Vietnam is undergoing its most significant labour law overhaul in over a decade. Between January and July 2026, five separate reforms take effect, covering work permits, social insurance, minimum wages, employment contracts and personal income tax. Consequently, foreign companies with staff or operations in Vietnam face a compressed compliance window, not a single deadline.
What is changing under Vietnam’s 2026 labour law changes
Several reforms are landing at once, and they interact with each other. Specifically, the changes include:
- A 7.2% regional minimum wage increase, effective 1 January 2026
- A streamlined foreign worker permit process under Decree 219/2025
- Expanded social insurance and unemployment insurance coverage under the Employment Law 2025
- A legal framework for electronic labour contracts, fully operational from 1 July 2026
- A two-phase personal income tax reform, with new deductions from January and new brackets from July
Because several of these changes share the same legal base — the regional minimum wage — a change to one figure cascades into social insurance caps, unemployment benefit ceilings and overtime calculations at the same time.
Work permits get faster for foreign professionals
Under the previous system, hiring a foreign employee required two separate approval steps and took roughly five weeks. Now, Decree 219/2025 replaces that with a single digital application processed in ten working days through the National Public Service Portal.
Moreover, the experience requirements for qualifying as an “expert” have dropped. Foreign professionals in technology, finance or innovation roles now need just one year of relevant experience, down from three. In other sectors, the threshold has fallen from three years to two. As a result, Italian companies looking to send specialists to a Vietnamese subsidiary face a considerably shorter path to approval than they did in 2025.
Minimum wage and social insurance costs are rising
At the same time, labour costs are increasing. The regional minimum wage rose by an average of 7.2% from 1 January 2026, with Hanoi and Ho Chi Minh City now at VND 5,310,000 per month. Because social insurance contribution caps are set at 20 times the regional minimum wage, this increase raises the maximum contribution base across the board.
Additionally, the Employment Law 2025 expanded who must be enrolled in unemployment insurance. Short-term contracts of one to three months, and part-time staff above a salary threshold, are now compulsorily covered. Therefore, companies with flexible or short-term hiring arrangements in Vietnam should review their current enrolment status, since gaps here are increasingly visible to inspectors.
Personal income tax relief for expatriate staff
Not every change adds cost. From 1 January 2026, personal income tax deductions increased by 41%, raising the tax-free threshold for employees without dependents to VND 15.5 million per month. Then, from 1 July 2026, a separate reform simplifies the tax brackets from seven to five and raises the top-rate threshold.
For companies employing expatriate managers or technical staff, this means two separate payroll updates within the same year – one in January, one in July. Missing either date risks applying the wrong withholding rate for part of the year.
What this means for Italian companies operating in Vietnam
Taken together, these reforms reward companies that treat 2026 as a single compliance review rather than a set of isolated tasks. A payroll update, a work permit renewal and a social insurance audit are now connected by the same underlying figures. Consequently, businesses that review all three together avoid the retroactive corrections that come from treating them separately.
How Kelmer Group can help
Navigating which changes apply to your specific workforce — Vietnamese staff, foreign specialists, or a mix of both equires matching your current contracts and enrolments against five overlapping legal frameworks.
Kelmer Group supports Italian and European businesses operating in Vietnam with HR compliance, payroll administration and market entry advisory, working alongside our tax and legal teams to keep your Vietnamese operations aligned with the new rules.
Source: www.beyondbordershr.com/vietnam-labour-law-updates-2026/