5 most common labour and HR issues faced by foreign investors in Vietnam
Human resource and labour compliance in Vietnam is one of the most troublesome areas for international investors operating or seeking to enter Vietnam. In a recent LinkedIn survey of our extended Vieter community, 62% of our audience, when being asked of “What are the top challenges foreign investors face when doing business in Asia?” voted Labour laws and HR issues as their number 1 choice.
In this article, we seek to present the key risks and offer practical solutions for the most challenging issues faced by investors in Vietnam regarding HR, labour and employment compliance.
1. Labour contracts and HR document issues
Common issues regarding labour contracts:
- Incorrect practices adopted regarding the number of times employers are allowed to sign definite term contracts,
- Labour Contracts do not include required information, or include non-compliant regulations,
- No labour documents to prove the application of allowances or amounts,
- Non-compliance in signing contracts to avoid compulsory SHUI contribution (one non-compliant method is to separate the salary into many allowance amounts, however, the allowances are still subject to PIT or SHUI contributions).
Employers may face risks of being sued by employees who have non-compliant labour contracts, and can also face potential penalties from the authorities when subject to audit, leading to reputational damage and unexpected costs.
