Labour contracts in Vietnam: the legal structure and the contents most often got wrong.

1. Risk often arises when the contract is signed

The labour contract is the foundation of every employment relationship in an enterprise. In practice, most labour disputes in Vietnam do not stem from termination but from decisions made when the contract is signed: choosing the wrong type of contract, omitting mandatory terms, or letting a fixed-term contract turn into an indefinite-term contract without the enterprise noticing.

2. The law now recognises only two types of labour contract

An enterprise may now enter into only two types of labour contract:

• Indefinite-term labour contract: the two parties do not determine the term or the time at which the contract ceases to have effect.
• Fixed-term labour contract: the two parties determine the term and the time at which the contract ceases to have effect, within a period of no more than 36 months from the time the contract takes effect.

Seasonal contracts and contracts for a specific task of less than 12 months, which the Labour Code 2012 recognised, were abolished from 1 January 2021. An enterprise that still uses a seasonal contract template is signing a type of contract that no longer exists in law, and signing the wrong type of contract is a sanctionable breach.

3. A fixed-term contract may be signed only one further time

When a fixed-term contract expires but the employee keeps working, the relationship is dealt with in three steps:

1. Within 30 days from the date on which the contract expires, the two parties must enter into a new labour contract. Until the new contract is signed, the rights and obligations of the two parties are performed in accordance with the contract already entered into.
2. If the two parties do not enter into a new contract by the expiry of the 30 day period, the fixed-term contract already entered into becomes an indefinite-term labour contract.
3. Where the new contract entered into by the two parties is also a fixed-term contract, it may be signed one further time only. After that, if the employee continues to work, the two parties must enter into an indefinite-term contract.

The contract converts automatically. The conversion in step 2 takes effect whatever the parties intend and without any confirming document. If an enterprise lets an employee keep working for more than 30 days after the contract expires, the contract becomes indefinite-term, even if the personnel file still shows the old contract. From then on, the notice period for unilateral termination rises from 30 to 45 days, and the enterprise can no longer rely on the expiry of the contract as a ground for termination.

The rule has exceptions. The limit of one further contract does not apply to contracts with a person hired as director in an enterprise with state capital, elderly employees and foreign employees, or to the extension of the contract of a part-time trade union official during that official's term of office.

4. Electronic contracts have the same validity as written contracts

A labour contract must be entered into in writing and made in two copies, with each party keeping one copy. The parties may also enter into it through electronic means in the form of a data message; a contract entered into in this way has the same validity as a labour contract in writing.

The electronic transactions legislation now in force is the Law on Electronic Transactions 2023, effective from 1 July 2024. An electronic contract is valid if the integrity of the data message is assured and the signatory can be identified, whatever platform the enterprise uses.

For work lasting less than one month, the parties may enter into an oral contract. This option is not available for contracts signed through an authorised representative for a group of employees, contracts with employees under 18, or contracts with domestic workers.

5. The contract must contain all principal contents

A labour contract must contain all of the following principal contents: information on the employer and on the person entering into the contract on the employer's side; personal particulars of the employee; the work and the place of work; the term of the contract; the salary for the work or position, the form of salary payment, the time limit for salary payment, salary allowances and other additional amounts; arrangements for promotion and salary increases; working hours and rest periods; the provision of labour protection equipment; social insurance, health insurance and unemployment insurance; and training, retraining and the improvement of occupational skills. Circular No. 10/2020/TT-BLDTBXH guides these contents in detail.

Signing a contract without all the principal contents is a sanctionable breach under Decree No. 283/2026/ND-CP, and the fine rises with the number of employees affected.

5.1. Business secrets need to be identified in writing

Where an employee's work relates directly to business secrets or technological secrets, the employer has the right to agree in writing on the content of the protection, the duration of the protection, the benefits and compensation in the event of a breach.

The value of such an agreement goes beyond protecting information. The law allows dismissal of an employee who discloses business secrets, but to prove the breach the employer must first show which information is a business secret. An enterprise without a written list of its business secrets cannot rely on this ground for dismissal.

6. Probation is limited in number, length and pay

6.1. How probation is agreed determines the next step

The parties may set out probation in the labour contract or in a separate probation contract. Both are lawful, but they lead to different results at the end of probation, as section 6.4 explains.

Probation does not apply to an employee entering into a contract with a term of less than 01 month.

6.2. The maximum probation period depends on the type of work

The parties may apply probation once only for a given piece of work, and the probation period may not exceed:

6.3. Probation pay may not be below 85%

The parties may agree the probation salary, but it must be at least 85% of the salary for the job. Paying less is a sanctionable breach, in the same group as applying probation more than once or for longer than allowed.

6.4. At the end of probation, the employer must notify the result

At the end of probation, the employer must notify the employee of the result. If the employee passes, the next step depends on how the parties agreed probation: where the probation terms were in the labour contract, the parties continue with that contract; where they used a separate probation contract, they must sign a labour contract.

During probation, either party may cancel the probation contract or the labour contract without notice and without compensation. This right ends when probation ends.

Probation counts towards severance allowance. Probation is included in working time when calculating severance allowance, under Decree No. 145/2020/ND-CP. This differs from practice before 2021, so the enterprise's personnel records should reflect it.

7. Contracts with foreign employees are tied to the work permit

Employment of a foreign national is subject to one extra limit: the labour contract term may not exceed the work permit term. In return, the parties may sign successive fixed-term contracts without the one-further-contract limit.

Decree No. 219/2025/ND-CP, in force from 7 August 2025 and replacing Decree No. 152/2020/ND-CP and Decree No. 70/2023/ND-CP, makes several changes that directly affect contract drafting:

• A work permit lasts up to 2 years and may be extended only once, also for up to 2 years. There is no clear guidance yet on what happens after the single extension, so enterprises should allow for applying for a new permit when planning long-term for foreign staff.
• The report explaining the need for foreign employees is now part of the work permit application, instead of a separate procedure.
• The competent authority issues a work permit within 10 working days of receipt of a complete application.
• The provincial People's Committee of the place where the employee will work issues, reissues, extends and revokes work permits; if the employee works in several provinces, the People's Committee of the province where the employer has its head office is competent.

When the work permit expires, the labour contract ends on a separate ground, so the enterprise does not need to rely on unilateral termination.

8. Organisations are fined double the amount for individuals

The table below sets out the fines for individuals under Decree No. 283/2026/ND-CP. Organisations are fined double the amount for individuals.

9. Points for the enterprise to review

1. Check the contract templates in use to make sure none is a seasonal contract.
2. Track the expiry date of each fixed-term contract, with an alert at least 45 days ahead.
3. Identify employees who have kept working more than 30 days after their contract expired.
4. Make sure each contract includes all ten groups of principal contents, especially salary allowances and other additional payments.
5. Put in place written business secret protection agreements, with a specific list, for the relevant positions.
6. Check that each position's probation period matches its category and that probation pay is at least 85%.
7. Notify probation results in writing and, where a separate probation contract was used, sign the labour contract once the employee passes.
8. For foreign employees, make sure the contract term does not exceed the work permit term.