17.1 Legislation
The Labour Code which was promulgated on 23 June 1994 serves as the principal legal base for all the labour matters in Vietnam. This Code was amended and supplemented on 2 April 2002, effective from 1 January 2003. The Code applies to both employee and employer including foreign organizations employing local and foreign staff working on regular basis in Vietnam.
Since June 1994, a number of decrees, decisions, circulars, directions and other regulations have been issued from time to time, by the Government and various ministries and agencies, to guide for the implementation of each chapter of the Code.　

17.2 Recruitment
Formerly, foreign capital enterprises must recruit employees first from individuals recommended by the local labour supplier(s). Now, foreign capital enterprises can do direct recruitment.
Employees must be at least 15 years old. Preference in employment should be given to Vietnamese citizens. However, if a Vietnamese person with appropriate qualifications is not found, foreign employees can be hired, provided that the period of that employment is fixed and appropriate training programmes are established for Vietnamese employees for future replacement. It is worthy of note that the number of recruited foreigners in a company shall in no case exceed 3% of the company’s total workforce or at least 1 minimally to 50 maximally.
Foreigners wishing to work in Vietnam must meet several prior conditions including being at least 18 years of age, having technical qualifications and professional experience; not having been sentenced or punished for offences against the State security or for other criminal offenses as outlined in the Criminal Code, not being wanted or having served sentences for serious offences in other countries, and having obtained a work permit from the competent authority of Vietnam should the working term exceed three months.
It is worthy of note that foreigners are not required to obtain work permits if they intend to work in Vietnam for less than three months; are invited to Vietnam to assist local companies and organizations with technical problems that Vietnamese experts or foreign experts currently in Vietnam are unable to address; members of boards of management, general directors, deputy general directors, directors or deputy directors of companies established under Vietnamese laws, heads of representative offices or branch offices in Vietnam.

17.3 Labour Contracts
A labour contract must be in writing and signed between the employee and the employer's representative, unless the employment will last less than three months. The contract should provide for either a definite term, an indefinite term or for work on seasonal or limited basis.
A labour contract must be in conformity with the Vietnamese laws and collective agreements (if any), with maximal two definitive term contracts to be first permitted, then indefinitive term contract to be applied. Unlike in the past when the printed-already form was applicable, the form built up itself by employer shall be now applicable. It must have clauses relating to: the work involved, working hours, rest breaks, recreation time, wages, place of works, term of contract, occupational safety and hygiene, social and medical insurance.
Probationary agreements are often included in the contracts. The probationary length varies, and subject to the nature and complexity of assigned jobs.

17.4 Statutory Minimums
Regular working hours are limited to 8 hours per day and would be, 40 hours per week in the nearest future (now 48 hours per week). Working hours may be extended by mutual agreements, but total daily overtime must be in no case over four hours and annual overtime must not exceed now 300 hours.
Subject to the nature of jobs, employees are entitled to have 12, 14 or 16 day annual leave. Female employees are entitled also to maternity leave of at least four or six months, as the case may be, with an allowance equal to 100% of salary.
Salary rates must conform to the collective labour agreement (if any) and must not be less than the legally-regulated minimum rates. There are currently four levels applicable to employees working for foreign capital enterprises, which come down from VND1,200,000 (about US$68) in the inner of Hanoi and HCMC, VND1,080,000 (about US$62) in the suburb of Hanoi, HCMC, and the inner of some smaller cities including Ha Long, Hai Phong, Bien Hoa, Vung Tau, etc., VND950,000 (about US$54) in the other cities and towns, to VND920,000 (about US$52) in the rest.

17.5 Collective Labour Agreement
Representatives of both employers and employees in a foreign capital enterprise are required to negotiate and sign a collective agreement. Normally, the employee's representative is the chairman of the enterprise's trade union.
A collective labour agreement must cover all maters such as wages, and working conditions for each category of jobs. A collective labor agreement shall have the validity depending on agreement between employer and enterprise’s trade union executive committee. A copy of the collective labour agreement must be submitted to provincial labour department for registration.
The term of the collective labour agreement may be extended from one to three years.

17.6 Internal Working Rules
Foreign capital enterprises must have its internal working rules registered with provincial labor department. An internal working rules must include compulsory items such as working time and rest time, orders in enterprises, labor safety and hygiene, breaches and sanctions methods etc.
Internal working rules shall be the legal basis for employees to follow and for employer to apply disciplines in case of breaches by employees.

17.7 Social, Healthcare and Unemployment Insurance
They have recently been merged into one system being managed by Social insurance organization. Social insurance covers illness, pregnancy, retirement, death, occupational accidents and diseases, and unemployment.
Foreign capital enterprises are required to comply with the social insurance scheme, at least with respect to Vietnamese employees. In general, employers must pay to the social insurance fund, now equal to 15% of the total wages which will be increased by 1% for every two years till 18% and employees will make a monthly payment of 6% of the total wages which will be increased by 1% for every two years to 8%.
With respect to health insurance, both sides of employer and employee have to pay to the health insurance, of which 2% of total wages are paid by employers and 1% of the total wages are paid by employees.
Unemployment insurance is effective from 1 January 2009, which requires 1% to be paid by the employer and another 1% to be paid by the employee. Having benefit from this type of insurance, the employee shall not be beneficial in terms of time for calculation of the severance allowance when the employment relation is terminated, from 1 January 2009 (i.e. all severance allowance if any shall be calculated up to 31 December 2008 as the last date for that).

17.8 Labour Disputes
It should be first noted that Vietnamese laws allow employees to strike works against employers. Attempts must be made to settle labour disputes through amicable negotiation between the employer and employee. If the dispute can not be settled through negotiation, the parties may refer the dispute to a conciliation council comprising an equal number of representatives from each side, or an arbitrator from local labour agency.
Failing all, the dispute can be referred to the local court for final settlement.