HR and Payroll Setup for a New Vietnam Entity: The First 60 Days
The registrations that start counting from the first contract date, the insurance base that decides the real cost, the documents that make an employment defensible, and the separate track for foreign hires.
The licence arrives, the bank account opens, and the first employee starts on Monday. That is the moment most foreign-owned companies discover that employing someone in Vietnam is not one task but about a dozen, several of which have deadlines counted from the day the contract was signed rather than from the day anyone got round to reading about them.
This is the sequence for the first sixty days, in the order the obligations actually fall due.
Before the first contract: three decisions
Settle these before you sign anyone, because each one is awkward to change afterwards.
- Contract type. Vietnamese law recognises indefinite-term contracts and definite-term contracts of up to 36 months. A definite-term contract can generally be renewed only once; after that the relationship becomes indefinite by operation of law. Companies that plan to "keep everyone on one-year contracts" are planning something the law does not allow.
- Probation length. The maximum depends on the role: longest for enterprise managers, shorter for positions requiring a university qualification, shorter again for technical roles, and only a few working days for simple work. Probation pay must be at least 85 percent of the agreed salary, and probation terms can sit inside the labour contract rather than in a separate document.
- Gross or net. Vietnamese candidates often negotiate in net take-home. If you agree net, you have accepted the tax and insurance risk, and every change in contribution rates lands on the employer. Agree gross and explain the deductions properly. It is a harder conversation once and an easier payroll forever.
Day 1 to 30: registrations that start counting from the contract date
The first contract starts several clocks at once.
| Obligation | Timing | Why it bites later |
|---|---|---|
| Social, health and unemployment insurance registration | Within 30 days of the first labour contract taking effect | Late registration means retrospective contributions plus interest, calculated from the contract date, not the registration date |
| Labour usage declaration to the local labour authority | Shortly after starting to employ, then periodically | Missing it is a common finding in a first inspection |
| Personal income tax registration for employees | Before the first payroll run | Without tax codes and dependant registrations, withholding is wrong from month one and has to be unwound at finalisation |
| Trade union funding | Monthly, alongside insurance | Payable on the insurance salary fund whether or not a union exists at your company. Companies routinely miss this one entirely |
| Internal labour regulations | Registered once headcount reaches the statutory threshold | Without registered regulations, dismissing anyone for misconduct is extremely difficult to defend |
The insurance base is where the money is
Employer contributions to social, health and unemployment insurance add roughly a fifth on top of the contractual salary, and employees carry a further tenth from theirs. The rates are published and predictable. What is not predictable is the base.
Contributions are calculated on salary plus certain fixed allowances, not on total cash paid. Which allowances count is a technical question with a real number attached, and it is the single most common source of retrospective adjustment we see. There are also caps tied to the statutory base salary and to the regional minimum wage, so the contribution does not rise indefinitely with pay.
Practical takeaway. Decide the structure of the pay package before the first hire, not after the tenth. A salary split across many small allowances looks cheap in month one and becomes a multi-year correction when an inspector decides several of those allowances belonged in the contribution base all along.
Day 30 to 60: the documents that make the employment defensible
An employment relationship in Vietnam is defended with paperwork, and the paperwork has to exist before the dispute, not after it.
- Signed contracts in Vietnamese, one copy held by each side. A bilingual contract is fine; a contract only in English is not a comfortable position.
- A salary scale built and consulted with the employee representative organisation at your workplace, used consistently for grading and increases.
- Job descriptions that match the contract title, because dismissal for failing to perform assigned work requires there to be a record of what the assigned work was.
- Internal labour regulations covering working hours, conduct, confidentiality and the disciplinary process, registered where required.
- Attendance and leave records from day one. Annual leave accrues from the start, and an unrecorded year becomes a cash liability when someone resigns.
Payroll itself: the monthly cycle
The monthly rhythm is straightforward once it exists: collect attendance and variable pay, compute gross to net, remit insurance contributions and union funding, withhold and declare personal income tax, pay salaries, and issue payslips. Vietnamese employees expect a payslip that shows the deductions; an unexplained net figure generates more HR questions than any other single practice.
Two details catch new entrants. First, the personal income tax declaration is monthly or quarterly depending on your filing status, and an annual finalisation follows for employees you pay. Second, insurance is remitted monthly and reconciled against a headcount report, so every joiner, leaver and salary change has to be filed as it happens rather than swept up at year end.
Foreign employees add a separate track
A foreign hire is not a variation on a local hire; it is a parallel process that has to start earlier. The employer first explains to the labour authority why the role cannot be filled locally, then applies for the work permit, and only then can the contract and the visa or temporary residence card follow. Each step has its own lead time and they are sequential.
Employ first and regularise later is the route that produces problems: a foreign national working without a permit exposes both the individual and the company, and the fix is slower than doing it in order would have been.
When to run this yourself and when not to
Below roughly ten employees, payroll is a spreadsheet and a disciplined calendar, and many companies run it with an outsourced accountant. Above that, or as soon as you have shift work, foreign staff, variable commission or more than one location, the failure modes get expensive and a dedicated payroll process earns its cost.
The alternative worth considering before the entity is fully staffed is an employer of record, which carries the employment administration while you build. It is not cheaper in headline terms once you have an entity; it is simply a way to start hiring before the HR function exists.
A sixty-day checklist
Contract type and probation decided. Pay structure agreed gross. Insurance registered within thirty days. Tax codes and dependants registered before the first run. Union funding set up. Salary scale built. Internal labour regulations drafted and registered at the threshold. Attendance and leave tracked from day one. Work permit process started before any foreign hire signs.
None of it is difficult. All of it is deadline-driven, and the deadlines start from the first signature rather than from the day the HR system is ready.
Setting up a Vietnam entity and hiring at the same time? Our employer of record and hiring team runs the registrations, the payroll cycle and the documentation while your entity finds its feet.
