Salary, health and fair employment practices

Dear Marijn, I’m Italian and two months ago I opened a wood oven pizza place in HCMC where I currently employ five locals. They are all doing an amazing job, and they even started singing Italian opera when baking pizzas. My ‘pizzaioli’ work long hours six days a week, but I pay them well and I think they are happy employees. However, I am a bit concerned about my lack of knowledge on labor regulations. Could you inform me of the basics? Also, I am thinking about hiring an exchange student (my friend’s son) from Italy to work part-time. Am I legally allowed to do so?

Let me first of all congratulate you on the success of your restaurant. I trust that your pizzas are among the best in town. Now let’s have a look at how well you treat your employees according to the law. The starting point to finding out more about your rights and obligations as an employer in Vietnam is the Labour Code. As is the case with many other countries around the world, Vietnam’s Labor Code contains minimum standards of protection for employees. But, of course, as an employer you are free to offer your staff better conditions.

Pertaining to working time, the Labor Code of Vietnam stipulates that the normal working hours for employees shall not exceed eight hours per day, 48 hours per week. However, you can also provide in your labor contract that your employees will work a certain number of hours calculated on a weekly basis. If you do so, then their normal working hours cannot exceed 10 hours per day, and again 48 hours per week. You are certainly entitled to ask your employees to work overtime, but that is strictly subject to their consent. Furthermore, the amount of overtime hours is limited and you will need to pay a higher wage, which depends on whether the overtime work is being performed on a weekday (150%), on a weekend (200%), or on a public holiday or paid leave day (300%).

In terms of leisure time, for every full day of work your employees will be entitled to a rest break of at least 30 minutes, which should be included in the number of working hours. Special cases aside, Vietnam’s Labour Code further entitles your employees to have a break of at least 24 consecutive hours every week. Furthermore, for every full 12 months that your employees have worked they are entitled to full paid annual leave of at least 12 working days.

I don’t know what time you usually close your restaurant, but keep in mind that in Vietnam the hours between 10pm and 6am are considered ‘night working hours.’ During those hours, wages must be at least 30% higher than during regular daytime hours. Now that we are on the subject of wages, as of January 1, 2015 the minimum wage for employees working in the inner city of Ho Chi Minh City has been raised from VND2.7 million to VND3.1 million per month, which is the same as in Hanoi. As an employer, you are free to determine your applicable wage scale, as long as you respect the minimum wage.

However, please don’t forget that paying wages is not the only financial obligation that you have towards your employees. You must also arrange annual health checks, and you are obligated to contribute to their social insurance, health insurance, unemployment insurance and trade union funding and fees, which currently adds up to an additional 25% of your employees’ salaries and remunerations.

To answer your last question about hiring an exchange student – the general rule under the Labor Code is that foreigners are only allowed to work in Vietnam if they have a work permit. Some categories of employees are, however, exempted from this rule, including foreign students. And indeed, the Law on Entry, Exit, Transit and Residence of Foreigners in Vietnam states that foreigners studying at a Vietnamese school or educational institution under an international agreement may work in Vietnam, provided that the institution or school allows them to do so (in writing). Furthermore, you will need to inform the Vietnamese labor authorities of your intentions at least seven days in advance.

Notwithstanding the fact that the exchange student may not have to apply for a work permit, the Labor Code of Vietnam does impose further conditions on foreigners working here. Besides the pretty straightforward conditions of being in good health and having a clean (criminal) slate, foreigners must have so-called “specialized and technical skills.” In addition to that, employers must convince the relevant State authorities of the need to employ a foreigner instead of a Vietnamese, which means that you may have some explaining to do in regards to the student’s specialized and technical pizza baking skills. In practice, this may turn out to be quite a challenge since your current employees are living proof that Vietnamese pizzaioli–turned–opera singers can do the same job just fine.

If you have any legal question you want answered, send them to legal@oivietnam.com.

BIO: After having obtained legal experience in his home country the Netherlands and in Cambodia, Marijn Sprokkereef is currently an associate of Audier & Partners. Audier & Partners is an international law firm with presence in Vietnam (Ho Chi Minh City and Hanoi), Myanmar and Mongolia, providing advice to foreign investors on a broad range of legal issues.

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