When working in Vietnam, understanding the various types of employment contracts is essential for both employers and employees, particularly expatriates. Vietnam’s Labor Code outlines distinct contract types, each with specific terms that impact job security, benefits, and termination procedures.
Whether you’re entering into a fixed-term or indefinite-term contract, a thorough understanding of the legal framework can help prevent disputes and misunderstandings. This guide explores the key aspects of these contracts, ensuring compliance with Vietnamese labor laws.
Types of Employment Contracts in Vietnam
An employment contract in Vietnam is a legally binding agreement between an employer and an employee, defining the job, working conditions, and obligations of both parties. Governed by the Labor Code of Vietnam (Law No. 45/2019/QH14), which came into effect on January 1, 2021, employment contracts are categorized based on duration and nature.
According to Article 13 of the Labor Code:
“A labor contract is an agreement between an employee and an employer on a paid job, salary, working conditions, rights and obligations of each party in the labor relationship.”
Contracts must generally be in writing, except for temporary work lasting less than one month, where oral agreements are permissible. All contracts—whether indefinite or fixed-term—must include key provisions such as:
- Employer and employee details
- Job description and location
- Contract duration
- Salary, benefits, and payment terms
- Promotion and salary adjustment policies
- Working hours and breaks
- Personal protective equipment requirements
- Social, health, and unemployment insurance
- Training and skill development provisions
These elements aim to ensure fair working conditions and provide a framework for resolving disputes.
Employment Requirements for Expatriates
Expatriates working in Vietnam must meet several legal requirements to sign a labor contract, governed by the Labor Code and additional regulations for foreign workers:
- Work Permit: A valid work permit is required unless exempt under specific conditions outlined in Decree No. 152/2020/ND-CP (amended by Decree 70/2023/ND-CP). Exemptions may apply to certain professionals or those working short-term assignments.
- Health Certificate: A health certificate from an authorized medical provider is necessary to confirm fitness for work.
- Qualifications: Expatriates must provide evidence of qualifications or experience, such as degrees or certifications.
- Visa or Residence Card: A DN or LD visa or a temporary residence card is mandatory for legal residency during employment.
- Alignment with Work Permit: The job title and employer in the labor contract must match those on the work permit. Discrepancies may lead to penalties or invalidation.
- Special Categories: Some expatriates, such as those under international treaties or intra-corporate transferees, may be exempt from work permits but must fulfill reporting obligations.
Upon meeting these requirements, expatriates can sign either a fixed-term or indefinite-term contract based on the job’s specifics.
Key Types of Employment Contracts
1. Indefinite-Term Contracts
Indefinite-term contracts have no specified end date, offering the highest level of job security. They are commonly used for long-term employment.
Key Features:
- No fixed end date
- High job security
- Requires at least 45 days’ notice for termination (unless due to a breach)
- Automatically applies after two consecutive fixed-term contracts if employment continues
Termination procedures for indefinite-term contracts require adherence to mandatory notice periods unless exceptional circumstances apply.
2. Fixed-Term Contracts
Fixed-term contracts are time-bound agreements, typically lasting 12 to 36 months for local employees and up to 24 months for expatriates. These contracts are common for short-term or project-based roles.
Key Features:
- Duration of 12 to 36 months
- Limited to two consecutive terms; the third must transition to an indefinite-term contract
- Often used for temporary assignments
Expatriates must closely monitor their visa and work permit expiry dates when renewing fixed-term contracts.
3. Probationary Contracts
Probationary contracts serve as trial agreements to evaluate suitability for permanent roles. Their duration depends on the job’s complexity, and either party can terminate the agreement during this phase without significant consequences.
Key Features:
- Duration varies by role complexity:
- Up to 180 days for executives
- 60 days for skilled positions
- 30 days for technical roles
- 6 days for basic jobs
- Lower, negotiable salary during probation
- Transition to fixed-term or indefinite-term contracts upon successful completion
Expatriates on probationary contracts may not receive full benefits like health insurance or regular wages until confirmed as permanent employees.
4. Non-Traditional Contracts
Non-traditional contracts, such as service agreements or cooperation contracts, are not governed by standard labor laws. These are common in fields like education and consulting, offering flexibility for foreign language teachers, freelancers, and consultants.
For expatriates, non-traditional contracts provide more freedom than standard employment arrangements, making them popular in specific sectors.
Understanding the nuances of these employment contracts is vital for ensuring compliance with Vietnamese labor laws and fostering a stable working relationship.
—————————-
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
-Doan Huyen My-