Employment Contracts in Vietnam

In the labor disputes FLAT LAW FIRM handles, trouble rarely begins at the moment of resignation or discipline. It usually lies in the contract signed years earlier: missing clauses, the wrong contract type recorded, or a single template used for every position. The employment contract is the document establishing all rights and obligations of both parties, and it is the first piece of evidence a mediation body or court examines when a dispute arises.

This article systematizes the core aspects of employment contracts under the Labor Code 2019 (No. 45/2019/QH14, effective from 01/01/2021) and Decree 145/2020/ND-CP, from the practical perspective of the employing enterprise.

An Employment Contract Is Not Just Paper to Sign

Many companies still treat employment contracts as an administrative formality: download a template online, fill in the name, sign, file it away. This approach carries three main risks. First, a generic template does not reflect the true nature of the work, leading to disputes over job scope or salary structure when conflicts arise. Second, thinly drafted clauses on probation, confidentiality and training are hard to invoke when terminating a contract or handling violations. Third, a contract that violates form or content requirements can be declared partially invalid, leaving the company without the legal basis it thought was solid.

The cost of reviewing and standardizing employment contracts is always far lower than the cost of a protracted dispute. A carefully drafted contract is the company’s first layer of protection.

Two Types of Employment Contracts under the Labor Code 2019

The Labor Code 2019 recognizes only two types of contracts in Article 20: definite-term and indefinite-term. Seasonal or job-based contracts under 12 months have been abolished — a point many companies have not updated, continuing to use old templates and inadvertently creating employment relationships of the wrong legal nature.

A definite-term contract has a term of no more than 36 months. When it expires and the employee continues working, both parties must sign a new contract; if it is again a definite-term contract, it may be signed only once more, after which an indefinite-term contract must be signed. This rule aims to limit the practice of chaining short-term contracts to avoid long-term obligations.

Form of Conclusion: When Written Form Is Mandatory

Under Article 14, an employment contract must be concluded in writing, made in two copies, each party keeping one. Oral conclusion is accepted only for contracts with a term of less than 01 month — and even then, the parties should still put it in writing to avoid disputes.

A notable new point: contracts concluded via electronic means in the form of data messages have the same validity as written contracts. For companies with multiple branches or remote hiring, electronic contracts significantly shorten the completion time. However, the storage system must ensure the integrity of the data message and retrievability when required by state authorities or when a dispute arises.

Mandatory Contract Contents

Article 21 lists the principal contents: information of the two contracting parties; the employee’s full name, date of birth, place of residence and personal identification number; the job and workplace; the contract term; salary level, payment form and schedule, allowances; grade and salary advancement; working hours and rest; labor protection; social, health and unemployment insurance; training and development.

Disputes most often arise from three groups: vague job descriptions (“perform assigned tasks”), an unclear workplace when the company has multiple branches, and a salary structure that does not separate base salary from allowances and bonuses. When the insured salary and the actual salary differ greatly without clear explanation in the contract, the company is prone to trouble during labor and social insurance inspections.

Probation in the Contract: Common Mistakes

The law allows probation to be agreed within the employment contract or in a separate probation contract. A common mistake is imposing probation without any written document, so that when the company wants to terminate for “unsatisfactory performance” it has no evidence of the evaluation criteria agreed from the start.

The core principle: probation is allowed only once for one job. Maximum periods: no more than 180 days for enterprise managers; 60 days for jobs requiring college-level qualifications or higher; 30 days for intermediate-level, technical worker and professional staff jobs; 06 working days for other jobs. Probation salary must be at least 85% of the salary for that job. See the article on probation and probation terms for details.

Contract Appendices and Amendments

When salary, title or workplace needs adjustment, the parties amend the contract by appendix — the appendix is part of the contract and has the same effect. But there is an important limit: an appendix may not amend the term of the employment contract.

Many companies use appendices to “extend” contracts without knowing this practice violates the rules, easily leading to disputes about the type of contract actually in existence. To extend the working period, both parties must sign a new contract when the old one expires, following the rule on the number of definite-term contracts.

Electronic Employment Contracts: Validity and Notes

An electronic contract has the same validity as a paper contract if it meets the conditions of the law on electronic transactions: the parties can be identified, the content remains intact after signing, and the signature authentication method is appropriate. The company must ensure the electronic signature identifies the signer and their acceptance of the contract content.

For ordinary workers with limited access to technology, the company should help them genuinely understand the content before signing, to avoid later claims that they were forced to sign without knowing what they accepted.

Signing Contracts with Foreign Employees

For foreigners working as managers, executive directors, experts or technical workers who require a work permit under Decree 219/2025/ND-CP (effective from 07/08/2025, replacing the foreign labor provisions of Decree 152/2020/ND-CP), the employment contract takes full effect only once the person has been granted the permit.

Companies must align the permit issuance timeline with the contract conclusion date: letting a foreigner work without a permit can trigger administrative penalties. For newly established FDI enterprises, the foreign labor dossier should be prepared in parallel with the investment procedures from the start.

Distinguishing Employment Contracts from Service Contracts

Many companies sign service or collaborator contracts whose substance is actually an employment relationship: working fixed hours, subject to management and direction, and paid periodically. Article 13 is clear: an agreement under another name whose content shows paid work, wages, and the management, direction and supervision of one party is deemed an employment contract.

The consequences when discovered through inspection are severe: retroactive social, health and unemployment insurance contributions for the entire period, administrative fines, and the employee may claim benefits such as severance allowance. If the substance is labor under your management, sign an employment contract from the start.

Invalid Employment Contracts and Remedies

A contract is wholly invalid when its entire content violates the law, the signatory lacks authority, or the agreed job is prohibited by law. It is partially invalid when only part of the content violates the law without affecting the rest. The court has jurisdiction to declare invalidity.

In adjudication practice, courts often apply the provision more favorable to the employee when a clause is invalidated for illegality — for example, a salary clause below the regional minimum wage is replaced by the regional minimum. Companies should periodically review their contract templates, especially after each change in labor, minimum wage or insurance law.

Pre-Signing Contract Review Checklist

Before issuing a unified contract template, HR and legal should check: whether the contract type suits the employment need and follows the rule on the number of definite-term contracts; whether the job description and workplace are specific enough; whether the salary structure separates base salary, allowances and bonuses and is consistent with the social insurance contribution level.

Next: whether probation and working-hour clauses comply with statutory limits; whether the company’s signatory has proper authority; whether the contract is made in two copies with a clear storage mechanism; whether the content conflicts with the effective internal labor regulations and collective labor agreement; for foreign workers, whether the work permit timeline matches the contract’s effective date.

FAQs on Employment Contracts