Expanding your business to a new country is both thrilling and complex. You’re imagining new markets, new customers, and new revenue streams. But as soon as you start thinking about hiring people locally, or even sending employees from abroad, you hit a key question: How does payroll work in Vietnam?
This guide will walk you through everything you need to know about payroll in Vietnam, from payroll services in Vietnam, hiring your first employees, understanding salary structures, to meeting payroll obligations and compliance requirements. We’ll also explore how partnering with a dedicated payroll service provider can make your life easier.
What Is Payroll in Vietnam and Why It Matters
When we say payroll in Vietnam, we aren’t just talking about writing paychecks. Payroll encompasses everything related to paying employees correctly and on time, including:
- Salary and wage calculation
- Payroll taxes and contributions in Vietnam
- Payroll obligations for employers
- Compliance with employment laws
- Reporting and tax filing
For many international businesses, payroll is part of a larger challenge: human resources and payroll management in a new regulatory environment.
Getting payroll right isn’t optional. If your company wants to hire people, comply with local laws, and build trust with employees, you need a compliant payroll system. Vietnam has specific payroll laws and reporting requirements that apply whether you have a local entity or work with remote employees.
Employment and Payroll Obligations in Vietnam
When you employ people in Vietnam, you become responsible for a range of obligations. Let’s break these down clearly.
Employment Contracts and Payroll Setup
Before your first payroll run, every employee must have an employment contract. This document outlines:
- The salary or wage
- Working hours
- Benefits
- Job responsibilities
Vietnamese law has clear rules about employment contracts. These also affect payroll calculations because they define compensation and work conditions from day one.
Working Hours, Overtime, and Payroll Calculations
Vietnam’s standard working hours are usually 8 hours per day and 48 hours per week. Anything beyond that counts as overtime, and employers are required to pay overtime premiums, often at higher rates.
Payroll calculations must account for:
- Regular salary
- Overtime pay
- Allowances
- Bonuses
- Deductions
If you’re handling payroll manually or with basic software, it’s easy to overlook these nuances. That’s one of the reasons many companies choose a payroll service provider.
Key Payroll Concepts Every Employer Should Know
Let’s walk through some essential terms and processes you’ll encounter with payroll in Vietnam.
Salary vs. Wage
In Vietnam:
- Salary is often used for staff paid a fixed monthly amount.
- Wage may refer to hourly or daily pay structures, especially for contract or temporary workers.
Understanding this helps with correct payroll calculations and reporting.
Gross Salary and Net Pay
Payroll always starts with gross salary, the total amount agreed upon with the employee before taxes and contributions. From there, you calculate:
- Employee contributions (e.g., social and health insurance)
- Employer contributions
- Personal income tax
- Other deductions (if applicable)
The amount left after these deductions is the net pay, the amount your employee actually receives.
Payroll Taxes and Contributions in Vietnam
One of the trickiest aspects of payroll in Vietnam is understanding how taxes and contributions work. Here’s the breakdown.
Personal Income Tax (PIT)
Employees in Vietnam are subject to personal income tax. Employers are responsible for:
- Withholding the correct amount
- Filing PIT returns with the tax authorities
- Ensuring compliance with local tax laws
- This is a key part of payroll obligations.
This is a key part of payroll obligations.
Social and Health Insurance Contributions
Both the employer and employee contribute to mandatory insurance programs, including:
- Social insurance
- Health insurance
- (In some cases) Unemployment insurance
These contributions are calculated as a percentage of the gross salary. Businesses must correctly calculate and remit these contributions each payroll cycle in Vietnam.
Failing to comply can lead to fines or legal issues, which is why many companies use a local payroll service familiar with Vietnam’s insurance contribution rules.
Minimum Wage and Salary Structures
Vietnam sets a regional minimum wage that varies depending on the city or province. As an employer, you must ensure that the employee’s salary meets or exceeds these minimums.
Minimum wage is updated periodically. Whether you’re hiring in Ho Chi Minh City or Hanoi, your payroll calculations must reflect the correct minimum wage for that region.
The Payroll Process in Vietnam
Now let’s look at a typical payroll process from start to finish.
1. Collect Payroll Data
This includes:
- Employee hours worked
- Leave taken
- Bonuses or allowances
- Overtime records
Accurate data is the foundation of correct payroll.
2. Calculate Payroll
Once you have all the inputs, you calculate:
- Gross salary
- Deductions for taxes and insurance
- Employer contributions
- Net pay
This is where local knowledge matters. Vietnam’s payroll laws dictate specific formulas for calculating each component.
3. Generate Payroll Reports
Employers must prepare payroll reports for:
- Internal records
- Tax filing
- Insurance remittance
These reports must align with Vietnam’s regulatory requirements.
4. Distribute Payslips and Payments
Employees should receive payslips detailing:
- Gross earnings
- Deductions
- Net pay
Then, employers disburse funds according to the payroll cycle in Vietnam, typically monthly.
Payroll Services in Vietnam: Options for Employers
Now that you understand the basics, let’s explore how companies actually do payroll in Vietnam. There are three main approaches:
1. In‑House Payroll
You build your own payroll team or assign the task to HR staff. This can work if you have the expertise and staff capacity, but it also means handling everything from compliance updates to tax filings yourself.
2. Manual Payroll
Some smaller companies try to manage payroll with spreadsheets and manual records. This is risky, especially when dealing with employment laws, tax remittances, and insurance contributions.
3. Outsourced Payroll Service
This is where payroll services in Vietnam shine.
By partnering with a payroll provider, you can:
- Ensure accurate payroll calculations
- Stay compliant with tax and insurance laws
- Receive regular payroll reports
- Reduce administrative burden
Many global companies choose this option because it lets them focus on growth while experts handle the complexities of payroll.
Human Resources and Payroll
In many ways, human resources and payroll go hand in hand. HR handles hiring, contracts, and employee records. Payroll ensures employees are paid correctly and on time.
A strong HR team understands:
- Employment contracts
- Leave policies
- Wage structures
- Compliance requirements
Meanwhile, your payroll system ensures:
- Accurate tax withholding
- Timely contribution remittances
- On‑time pay delivery
- Clear, compliant payroll reporting
When HR and payroll work together, whether in‑house or through a payroll service provider, your employees feel valued, and your business stays compliant.
Global Payroll and Vietnam: What You Should Know
If you’re coming from another country with established payroll practices, you’ll notice differences in Vietnam:
- Different tax brackets
- Social insurance contributions
- Regional minimum wage requirements
- Local reporting standards
All this means that even seasoned payroll teams often rely on local expertise when operating in Vietnam.
For multinational companies, global payroll solutions that integrate Vietnam’s system are especially helpful. They provide:
- Centralized oversight
- Local compliance
- Standardized reporting across regions
Empleyo’s payroll services help bridge local knowledge with global payroll needs.
Common Payroll Challenges in Vietnam
Now, let’s talk about common hurdles, and how to overcome them.
Staying Updated on Legal Changes
Payroll regulations evolve. Vietnam occasionally updates:
- Minimum wage levels
- Tax brackets
- Insurance rates
A payroll service provider stays on top of these changes so you don’t have to.
Managing Foreign Workers and Work Permits
If your team includes international staff assigned to work in Vietnam, payroll gets more complex. Foreign worker payroll may involve:
- Different tax obligations
- Residency considerations
- Special compliance requirements
These challenges are another reason many businesses choose external payroll expertise.
Payroll Compliance in Vietnam
Compliant payroll isn’t just about avoiding fines. It’s about building trust with your workforce and reputation in the market.
Correct payroll ensures:
- Employees are paid what they’re owed
- Taxes and contributions are remitted accurately
- Your business follows local laws
Whether you use payroll software, in‑house staff, or a full‑service provider, compliance should be your top priority.
Choosing the Right Payroll Options
When deciding between payroll approaches, ask:
- Do we have local expertise?
- Are we comfortable with compliance risks?
- Do we want to focus on growth rather than admin tasks?
- Should we integrate with global payroll systems?
For many companies, outsourcing to a reliable payroll service provider is the smartest choice. It reduces risk and allows your team to stay focused on strategic goals.
Payroll Reporting and Tax Filing
Every employer in Vietnam must submit regular reports to:
- Tax authorities
- Insurance agencies
- Internal stakeholders
Your payroll reports should include:
- Salary details
- Tax withholdings
- Insurance contributions
- Other statutory deductions
Accurate reporting makes tax filing smoother and keeps your business compliant year‑round.
Payroll Is More Than a Paycheck
Managing payroll in Vietnam is more than just cutting checks. It’s about compliance, accuracy, timeliness, and understanding local requirements.
For companies expanding in Vietnam, the payroll process can be a strategic advantage, if done right.
From local employment contracts to payroll services in Vietnam, from salary structures to minimum wage, and from personal income tax to insurance contributions, payroll touches every part of your HR and finance operations.
If that sounds like a lot, you’re not alone. Most international businesses choose to partner with specialists who know Vietnam’s system inside out.
Empleyo offers payroll services in Vietnam tailored to your business needs. Whether you’re just exploring how payroll works or ready to set up your entire payroll cycle, we’re here to help you stay compliant, efficient, and focused on growth.
Let’s make payroll one less thing to worry about. Contact us today!
FAQs – Vietnam Payroll
1. What’s the difference between basic salary and total salary in Vietnam?
In Vietnam, the basic salary is the foundation for calculating insurance contributions, while the total salary includes all earnings like bonuses, allowances, and overtime. Understanding this is essential for accurate payroll contributions and staying compliant with payroll obligations in Vietnam. Employers must ensure the declared basic salary aligns with legal requirements and employee agreements.
2. How many working days per year are standard in Vietnam?
A standard working day in Vietnam is typically 8 hours, with a 5- or 6-day workweek depending on the employer’s policy. That amounts to roughly 260 working days per year. This directly impacts monthly salaries, leave entitlements, and payroll calculations for employees in Vietnam. Employers should define working schedules clearly in employment contracts and apply consistent payroll policies.
3. Do foreign workers in Vietnam follow the same payroll rules?
Yes, but with a few differences. Foreign workers in Vietnam are generally subject to the same payroll contributions, such as personal income tax and certain insurance payments. However, they may be exempt from social insurance during the first working year or if their work permit conditions apply. Businesses employing foreign talent must ensure their payroll system in Vietnam accounts for these variables.
4. What payroll options are available for startups and SMEs entering Vietnam?
Startups and foreign investors in Vietnam often choose between in-house payroll and outsourcing to a specialized payroll service. While managing payroll internally might seem cost-effective, local compliance complexities make payroll services in Vietnam a smarter choice. These services help businesses process payroll, handle tax filing, and manage the entire payroll process with ease.
5. How long must someone reside in Vietnam before becoming subject to income tax?
If an individual resides in Vietnam for 183 days or more in a calendar year, they are considered a tax resident. This means their worldwide income may become subject to income tax in Vietnam. It’s crucial for employers to track this when hiring foreign staff, as it affects payroll in Vietnam, employee classification, and tax reporting obligations for both employee and employer.
