The Legal Foundation of Every Hire

In Vietnam, employment contracts are not mere formalities—they are legally binding documents that clearly define the rights, responsibilities, and protections of both employers and employees. For businesses, especially foreign investors and SMEs, selecting the appropriate contract type is essential to ensure compliance with Vietnamese labor laws and to minimize the risk of disputes.

This comprehensive guide outlines the main types of employment contracts under the 2019 Labor Code (effective from 2021) and offers practical advice to help you align your workforce strategy with current legal requirements.

1. Official Types of Employment Contracts in Vietnam

Under Article 20 of the 2019 Labor Code, there are two primary types of labor contracts:

1.1 Indefinite-Term Contract

• Definition: A contract without a fixed end date.

• Use Case: Suitable for long-term or permanent employees.

• Notice Period: Typically 30 to 45 days, depending on the employee’s role.

• Benefits: Offers job security and full legal protections.

• Important Note: After two consecutive fixed-term contracts in the same position, the contract must be converted to an indefinite-term contract to comply with the law.

1.2 Definite-Term Contract (Fixed-Term)

• Definition: A contract with a specified duration, up to a maximum of 36 months.

• Use Case: Ideal for probationary periods, project-based roles, or temporary staffing needs.

• Renewal: Can be renewed only once; subsequent renewals require conversion to an indefinite-term contract.

• Common Pitfall: Repeatedly renewing fixed-term contracts without conversion is a violation of labor regulations.

2. Other Contractual Arrangements to Note

Though the Labor Code officially recognizes only the two contract types above, other arrangements exist in practice but require caution:

• Probation Agreement: Integrated within the main employment contract, probation periods vary by role:

  • Up to 180 days for managerial positions

  • 30 to 60 days for regular employees

  • Employees may terminate during probation without compensation.

• Seasonal or Task-Based Contracts: Previously used for jobs under 12 months, these contracts are no longer recognized under the current Labor Code. Employers must now use fixed-term contracts for such roles.

3. Mandatory Contents of Every Types of Employment Contract

Per Article 21 of the Labor Code 2019, every valid employment contract must include:

• Employer and employee identification details

• Job title and description

• Workplace location

• Contract type and duration

• Salary details, payment method, and schedule

• Working hours and rest periods

• Social, health, and unemployment insurance obligations

• Rights, responsibilities, and benefits of both parties

• Terms for contract modification, suspension, and termination

Contracts must be in writing (except for temporary work under one month) and signed before the employee begins work.
Read more about How to Hire Employees in Vietnam: Full Legal Guide (2025) – NetViet HRS

4. Risks of Non-Compliance

Employers using incorrect contract types or omitting mandatory clauses risk:

• Legal disputes and fines, including back payments for social insurance contributions

• Invalid contract terminations

• Damage to reputation with authorities and employees

Consulting legal experts or HR outsourcing providers is advisable to ensure compliance.

5. Choosing the Right Contract Type for Your Business

Understanding the types of employment contract and using them correctly will not only help you meet legal obligations but also build trust and clarity with your workforce. Need help drafting or managing employment contracts in Vietnam? Our HR experts are here to assist with compliant, customized solutions.

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