Vietnam Employment and Payroll Compliance: Key Considerations for Employers

Under Decree No. 161/2026/ND-CP, Vietnam's statutory Base Salary will increase from VND2.34 million to VND2.53 million with effect from 1 July 2026.

As the Base Salary is used in determining statutory contribution ceilings, the increase will affect contribution thresholds for Social Insurance (SI), Health Insurance (HI), Trade Union (TU) and other payroll-related obligations.

For Region 1, the minimum salary for statutory contributions will increase to VND5.31 million, while the Social Insurance contribution cap will increase to VND50.6 million, equivalent to 20 times the new statutory Base Salary. The Unemployment Insurance contribution cap will increase to VND106.2 million, equivalent to 20 times the Region 1 minimum salary.

What This Means for Employers

For employers, the revised contribution thresholds may result in:

• Increased statutory contribution costs for employees whose salaries are subject to contribution caps
• Higher payroll costs and workforce expenditure
• The need to review payroll budgets and labour cost forecasts

What This Means for Employees

Employees whose salaries exceed the revised contribution thresholds may experience:

• Higher Social Insurance, Health Insurance and Trade Union contributions
• Potential improvements in future social insurance benefits linked to higher contribution levels

Effective from 1 July 2026, amendments under the Labour Code 2019 and Social Insurance Law 2024 will expand maternity and paternity leave entitlements for employees with multiple births.

Maternity Leave

Female employees will continue to receive six months of maternity leave for the birth of their first child.

For multiple births, an additional month of leave will be granted for each child from the second child onwards. For example, a female employee giving birth to twins will be entitled to seven months of maternity leave.

Paternity Leave

Male employees will continue to receive five working days of paternity leave for the birth of their first child.

For multiple births, an additional five working days will be granted for each child from the second child onwards. For example, a male employee whose spouse gives birth to twins will be entitled to ten working days of paternity leave.

What This Means for Employers

The expanded leave entitlements may require organisations to:

• Review workforce planning and resource allocation
• Update leave administration procedures
• Assess business continuity arrangements during longer employee absences

What This Means for Employees

Employees will benefit from:

• Enhanced maternity and paternity benefits
• Additional support during childbirth and childcare periods
• Greater flexibility for family and caregiving responsibilities

Under Resolution No. 28/2026/QH16, 24 November has been designated as Vietnam Culture Day and will become a paid public holiday with effect from 1 July 2026.

What This Means for Employers

Businesses may need to:

• Update annual holiday calendars
• Review workforce scheduling and operational planning
• Adjust payroll calculations for employees required to work on the public holiday

What This Means for Employees

Employees will receive:

• An additional paid public holiday entitlement
• Public holiday pay protection where work is required on the designated holiday

Effective from April 2026, organisations withholding Personal Income Tax from employment income are required to submit PIT declarations on a quarterly basis.

The previous distinction between monthly and quarterly filing eligibility has been removed, creating a single quarterly reporting framework for all employers.

What This Means for Employers

The revised framework may:

• Reduce administrative workload through fewer tax filings
• Simplify tax compliance processes
• Require updates to payroll reporting calendars and compliance procedures

What This Means for Employees

The change does not affect:

• Monthly payroll calculations
• Personal Income Tax withholding obligations
• Employee tax liabilities

Under Decree No. 337/2025/ND-CP, Vietnam continues to encourage the adoption of electronic labour contracts as an alternative to traditional paper-based agreements.

The framework introduces additional implementation guidance covering:

• Digital signatures
• Timestamp services
• Electronic identification requirements

The initiative forms part of Vietnam's broader digitalisation agenda and supports the modernisation of employment administration.

What This Means for Employers

Potential benefits include:

• Reduced administrative burden
• Lower document storage requirements
• More efficient onboarding and contract management processes
• Greater support for digital transformation initiatives

What This Means for Employees

Employees may benefit from:

• Faster and more convenient contract execution
• Improved accessibility to employment records and documentation
• Greater flexibility in employment administration processes

Several payroll and Personal Income Tax proposals remain under consultation and have not yet been formally approved. However, employers may wish to monitor these developments and assess their potential impact on payroll administration and employee tax management.

Proposed Non-Taxable Meal Allowance Threshold

The draft proposal would introduce a non-taxable cash meal allowance threshold of VND1.2 million per employee per month.

Additional Conditions for Other Dependents

The proposal would require dependents classified as "other dependents" to belong to poor or near-poor households in order to qualify for dependent tax deductions.

Revised Dependent Registration Deadline

The draft proposal would require all dependents to be registered by 31 December of the relevant tax year in order to qualify for dependent deductions.

Increased PIT Withholding Threshold

The proposal would increase the current PIT withholding threshold from VND2 million to VND5 million per payment for individuals who are not employed under a labour contract or who are employed under contracts of less than three months.

The existing 10% withholding rate would remain unchanged.

Potential Impact of Proposed Changes

If implemented, these proposals could result in:

• Changes to employee tax administration requirements
• Adjustments to payroll and withholding processes
• Reduced withholding obligations for certain lower-value payments
• Increased flexibility for meal allowance administration

Vietnam's 2026 employment and payroll changes affect multiple aspects of workforce administration, from payroll calculations and employee benefits to tax reporting and employment documentation.

To prepare for the changes, employers should consider the following actions:

Conduct a Payroll Impact Assessment

Review employee salary data to identify individuals who may be affected by revised statutory contribution thresholds and calculate the resulting impact on employer costs.

This assessment can support workforce budgeting, forecasting and compensation planning activities.

Validate Payroll System Configuration

Ensure payroll systems have been updated to reflect:

• Revised contribution ceilings
• Statutory reporting requirements
• New public holiday calculations
• Updated leave entitlements

Testing should be completed before processing payroll periods affected by the new rules.

Review Workforce Planning and Leave Management Processes

Assess whether existing workforce planning assumptions adequately account for expanded maternity and paternity leave entitlements.

Organisations may also wish to review succession planning, temporary resource arrangements and business continuity measures for key roles.

Update Employment Documentation and Internal Policies

Review and update:

• Employee handbooks
• Leave policies
• Payroll procedures
• Internal Labour Regulations
• Attendance and holiday policies

Clear employee communication plans should also be established to ensure employees understand the new requirements and entitlements.

Strengthen Payroll Tax Compliance Processes

Review payroll compliance calendars, reporting responsibilities and internal controls to ensure readiness for mandatory quarterly PIT declarations.

This may also present an opportunity to streamline payroll reporting workflows and strengthen governance processes.

Evaluate Readiness for Electronic Labour Contracts

Businesses considering the adoption of electronic labour contracts should assess the readiness of their HR, onboarding and document management processes.

This may include reviewing digital signature solutions, electronic identification requirements and document retention frameworks.

Monitor Future Personal Income Tax Developments

Although the proposed PIT reforms have not yet been enacted, employers should assess their potential impact on payroll administration, withholding processes and employee communications.

Early preparation can help minimise implementation challenges once final regulations are issued.

Keeping pace with evolving employment, payroll and tax requirements can be challenging, particularly for organisations operating across multiple jurisdictions.

Vistra supports businesses in Vietnam through integrated payroll, HR administration and employment compliance services.

Our specialists can assist with:

• Payroll administration and statutory compliance
• Employment and workforce compliance reviews
• Leave and benefits administration
• Personal Income Tax compliance
• Electronic labour contract implementation
• Regulatory monitoring and advisory support

By combining local expertise with regional capabilities, we help organisations manage compliance obligations, reduce operational risk and navigate regulatory change with confidence.