Vietnam vs China Labor Law: 10 Differences Investors Must Know

Every year, thousands of Chinese companies open factories and offices in Vietnam, and many bring their home "legal instincts" intact: labor contract templates drafted under China's Labor Contract Law, overtime calculations under China's Labor Law, even HR management habits formed in Shenzhen or Guangzhou. The problem is that although both countries' labor laws share a worker-protection tradition, they follow very different logic on key points.

This article identifies the 10 Vietnam China labor law differences investors most often stumble on: from contract types, probation and overtime to dismissal, maternity and social insurance. Each point cites the specific articles of both sides, with analysis of the practical consequences for businesses.

Contents

• 1. Context: why compare
• 2. Overview table of the 10 differences
• 3. Detailed analysis of each difference
• 4. Notable similarities
• 5. Common risks for Chinese investors in Vietnam
• 6. Practical recommendations
• 7. Frequently asked questions

1. Context: why compare

Vietnam is a top destination for Chinese capital in the global supply chain, with thousands of FDI projects in manufacturing, electronics, textiles and energy. Conversely, more and more Vietnamese companies cooperate with, form joint ventures with, or hire Chinese experts. In both directions, labor relations generate the most disputes and are the least prepared.

The core difference lies in legislative philosophy. Vietnam's labor law (Labor Code 2019, effective 01/01/2021) gives employees a very broad right to unilaterally terminate contracts while tightly restricting the conditions for employers to dismiss. China's law (Labor Contract Law as amended 2012, effective 01/07/2013) is the reverse on some points: "open-ended" contracts are almost the default after two signings, but as a general rule, employees wishing to leave must give 30 days' notice (Article 37), except for special cases of immediate termination under Article 38.

This article serves three audiences: Chinese investors operating or preparing to operate in Vietnam; Vietnamese companies doing business with Chinese partners; and HR and legal teams that must "translate" HR policies between the two systems.

2. Overview table of the 10 differences

3. Detailed analysis of each difference

3.1. Contract types: Vietnam has two, China three

Vietnam. Article 20 of the Labor Code 2019 recognizes only two forms of labor contracts: indefinite-term and fixed-term (max 36 months). When a fixed-term contract expires and the employee keeps working, the parties must sign a new contract within 30 days; beyond 30 days without signing, the old contract automatically becomes indefinite-term. More importantly, a fixed-term contract may be signed only one additional time — from the third signing onward it must be indefinite-term. The only exceptions are for special subjects: directors hired in state-capital enterprises, elderly workers, foreign workers in Vietnam, and leadership members of employee representative organizations during their term.

China. Article 12 of the PRC Labor Contract Law divides contracts into three types: fixed-term, open-ended, and "for the duration of a specific task" — i.e., project-based contracts that end when the work ends. Under Article 14, after two consecutive fixed-term contracts (where the employee is not subject to termination), the next signing must be open-ended at the employee's request or with consent. In addition, 10 years of continuous service with one employer also leads to an open-ended contract.

Practical impact. This is the most common trap: Chinese companies accustomed to "project-based" contracts for seasonal workers or short-term experts apply the same template in Vietnam. Vietnamese law does not recognize this contract type — the duration clause risks invalidity, and the employment relationship will be interpreted under the two permitted Vietnamese contract types, usually in the employee's favor. The fix is to redraft all templates under Articles 20 and 21 of the Labor Code 2019 from the start, rather than translating Chinese templates into Vietnamese.

3.2. Probation: Vietnam measures by job level, China by contract duration

Vietnam. Article 25 of the Labor Code 2019 uses the "nature and complexity of the work" as the yardstick: max 180 days for enterprise managers; 60 days for jobs requiring college-level or higher qualifications; 30 days for intermediate-level, technical workers and professional staff; and 6 working days for other jobs. One probation per job only. Probation salary is agreed but must be at least 85% of the job's salary (Article 26).

China. Article 19 of the PRC Labor Contract Law uses contract duration: contracts of 3 months to under 1 year allow max 1 month of probation; 1 year to under 3 years, max 2 months; 3+ years or open-ended, max 6 months. Contracts under 3 months or task-based contracts may not include probation. One probation per employee per employer, and probation salary must be no less than 80% of the same position's salary and no less than the local minimum wage.

Practical impact. A Chinese company hiring ordinary workers in Vietnam and applying a 3-month probation "like at home" violates Vietnamese law — for ordinary jobs, the cap is 6 working days. Probation violations attract administrative penalties under Decree 283/2026/ND-CP (effective 10/09/2026, replacing Decree 12/2022/ND-CP), and the employer may be ordered to pay full salary and sign a formal contract. Conversely, Vietnamese companies going to China should remember: a 2-year contract with a 3-month probation exceeds the 2-month cap.

3.3. Standard working time and overtime caps

Vietnam. Normal working time must not exceed 48 hours per week (Article 105), with the state encouraging a reduction to 40 hours. Overtime must simultaneously satisfy three conditions: employee consent; no more than 50% of normal daily hours (no more than 12 hours/day on a weekly basis) and no more than 40 hours per month; no more than 200 hours per year (Article 107). Certain special industries (textiles, footwear, electronics, agro-processing, electricity, telecoms, etc.) may reach 300 hours/year with written notice to the provincial labor authority.

China. The standard is 8 hours/day and 44 hours/week (Article 36, PRC Labor Law) — below Vietnam's 48 hours. Overtime must be agreed with the trade union and the employee, and in principle must not exceed 1 hour/day (3 hours/day in special cases) or 36 hours/month (Article 41). Chinese law sets no separate annual cap like Vietnam's.

Practical impact. Chinese factories in Vietnam are used to generous overtime during peak orders, but in Vietnam, exceeding 40 hours/month or 200 hours/year is an administrative violation and triggers compensation obligations. Notably, China's monthly cap (36 hours) is actually tighter than Vietnam's (40 hours), so companies already compliant in China adapt to Vietnam's monthly cap easily — the hard part is the 200-hour annual cap and the notification procedure for 300 hours.

3.4. Employee's unilateral termination: a broad "right to leave" in Vietnam

Vietnam. Article 35 of the Labor Code 2019 gives employees the right to unilaterally terminate without giving reasons, with notice of at least 45 days (indefinite-term), 30 days (fixed-term 12–36 months), and 3 working days (contracts under 12 months). Clause 2, Article 35 lists cases of immediate departure without notice: unpaid or underpaid wages, abuse, sexual harassment, forced labor, or a pregnant employee leaving on a doctor's instruction, among others.

China. Article 37 of the PRC Labor Contract Law sets the general rule: employees wishing to leave must give 30 days' written notice; 3 days' notice during probation. Article 38 adds two important exceptions: employees may terminate where the employer breaches working conditions, delays or underpays wages, fails to pay social insurance as required, or adopts unlawful labor rules; and may terminate immediately without notice when subjected to violence, threats, restriction of personal freedom, or orders to perform work endangering life or health. China's "walk away immediately" cases are narrower and more specific than Clause 2, Article 35 of Vietnam's Labor Code, but it is incorrect to say China has no such regime at all.

Practical impact. This is the deepest philosophical difference. Chinese managers are often shocked when Vietnamese staff quit "without reason" after 45 days' notice, or leave immediately when the company delays wages — whereas in China, an employee leaving without 30 days' notice may owe damages to the employer. Companies should build retention policies (pay, benefits, environment) rather than rely on legal restraints, because Vietnamese law sides with the employee's right to leave.

3.5. Employer's termination and payment obligations

Vietnam. Employers may unilaterally terminate only in statutory cases under Article 36 (regular failure to perform, long-term illness, force majeure requiring downsizing, etc.). On lawful termination, the company pays severance: 1/2 month's salary per working year for employees with 12+ months of regular service (Article 46 — severance has no minimum; the 2-month minimum applies only to job-loss allowance under Article 47). Unlawful unilateral termination requires reinstatement, back pay and compensation under Article 41.

China. Employers may also terminate only in statutory cases (Article 39: serious violations; Article 40: 30 days' notice or an extra month's salary; Article 41: mass layoffs with reporting). Economic compensation is 1 month's salary per working year (Article 47) — double Vietnam's. Most daunting: unlawful termination gives the employee the right to demand continued performance; where the contract cannot continue, the company pays double the economic compensation (Articles 48, 87).

Practical impact. Both countries prohibit arbitrary dismissal, but the "price" of getting it wrong in China is significantly higher. Chinese investors in Vietnam should note the reverse: in Vietnam, unlawful dismissal has no "double money" sanction, but the obligation to reinstate the employee and pay for the non-working period is often more costly and troublesome administratively.

3.6. Annual leave: immediate in Vietnam, after a year in China

Vietnam. Employees with 12 months of service get 12 paid days/year; below 12 months, leave is pro-rated; +1 day per 5 years with one employer (Articles 113, 114).

China. The threshold is 1 continuous year of service before any entitlement. Leave scales with total seniority (not necessarily with one employer): 5 days (1 to under 10 years), 10 days (10 to under 20 years), 15 days (20+ years). Untaken leave due to work needs is paid at 300% of the daily wage (Annual Leave Regulations, State Council Order No. 514, Articles 2, 3, 5).

Practical impact. New hires in Vietnam get pro-rated leave from year one, while in China they wait a full year — Chinese companies must adjust leave policies when entering Vietnam and avoid applying the "no leave before a year" rule that triggers disputes. Conversely, for long-seniority staff, China's 15-day regime is far more generous than Vietnam's 12 days plus seniority.

3.7. Maternity leave: 6 months in Vietnam, 98 days in China

Vietnam. Female employees get 6 months of maternity leave before and after birth, with pre-birth leave capped at 2 months; +1 month per child from the second for multiple births (Article 139, Labor Code 2019). The 2024 Law on Social Insurance (effective 01/07/2025) continues to reference this for maternity benefit duration.

China. Central rules grant 98 days, including 15 days pre-birth; +15 days for difficult birth, +15 days per additional child for multiples (Special Provisions on Female Employee Protection, State Council Order No. 619, Article 7). Provinces add their own extensions — some adding dozens of extra days.

Practical impact. Vietnam's maternity regime (~180 days) is nearly double China's central level — typically the most surprising point for Chinese HR when planning headcount and replacement costs. Companies should budget for maternity cover from the recruitment planning stage, and remember the prohibition on dismissing female employees for pregnancy or maternity leave (Article 137, Labor Code 2019).

3.8. Social insurance: different contribution structures, obligations for foreign workers

Vietnam. Total compulsory contributions are about 32% of the monthly wage fund: the employer pays ~21.5% (social, health, unemployment insurance) and the employee ~10.5%. The 2024 Law on Social Insurance (No. 41/2024/QH15, effective 01/07/2025) expands coverage, with foreign citizens signing labor contracts of 12+ months with enterprises in Vietnam falling within compulsory social insurance.

China. The "five insurances and one fund" system under the PRC Social Insurance Law covers pension, medical, unemployment, work injury, maternity insurance and the housing fund. Rates are set locally and frequently adjusted; total employer burden in major cities is usually higher than Vietnam's and varies significantly between provinces and cities.

Practical impact. Two common mistakes: first, Chinese companies not contributing Vietnamese social insurance for dispatched Chinese experts on the assumption that "contributions at home suffice" — Vietnamese law has no automatic exemption mechanism; second, mechanically applying one Chinese city's rates across the whole operation. Both risk recovery and penalties.

3.9. Labor leasing and labor dispatch: both countries tighten up

Vietnam. Labor leasing is a conditional business line: leasing enterprises need a license and escrow deposit; only listed jobs may be leased; the lessee may not sign labor contracts directly with leased workers, and leased workers must be paid no less than the lessee's own employees in the same job (Articles 52–57, Labor Code 2019; Decree 145/2020/ND-CP).

China. Labor dispatch is permitted only for temporary, auxiliary or substitute positions; dispatched workers may not exceed 10% of total headcount; dispatch agencies must sign labor contracts of 2+ years with workers (Interim Provisions on Labor Dispatch, Articles 3, 4, 5).

Practical impact. The model of using hundreds of dispatched workers for "headcount flexibility and lower obligations" was once common in China before 2014 but is now tightened in both countries. Investors carrying old habits violate both sides: in Vietnam, unlicensed leasing or leasing outside the job list; in China, breaching the 10% cap. The sustainable solution is direct hiring or licensed leasing within the permitted job list.

3.10. Disciplinary action and dismissal: Vietnam demands procedure, China punishes with money

Vietnam. The law provides 4 disciplinary forms: reprimand; wage-raise deferral up to 6 months; removal from office; dismissal (Article 124). Dismissal applies only to statutory acts: theft, embezzlement, gambling, intentional injury, drug use at the workplace; disclosure of business or technology secrets; other acts causing especially serious damage as defined in the internal regulations; re-offending while already disciplined by wage-raise deferral or demotion (removal from office) before that discipline is expunged (Article 125(3)); 5 cumulative days' unauthorized absence in 30 days or 20 cumulative days in 365 days (Article 125). Employers with 10+ workers must have written internal labor regulations registered with the labor authority (Article 119); disciplinary action must follow the fault-proving procedure with the employee representative organization's participation (Article 122).

China. Employers may terminate immediately for serious violations of rules (Article 39, PRC Labor Contract Law); cases such as post-training incompetence or major objective changes require 30 days' notice or an extra month's salary (Article 40); layoffs of 20+ people or 10% of headcount must be reported to the labor authority (Article 41).

Practical impact. In Vietnam, companies lose dismissal cases mostly not because the reason was wrong, but because the procedural "infrastructure" was missing: no registered regulations, no fault proved under the Article 122 procedure. In China, procedures are more flexible but the price of error is double compensation. The common advice for both: invest in internal labor regulations and a proper disciplinary procedure from day one; do not scramble to backfill paperwork when a case arises.

4. Notable similarities

Not everything differs. Some points are near-twins in the two systems, and recognizing them lets companies leverage existing compliance experience:

Identical overtime pay formulas. Both Vietnam (Article 98, Labor Code 2019) and China (Article 44, PRC Labor Law) apply 150% for ordinary-day overtime, 200% for weekly rest days and 300% for public holidays. A company calculating correctly in one country already has the basic formula right in the other — only the overtime caps and consent procedures differ.

Both prohibit holding documents and collecting deposits. Vietnam bans employers from keeping originals of identity papers, diplomas and certificates and from requiring monetary guarantees when concluding or performing contracts (Article 17). China bans withholding identity documents and demanding guarantees or money under any name during recruitment (Article 9, PRC Labor Contract Law). The habit of "holding originals to bind staff" violates both countries' laws.

Both mandate written contracts. Vietnam requires written labor contracts, except jobs under 1 month may be oral (Article 14). China requires a written contract within 1 month of employment; without one, double salary applies from the second month (Articles 10, 82, PRC Labor Contract Law). The common message: purely oral employment relationships are not protected for the employer's side in either country.

Both specially protect pregnant employees. Vietnam bans dismissal or unilateral termination of female employees for marriage, pregnancy, maternity leave or nursing children under 12 months (Article 137). China bans termination for female employees who are pregnant, on maternity leave or breastfeeding (Article 42, PRC Labor Contract Law). All personnel decisions involving female employees in these periods must be carefully legally reviewed in both countries.

5. Common risks for Chinese investors in Vietnam

Below are 5 risks the FLAT team most often encounters when reviewing compliance for Chinese companies in Vietnam — almost all stemming from applying "home legal thinking" to Vietnam's legal environment. For a comprehensive overview of labor compliance, see the labour law handbook for companies in Vietnam (hub).

Risk 1: Using Chinese templates translated into Vietnamese. Symptoms: contracts referencing "task-completion duration" types, Chinese-style breach penalties, 3–6 month probation for all positions. Cause: HR or the parent company sends the group's standard template for translation only. Prevention: redraft the entire template system under Articles 20 and 21 of the Labor Code 2019; any clause "unfamiliar" to Vietnamese law needs thorough legal review before use.

Risk 2: Probation exceeding Vietnamese caps. Symptoms: 2–3 month probation for ordinary workers, or repeated probation after one round. Cause: in China, probation attaches to contract duration, so 1–3 months is normal. Prevention: apply Article 25 caps correctly (ordinary jobs: 6 working days), one probation per job, keep written probation assessment dossiers.

Risk 3: Exceeding overtime caps without written consent. Symptoms: 60–80 overtime hours/month in peak season per Chinese habits, no written employee consent. Cause: unawareness of Article 107's 40-hour/month and 200-hour/year caps. Prevention: build production plans within permitted overtime caps; obtain written overtime consent on a standard form (see Decree 145/2020/ND-CP); where the 300-hour/year tier applies, complete the provincial notification procedure.

Risk 4: "Quick and clean" dismissals without regulations and procedure. Symptoms: immediate termination upon discovering a violation, no minutes, no registered internal regulations. Cause: China's Article 39 allows immediate termination for serious rule violations, so companies are used to acting fast. Prevention: issue and register internal labor regulations (mandatory with 10+ workers), follow the Article 122 disciplinary procedure — prove the fault, involve the employee representative organization, keep full minutes.

Risk 5: Dodging social insurance for Chinese experts and mass dispatch. Symptoms: Chinese experts working 2–3 years in Vietnam without Vietnamese SI contributions; hundreds of workers through unlicensed dispatch agencies. Cause: assuming "contributions in China suffice" or carrying the large-scale dispatch model. Prevention: review all foreign experts with 12+ month contracts for compulsory SI under the 2024 Law on Social Insurance (see social, health and unemployment insurance for foreign employees in Vietnam); use only licensed labor leasing services within the permitted job list.

6. Practical recommendations

Before investing:

1. Inventory all differences before "copying" the HR system. Do not bring contract templates, regulations and salary scales from China wholesale. Engage counsel who understands both systems to review and redraft under the Labor Code 2019 from the start — this costs far less than one unlawful-dismissal dispute.
2. Design working-time models within Vietnamese caps. For seasonal manufacturing, calculate from the outset an overtime plan within the 200-hour/year cap, or prepare dossiers for the 300-hour/year tier with proper notification.

During operation:

1. Build proper disciplinary "infrastructure". Issue internal labor regulations, register them with the competent authority, and train managers on the Article 122 disciplinary procedure. This is the only shield when a violating employee must be dismissed.
2. Tightly manage foreign workers and leased labor. List Chinese experts, reconcile contract durations against compulsory SI obligations; check leasing agencies' licenses and the permitted job list (see the work permit guide for hiring foreign workers and work permits for Chinese parent company staff in Vietnam).

When disputes arise:

1. Prioritize negotiation and mediation before court. Labor disputes in both Vietnam and China encourage mediation first. Complete dossiers (contracts, payroll, disciplinary minutes, registered regulations) are the precondition for favorable negotiation.
2. Find counsel who understands both systems. Disputes with a China–Vietnam element require lawyers who grasp both the PRC Labor Contract Law's logic (for dealing with the parent company) and Vietnam's Labor Code (for proceedings before Vietnamese authorities). Do not let an interpreter substitute for a lawyer.

7. Frequently asked questions

1. Can a Chinese company in Vietnam sign "project-based" labor contracts as in China? No. Vietnamese law recognizes only two types of labor contracts: indefinite-term and fixed-term of up to 36 months (Article 20, Labor Code 2019). China's "for the duration of a specific task" contract type does not exist in Vietnamese law; such duration clauses risk invalidity and the relationship will be interpreted in the employee's favor.

2. How do maximum probation periods differ between Vietnam and China? Vietnam measures by job level: up to 180 days (managers), 60 days (college-level+), 30 days (intermediate level), 6 working days (other jobs). China measures by contract duration: up to 1 month, 2 months or 6 months for contracts of 3 months–1 year, 1–3 years, and 3+ years respectively. Both countries allow only one probation per job/per employee.

3. What is the maximum monthly overtime? Vietnam: no more than 40 hours per month and 200 hours per year; certain special industries may reach 300 hours per year with written notice to the provincial labor authority. China: no more than 36 hours per month, with overtime agreed with the trade union and the employee. Both require employee consent before overtime.

4. Does unlawful dismissal in China really trigger double compensation? Yes. Where an employer unilaterally terminates a contract in violation of the law, the employee may demand continued performance; where the contract cannot continue, the company must pay compensation at twice the seniority-based economic compensation (Articles 48 and 87, PRC Labor Contract Law). This is one of the heaviest sanctions in Chinese labor law.

5. Must Chinese experts working in Vietnam contribute to Vietnamese social insurance? Yes, if they sign labor contracts of 12 months or more with an enterprise in Vietnam, they fall within compulsory social insurance under current Vietnamese law, including the 2024 Law on Social Insurance effective 01/07/2025. Specific rates, bases and benefit conditions should be checked against the latest guidance or with counsel for each case, as detailed rules may be adjusted over time.

Need counsel who understands both legal systems?

Cross-border China–Vietnam labor compliance and disputes require lawyers fluent in both systems: working with the parent company under the PRC Labor Contract Law's logic while defending the company before Vietnamese authorities under the Labor Code 2019. FLAT Law Firm's China Desk accompanies investors through the entire lifecycle of labor relations: from drafting contract templates and internal regulations to discipline, dismissal and dispute resolution.

For consultation: hotline 0988424851 — FLAT Law Firm, Your Trusted Legal Partner in Vietnam and Beyond.

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References

• Labor Code No. 45/2019/QH14 of Vietnam, effective 01/01/2021.
• Law on Social Insurance No. 41/2024/QH15 of Vietnam, effective 01/07/2025.
• Decree No. 145/2020/ND-CP detailing certain articles of the Labor Code on working conditions and labor relations.
• Decree No. 283/2026/ND-CP on administrative penalties in labor (effective 10/09/2026, replacing Decree No. 12/2022/ND-CP).
• 中华人民共和国劳动合同法 (Labor Contract Law of the People's Republic of China, adopted 2007, amended 2012, effective 01/07/2013).
• 中华人民共和国劳动法 (Labor Law of the People's Republic of China).
• 中华人民共和国社会保险法 (Social Insurance Law of the People's Republic of China, effective 01/07/2011).
• 职工带薪年休假条例 (Regulations on Paid Annual Leave of Employees, State Council Order No. 514, effective 01/01/2008).
• 女职工劳动保护特别规定 (Special Provisions on Labor Protection of Female Employees, State Council Order No. 619, issued 2012).
• 劳务派遣暂行规定 (Interim Provisions on Labor Dispatch, MOHRSS Order No. 22, effective 01/03/2014).