Vietnam’s Legal Framework for Probationary Contracts: Implications for Businesses

The Vietnam government regulates probationary contracts to protect workers’ rights, with a clear legal framework in place for the initial employment phase. This article examines the types of probationary contracts in Vietnam and their corresponding social insurance obligations. Foreign invested firms should note these obligations to stay compliant.

Probation is a mutual agreement between the employer and employee, allowing the employee to perform the role on a trial basis for a set period. Its purpose is to assess the employee’s competencies, qualifications, adaptability, and suitability for the workplace before finalizing the employment agreement.

Probationary contracts in Vietnam

Article 24 of the 2019 Labor Code prescribes that probation terms can be presented in two formats:

• Labor contracts with probationary content; or
• Separate probation contracts.

The probation contract must include the probation period and the following contents:

• The employer’s name and address;
• Full name and position of the person who concludes the contract on the employer’s side;
• Full name, date of birth, gender, residence, identity card number or passport number of the person who concludes the contract on the employee’s side;
• The job title and workplace;
• Job- or position-based salary, form of salary payment, due date for payment of salary, allowances, and other additional payments;
• Working hours and rest periods; and
• Personal protective equipment for the employee.

Maximum probationary period

According to Article 27 of the 2019 Labor Code, employers and employees shall negotiate the probationary period based on the nature and complexity of the job. However, employees are only allowed to undergo probation once for any position, and the probation period must be limited for different types of occupations, including:

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• No more than 60 days for positions requiring professional and technical qualifications from college level or higher;
• No more than 30 days for positions requiring professional and technical qualifications of intermediate vocational level, intermediate professional level, technical workers, and professional staff; and
• No more than 6 days: Other occupations.

Additionally, probation for managerial positions is prohibited from lasting longer than 180 days, as defined by the Enterprise Law and the Law on Management and Use of State Capital Investment in Production and Business Enterprises.

Note: Probation is not allowed if the employee works under an employment contract for less than one month.

Probationary salary

According to the 2019 Labor Code, the probationary salary shall be negotiated by both parties and must not be lower than 85 percent of the offered salary.

Probationary period conclusion

Upon the completion of the probationary period, the employer must notify the employee of the probation results.

• If the outcome is satisfactory, the employer will continue to implement the existing employment contract, if one exists, or establish a new one.
• If the outcome is unsatisfactory, the employer may terminate the employment contracts or probationary contracts.

During the probationary period, both employers and employees have the right to terminate the agreed employment or probationary contracts without prior notice or compensation obligations.

Subjects of compulsory social insurance

Vietnam’s 2024 Law on Social Insurance, effective July 1, 2025, expands mandatory social insurance coverage beyond the 2014 version. Under this law, both Vietnamese and foreign employees in Vietnam must participate in compulsory social insurance as specified in the legal provisions.

Also Read: Vietnam’s 2024 Social Insurance Law: Implications for Businesses

For Vietnamese employees

Vietnamese employees are subject to compulsory social insurance, including:

• Employees working under indefinite-term labor contracts, fixed-term labor contracts, seasonal labor contracts, or contracts for a certain job with a term from three months to less than 12 months, including labor contracts signed between employers and legal representatives of people under 15 years old in accordance with the provisions of the law on labor;
• Employees working under labor contracts with a term from one month to less than three months;
• Cadres, civil servants, public employees;
• National defense workers, police workers, and people working in other key organizations;
• Officers and professional soldiers of the People’s Army; Officers, professional non-commissioned officers, officers, technical non-commissioned officers of the people’s public security; people working in cryptography receiving salaries as military personnel;
• Non-commissioned officers and soldiers of the People’s Army; non-commissioned officers and soldiers of the People’s Public Security serving for a limited period; military, police, and cryptography students currently studying are entitled to living expenses;
• People working abroad under contracts stipulated in the Law on Vietnamese workers working abroad under contracts;
• Business managers, cooperative managers, and operators receiving salaries; and
• Part-time workers in communes, wards, and towns.

For foreign employees

Foreign employees working in Vietnam are subject to compulsory social insurance under the following conditions:

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• Having a work permit, practice certificate, or practice license issued by a Vietnamese competent authority; and
• Having an indefinite-term or fixed-term labor contract of 12 months or more with an employer in Vietnam.

However, foreign workers do not have to participate in Vietnam’s compulsory social insurance in the following cases:

• Internal transfers within the enterprise or reaching retirement age as prescribed by the 2019 Labor Code; or
• Being subject to the regulation of an international treaty to which Vietnam is a signatory or participant with other provisions.

Social insurance obligation during probation

Compulsory social insurance obligations apply only when a labor contract is established. This results in two scenarios:

• No obligation arises if a separate probationary contract is used.
• An obligation applies if the probationary period is included within a labor contract.

Moreover, compared to other contract types, additional payments for employees exempt from compulsory social insurance are determined as follows:

• Labor contracts with probationary terms: If a probationary employee is not subject to compulsory social, health, and unemployment insurance, they will receive an additional amount equal to the employer’s usual insurance contributions as part of their salary.
• Probationary contracts: Since probationary contracts under the 2019 Labor Code do not include provisions for social, health, or unemployment insurance, employers are not required to provide these benefits. As a result, no additional payment equivalent to insurance contributions is required during salary disbursement.

Implication for businesses

In practice, Vietnam’s competent authorities require both employers and employees to fulfill social insurance obligations once a labor contract is signed, regardless of whether it includes a probationary period. This means that social insurance contributions must be made during probation.

To defer social insurance contributions until the employee’s official start date, employers may opt to establish a separate probationary agreement instead of including probation terms within the main employment contract.

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