Vietnam labor contract types explained for employers

Vietnam labor contract types come down to two choices under the Labor Code 2019: an indefinite term contract or a fixed term contract. The Code is Law No. 45/2019/QH14. It took effect on 1 January 2021 and replaced the 2012 Code. Employers hiring in Vietnam should know how each type works before they sign anyone.

The two contract types

An indefinite term contract has no end date. Neither the term nor the end point is set. A fixed term contract has both a start and an end date. The 2012 Code also had a seasonal contract for jobs under 12 months. The 2019 Code dropped it. Short jobs now use a fixed term contract.

Choose the type that matches the real job. A role that continues year after year fits an indefinite contract. A project with a clear finish fits a fixed term one.

Sources: Allen and Gledhill, Vietnam's new Labour Code to come into force 1 January 2021, allenandgledhill.com; Viet Tonkin Consulting, Updates on Vietnam Labour Code 2021, viettonkinconsulting.com.

The 36 month limit on fixed term contracts

A fixed term contract cannot run longer than 36 months from the day it takes effect. If you need the person longer, you must change the arrangement. Do not just write a longer end date.

The Code also limits how often you can renew. If the worker keeps working after a fixed term contract ends, you have 30 days to sign a new contract. If you do not, the old one becomes an indefinite term contract. You may sign one more fixed term contract. If the worker stays after that second one ends, you must sign an indefinite term contract. The Code lists some exceptions, such as certain senior roles and foreign employees.

Keep a calendar of end dates. A missed 30 day window quietly changes the contract type.

Sources: Viet Tonkin Consulting, Updates on Vietnam Labour Code 2021, viettonkinconsulting.com; Allen and Gledhill, allenandgledhill.com; NetViet, Types of Employment Contract in Vietnam, netviet.com.vn.

Written form and the one month exception

Labor contracts should be in writing. The main exception is work lasting less than one month, which may be agreed verbally. The 2019 Code also confirms that a contract made as an electronic data message has the same value as a paper one, under the electronic transactions law.

Put the job, pay and term in writing even for short jobs when you can. A written record settles most later disputes.

Sources: Viet Tonkin Consulting, viettonkinconsulting.com; Allen and Gledhill, allenandgledhill.com; NetViet, netviet.com.vn.

Probation rules

Probation is a trial period. It sits next to the contract types, and the Code caps its length by job level. Article 25 sets these maximums:

180 days for enterprise managers, as defined in the enterprise law.
60 days for jobs that need a college level or higher qualification.
30 days for jobs that need intermediate vocational skills, such as technicians and skilled staff.
6 working days for all other jobs.

A job can have only one probation period. Workers on contracts under one month do not serve probation. The probation wage has a floor of 85 percent of the normal pay for that job.

Sources: Viet An Law, Maximum term of probationary contract in Vietnam, vietanlaw.com; Viet Tonkin Consulting, viettonkinconsulting.com.

A short checklist for employers

Why does the type matter? It sets how easily the job can end. An indefinite term contract gives the worker more security, so employers often prefer fixed terms for short projects. But the 36 month cap and the renewal rules limit how long that choice can last. Plan the whole run of the role, not only the first contract.

New hires from overseas follow the same Code, with the listed exceptions. Ask your adviser how any work permit rules fit with the contract term you pick. Each paperwork step should match the others, including the dates.

Before you sign, confirm four things. First, decide whether the role is indefinite or fixed term. Second, keep any fixed term at or under 36 months. Third, diarize the 30 day renewal window. Fourth, check the probation cap for the job level and pay at least 85 percent of the job rate.

Review each contract again before its end date, and keep signed copies on file for both sides.

This overview is general information only. Before a real hire, read the Code text and ask a Vietnam employment lawyer how it applies.

Sources: Labor Code 2019, Law No. 45/2019/QH14, effective 1 January 2021, as summarized by the sources above.