In HR and labor management at Vietnamese subsidiaries, one of the areas most prone to disputes is the calculation of overtime pay, night work, and holiday work.
Unlike Japan, Vietnam clearly stipulates premium rates by law, and calculation errors can lead to risks such as unpaid overtime claims or corrective guidance from authorities.
This article provides a systematic explanation of the rules for calculating overtime, night work, and holiday pay in Vietnam, and clearly summarizes key points to watch out for in practical operations.
Basic Rules on Working Hours in Vietnam
Under Vietnamese labor law, the following principles apply.
- Standard working hours: Up to 8 hours per day and 48 hours per week
- Any hours worked beyond this are treated as overtime
When employees are required to work beyond these limits, payment of premium wages is mandatory.
Overtime Premium Rates (Weekdays)
The following premium rate applies to work exceeding normal working hours on weekdays.
| Category | Premium Rate |
|---|---|
| Weekday overtime | At least 150% of normal wages |
“Normal wages” are calculated based on base salary and certain allowances.
Holiday Work Premium Rates (Weekly Rest Days)
When employees are required to work on weekly rest days (typically Sundays), the following premium rate applies.
| Category | Premium Rate |
|---|---|
| Weekly rest day work | At least 200% of normal wages |
Please note that even if a compensatory day off is granted, payment of the legally required premium wage may still be necessary.
Public Holiday Work Premium Rates
When employees work on statutory public holidays in Vietnam, even higher premium rates are prescribed.
| Category | Premium Rate |
|---|---|
| Public holiday work | At least 300% of normal wages |
This is stricter than the rules for weekday overtime or weekly rest day work and is often overlooked.
Premium Rules for Night Work
Night work refers to work performed between 10:00 p.m. and 6:00 a.m..
For work performed during this time period, the following additional premium applies.
- An additional 30% or more on top of the applicable premium rate
For example, night work performed on a weekly rest day would be calculated as 200% + at least 30%.
Limits on Overtime Hours
Vietnam also imposes limits on overtime hours.
- General rule: up to 40 hours per month
- Under specific conditions: up to 200 hours per year (up to 300 hours depending on the industry)
Overtime exceeding these limits may constitute a violation of labor law.
Wages Included in the Overtime Calculation Base
A critical point in correctly calculating overtime pay is “what the premium rate is applied to.”
In Vietnam, overtime pay must be calculated based on normal wages.
Normal wages are not limited to base salary, but include wages paid monthly on a fixed basis as compensation for work.
A general classification is as follows.
| Category | Examples |
|---|---|
| Included in calculation base | Base salary, position allowance, job allowance, fixed monthly allowances |
| Generally excluded | Commuting allowance, meal allowance, bonuses (Tet bonus, etc.) |
However, it is important not to judge based solely on the name of an allowance. Treatment may change depending on the actual payment substance (fixed nature and compensation-for-work character).
If this calculation base is incorrectly determined, there is a risk that overtime pay may be deemed unpaid overtime even if payments have been made.
▶ Detailed explanation: What Is the Overtime Pay Calculation Base in Vietnam? Included and Excluded Wages Explained
Common Practical Pitfalls
- Misunderstanding the scope of wages included in the overtime calculation base
- Failing to properly apply overlapping premiums for night and holiday work
- Inadequate attendance management resulting in insufficient evidence
These issues are common causes of labor disputes and administrative guidance.
Relationship with Overall Payroll Processing
Wages for overtime, night work, and holiday work also affect the calculation of social insurance contributions and personal income tax (PIT).
It is essential to process them accurately with a full understanding of the overall payroll system.
▶ Related article: Basic Rules of Payroll Calculation in Vietnam: A Complete Guide
Conclusion
The calculation of overtime, night work, and holiday pay in Vietnam is governed by clearly defined premium rates and limits,
making accurate understanding and proper operation essential.
By correctly understanding the system and properly managing attendance and payroll, companies can significantly reduce labor-related risks.
- Basics of Overtime Pay Calculation in Vietnam: What Is Included and Excluded from Wages
- Allowances in Vietnam and Their Tax & Social Insurance Treatment: A Practical Guide to Included and Excluded Allowances
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