Required and Recommended Clauses in Employment Contracts: 2027 Update
October 20, 2026
When reviewing employment contracts for businesses, we often encounter a familiar situation: a contract downloaded from the internet, printed, signed, and filed away. As long as there is no dispute or inspection by the Department of Home Affairs (DOHA), everything seems fine. It is only when a problem arises that the parties revisit the contract and discover that a legally required provision is missing, or that a particular clause can be interpreted differently by each party.
This can lead to consequences that nobody wants: administrative penalties for failing to include mandatory contractual terms, or disputes over the interpretation of the contract that escalate into litigation before the courts—consuming both parties’ time and resources.
First, what is an employment contract?
Article 13 of the 2019 Labour Code defines an employment contract as an agreement concerning paid work, wages, working conditions, and the rights and obligations of each party in the employment relationship.
One point that is often overlooked is that the title of an agreement does not determine its legal nature. The parties may call it a “service contract”, a “collaborator agreement”, or something else. However, if its substance involves paid work, wages, and the management, direction, or supervision of one party by the other, it may still be classified as an employment contract. In such cases, the applicable requirements concerning contractual form and content, as well as administrative penalties, may apply.
Regarding form, an employment contract must generally be made in writing in two originals, with each party retaining one. Electronic employment contracts have equivalent legal validity and are subject to separate implementing regulations (currently Decree No. 337/2025/ND-CP, effective from 1 January 2026). For work lasting less than one month, an oral employment contract may be permitted. For work lasting one month or longer, a written contract is mandatory.
Mandatory contents required by law
Clause 1, Article 21 of the 2019 Labour Code lists the following 10 principal contractual contents:
| No. | Mandatory content | Practical drafting considerations |
|---|---|---|
| 1 | The employer’s name and address; the full name and position of the person entering into the contract on behalf of the employer. | The signatory must have proper authority: either the legal representative or a person duly authorised to sign. If signing under a power of attorney, the authorisation document should be retained with the company’s records. |
| 2 | The employee’s full name, date of birth, sex, place of residence, and Citizen Identity Card (CCCD), Identity Card (CMND), or passport number. | For foreign employees, their passport details and work permit (or confirmation that they are exempt from the work permit requirement) should be clearly recorded. |
| 3 | The job and workplace. | Defining the position too broadly (e.g. “employee”) can make management difficult, while defining it too narrowly can limit the company’s flexibility in reassignment. The wording should strike a balance. Note that temporary reassignment to work different from that specified in the contract is subject to time limits and notification procedures under Article 29. |
| 4 | The term of the employment contract. | There are only two types: indefinite-term contracts and fixed-term contracts, with the latter limited to a maximum of 36 months. If the contract expires but the employee continues working, a new contract must be signed within 30 days. The parties may enter into one additional fixed-term contract; if the employee continues working thereafter, the contract must be converted into an indefinite-term contract. Entering into the wrong type of contract may also result in penalties. |
| 5 | The salary for the job or position, form and timing of salary payment, salary allowances, and other additional payments. | Salary, allowances, and additional payments (such as bonuses and support payments) should be clearly distinguished. This distinction affects the basis for calculating social insurance contributions and taxes and is a common source of disputes when these amounts are lumped together. Salary must not be lower than the applicable regional minimum wage. |
| 6 | Salary grades and salary increases. | The contract may refer to the company’s applicable regulations, salary scales, and salary tables. |
| 7 | Working hours and rest periods. | Specify working hours, weekly days off, and annual leave. The contract may also refer to the company’s internal labour regulations. |
| 8 | Personal protective equipment provided to the employee. | Many contracts address this requirement too vaguely. The contract should specify the equipment the company will provide, taking into account the nature of the work. |
| 9 | Social insurance, health insurance, and unemployment insurance. | Clearly state that both parties will make contributions in accordance with applicable law. This is a particularly sensitive area during labour inspections. |
| 10 | Training, professional development, and improvement of occupational qualifications and skills. | A general commitment may be sufficient to address this requirement formally. However, if the company intends to recover training costs, a separate agreement should be prepared. |
A probationary contract does not need to contain all 10 items. Its principal contents include the probationary period and the matters specified in Points (a), (b), (c), (đ), (g), and (h) of Clause 1, Article 21—namely, Items 1, 2, 3, 5, 7, and 8 in the table above. Probationary salary must be at least 85% of the salary applicable to the relevant job.
It is also worth noting that certain special categories of employment are subject to specific contractual requirements, including agricultural, forestry, fishery, and salt-production workers, as well as persons hired as directors of enterprises in which the State holds capital.
What are the penalties for non-compliance?
Important note on the applicable regulations
Decree No. 12/2022/ND-CP, which many practitioners are still accustomed to citing as the regulation governing administrative penalties for labour-related violations, was replaced by Decree No. 283/2026/ND-CP with effect from 10 September 2026.
Violations that occurred and ended before that date but were discovered afterwards remain subject to the regulations in force at the time the violations occurred.
Employers may be penalised for:
Entering into an employment contract other than in writing with an employee performing work for a term of one month or longer.
Failing to enter into a written contract with an authorised representative of a group of employees performing seasonal work or specific work with a term of less than 12 months.
Entering into the wrong type of employment contract.
Entering into an employment contract that does not contain all principal contents required by law (the 10 items listed in Section 2 above).
Penalty levels based on the number of affected employees
| Number of affected employees | Fine for individuals | Fine for organisations/enterprises (double the individual rate) |
|---|---|---|
| 1–10 employees | VND 2–5 million | VND 4–10 million |
| 11–50 employees | VND 5–10 million | VND 10–20 million |
| 51–100 employees | VND 10–15 million | VND 20–30 million |
| 101–300 employees | VND 15–20 million | VND 30–40 million |
| 301 employees or more | VND 20–25 million | VND 40–50 million |
Clauses that are not legally mandatory but are worth including
Below are the clauses I would recommend considering, ranked by their practical usefulness.
Trade secrets and technological secrets
Where an employee’s work is directly related to trade secrets or technological secrets, the employer may enter into a written agreement covering the scope of protection, protection period, benefits, and compensation for breaches (Clause 2, Article 21).
Clear probationary provisions
The contract should specify the criteria for successfully completing probation, the evaluation method, each party’s right to terminate the probationary arrangement, and the procedure for entering into an official employment contract upon successful completion.
Many disputes concerning employment termination begin with a simple problem: the parties never clearly defined what it means to “pass” or “fail” probation.
A detailed remuneration structure
The contract should clarify:
Whether the salary is gross or net.
Who bears personal income tax and the applicable insurance contributions.
Which bonuses are guaranteed and which are discretionary.
The timing of salary calculation and payment.
The mechanism for salary adjustments.
For foreign employees or senior positions involving net salary or tax gross-up arrangements, this clause requires particularly careful drafting.
Overtime, remote work, and flexible work locations
The contract should specify the procedure for requesting and agreeing to overtime, how overtime pay is calculated, and how compliance with statutory limits will be ensured.
For remote or hybrid working arrangements, the contract should address the work location, equipment, occupational safety, confidentiality when working outside the office, and the method for recording working hours.
Confidentiality, intellectual property, and data
Confidentiality provisions should define confidential information, the protection period, and the consequences of a breach.
Intellectual property rights in work products created during employment should be expressly addressed rather than left to default rules. Disputes often arise precisely when a work product becomes commercially valuable.
Personal data and workplace monitoring also deserve attention. Companies process substantial amounts of employee data, including identity documents, family information, health information, CCTV footage, and data collected through employee-monitoring software.
Training cost agreements
If the company invests in employee training and expects the employee to commit to remaining with the company for a certain period, a separate training agreement should be prepared. It should specify the training content, duration, actual costs, and repayment mechanism.
This relates to the Labour Code’s provisions on reimbursement of training costs. Do not simply write, “The employee shall reimburse training costs if they resign,” and assume that the clause will automatically be enforceable.
Contract termination and handover
The contract should reiterate the statutory notice periods—45 days for indefinite-term contracts, 30 days for fixed-term contracts lasting from 12 to 36 months, and three working days for fixed-term contracts of less than 12 months, except where the law permits termination without prior notice.
It should also address handover procedures, the return of company property, and the deadline for final payments.
Preparing these provisions in advance can help both parties avoid unnecessary tension when the employment relationship comes to an end.
Dispute resolution, language, and notices
Dispute resolution: Specify the procedure for negotiation and mediation before referring the dispute to the competent authority. For individual labour disputes, parties should not assume that arbitration or the application of foreign law will necessarily be available.
Language: Bilingual employment contracts are common among foreign-invested enterprises. The contract should specify which language version prevails in the event of discrepancies. In practice, the Vietnamese version is generally the version used when dealing with Vietnamese state authorities.
Notices and communications: Specify the official addresses and email addresses for serving notices. This can help avoid disputes over whether a party actually received a notice.
Severability and amendments: A clause being held invalid should not necessarily invalidate the entire contract. Amendments should be made through written appendices to the employment contract.
Special considerations for foreign employees
The contract should clearly address the work permit or confirmation of exemption from the work permit requirement, the relationship between the employment contract’s term and the validity of the work permit, personal income tax, mandatory insurance under the applicable regulations, and any additional benefits, such as accommodation, air tickets, and repatriation, where applicable.
A good employment contract does not need to be lengthy. It needs to include everything required by law, provide clarity where the parties might otherwise interpret the same provision differently, and reflect how the business actually operates.
If you are preparing your company’s initial set of HR documents or simply want to review the employment contracts you currently use, contact us today for further legal advice and assistance.
This article is provided for general informational purposes only and does not constitute legal advice for any specific case. Laws and regulations may change; please verify the applicable legal instruments currently in force before applying the information contained herein.
Đạt Nguyễn (Tony)
Employment Law
FREE LEGAL CONSULTATION
Email: admin@fareast-legal.com
Phone: 0981 414 721
232 Nguyen Luong Bang, Tan My Ward, HCMC, Vietnam
