Vietnam's 13th Month Bonus: Legal Guide for Employers

Sep 23, 2025

Blog, EOR

Vietnam’s 13th Month Bonus: Is it Compulsory? The Definitive Guide for Employers

The Vietnam’s 13th Month Bonus is a widely discussed topic in the Vietnamese labor market. While it is a traditional practice, its legal standing is often misunderstood. This guide provides a clear and authoritative overview of the facts for employers.

Table of Contents

Vietnam’s 13th Month Bonus: A Standard Practice, Not a Legal Requirement

The Vietnamese Labour Code (2019) and its related decrees do not legally define or mandate a 13th-month salary. Instead, it is classified as a bonus, an amount paid to employees based on an agreement between the employer and the employee.

Bonus vs. Salary: The 13th-month bonus is a form of reward or incentive, distinct from an employee’s regular monthly salary. Its payment is at the employer’s discretion and is often based on the company’s business performance and the employee’s contribution throughout the year.
The Importance of Company Policy: While not compulsory by law, employers are legally bound by their internal policies. The terms for the bonus, including eligibility criteria, calculation methods, and payment schedules, are typically outlined in the company’s internal bonus regulations or the Collective Labour Agreement. These documents become legally binding once officially enacted after consultation with employee representatives.

Resignation and the Vietnam’s 13th Month Bonus: Is Employee Still Eligible?

A common question is whether an employee must work a full year to be eligible for the Vietnam’s 13th Month Bonus. The answer depends entirely on the company’s policy. The law does not mandate a full 12-month tenure for eligibility.

Most company policies stipulate that to be considered for the bonus, an employee must meet the following general conditions:

Hold a valid labor contract.
Have been working for a specific period (e.g., at least two months, including probation).
Remain an active employee on the bonus payment date.

If these criteria are met, the bonus is often prorated based on the number of months worked. The typical calculation is as follows:

13th-Month Bonus = Number of Months Worked/12×Average Monthly Salary

This pro-rata approach is a standard practice to ensure fair compensation for employees who have not completed a full year of service.

Resignation and Vietnam’s 13th Month Bonus Eligibility

The entitlement to Vietnam’s 13th Month Bonus for an employee who resigns before the year-end is determined by the company’s internal policies. The bonus is considered an agreed-upon benefit, not a legal right.

Reviewing Company Policies: Employers must refer to their company’s bonus policy or labor contract. These documents should specify the conditions under which an employee is eligible for a prorated bonus even after resignation.
A Binding Agreement: If the Collective Labour Agreement or internal regulations explicitly state that a prorated bonus will be paid to employees who resign at the end of the year, the employer is legally obligated to honor that commitment.

The payment of a bonus to a resigning employee is therefore dependent on the written agreements established by the employer.

Tax and Social Insurance Implications

Employers must understand how the 13th-month bonus is treated for tax and social insurance to ensure accurate financial management and compliance.

Personal Income Tax (PIT)

The 13th-month bonus is subject to Personal Income Tax. According to the Law on Personal Income Tax, income from salaries, wages, and other similar payments, including bonuses, are taxable.

Taxable Income: All forms of cash or non-cash bonuses are generally considered taxable income.
Calculation: The 13th-month bonus is added to an employee’s total annual income and is subject to PIT only after all legal deductions and personal exemptions have been applied.

Social Insurance (SI)

The 13th-month bonus is not subject to Social Insurance contributions.

Legal Basis: The Social Insurance Law specifies that companies do not include bonus payments, such as the 13th-month bonus, in the calculation base for mandatory Social Insurance, Health Insurance, and Unemployment Insurance contributions.

This distinction is crucial for both employers and employees when calculating total compensation and contributions.

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