register for payroll by establishing a legal entity or working with an Employer of Record (EOR) service. Opening a business bank account is not mandatory but is recommended for payroll transactions.
Types of Business Bank Accounts
- Investment Capital Account: Used for receiving investment funds.
- Transaction Account: Facilitates daily business transactions.
Read more: What ASEAN Member Countries Can Learn from Vietnam’s Renewable Energy Boom
6. Vietnam Payroll Processing Steps
- Choose a Payroll System
- Manual payroll
- Payroll software
- Outsourced payroll providers
- Set Payroll Policies
- Define pay dates (monthly, bi-weekly, etc.)
- Determine payment methods (bank transfer, direct deposit)
- Ensure compliance with labor laws
- Collect Employee Data
- Gather personal information (name, address, tax status, social security number)
- Set up direct deposit details
- Track Work Hours
- Use time tracking systems for accurate payroll calculation
- Verify and Process Payroll
- Review timesheets and calculate final salaries
- Maintain Payroll Records
- Keep detailed records for tax and compliance purposes
7. Vietnam Payroll Contributions and Taxes
Both employers and employees contribute to payroll taxes.
| Contribution Type | Employer (%) | Employee (%) | Total (%) |
| Social Insurance | 17.5% | 8% | 25.5% |
| Health Insurance | 3% | 1.5% | 4.5% |
| Unemployment Insurance | 1% | 1% | 2% |
| Total | 21.5% | 10.5% | 32% |
8. Payroll Cycle and Options
- Payroll Frequency: Typically monthly, paid on the last working day.
- Payroll Options:
- In-House Payroll: Managed internally by HR teams.
- Accountant-Managed Payroll: Outsourced to a professional accountant.
- Payroll Provider Services: Fully managed payroll outsourcing.
9. Employee Benefits and Termination Policies
Paid Leave & Benefits
- Annual Leave: 12 business days + 11 public holidays
- Sick Leave: Up to 30 days (based on employment type)
- Maternity Leave: 6 months paid leave
Termination and Severance
- Notice Period: Not required if mutually agreed.
- Severance Pay: Employees with 12+ months of service are entitled to severance.
10. Simplify Payroll with Our Employer of Record (EOR) Services
Setting up payroll in Vietnam can be complex due to strict regulations and compliance requirements. Our Employer of Record (EOR) services handle everything from payroll management to tax compliance, ensuring a smooth payroll process for your business.
Why Choose Us?
✔️ Full compliance with Vietnamese labor laws
✔️ Efficient payroll processing
✔️ Tax and insurance management
✔️ Hassle-free employee onboarding
Start Expanding in Vietnam with Confidence. Let us manage your payroll while you focus on growing your business. Check our services here or book a free consultation now. Download our free guide on Vietnam here.
