Wednesday, September 3, 2008

Pay me in USD

Part of our payroll service in Vietnam is to gather and answer the queries of our client's employees in Vietnam. The wildly fluctuating black market exchange rate recently has caused some of these people to complain bitterly about being paid in Vietnamese Dong.

The law in Vietnam is very clear on this.

  1. In principle, a Vietnamese person can sign a labour contract with an employer being organizations duly established and existing under the laws of Vietnam, mutually agreeing the salary in foreign currency, usually in USD.
  2. However when the employer pays the salary to the employee directly or indirectly, the salary must be exchanged for Vietnamese Dong on the basic of average rate as provided by the State Bank of Vietnam at the time of salary payment or other exchange rate as agreed in the labour contract by the parties, other than a foreigner.
  3. In accordance with the law of Vietnam, the use of foreign currency within the territory of Vietnam is subject to Ordinance 28, Decree 160 and related documents. Specifically, under Article 22 of Ordinance 28, “within the territory of Vietnam, all transactions, payments, listings and advertisements of the organizations being residents must not be carried out in foreign currency except for transactions with credit institutions and payments made via intermediaries, including authorized collection, entrustment, agency and other necessary cases permitted by the Prime Minister of the Government” .
Organizations with Vietnamese staff need to be aware of this so they can quickly and easily explain to their staff that USD or other foreign currency payments as part of an employment contract are not legal.

If you have any questions, do not hesitate to contact HR2B Payroll Services in Vietnam