When the 13th month salary in Vietnam becomes mandatory and how to calculate it

Key Takeaways

• The 13th month salary is not required by Vietnam’s 2019 Labor Code. However, the moment it is committed in writing through an employment contract, collective labor agreement, or formally published bonus policy, it becomes a legal obligation the employer cannot unilaterally withdraw.
• Companies that fail to publicly post their bonus regulations can be fined between VND 10 million and VND 20 million under Decree 12/2022. This applies regardless of whether any bonus was actually paid.
• The most widely used calculation method is: months worked divided by 12, multiplied by average monthly salary. The 13th month bonus is subject to personal income tax but is excluded from the social, health, and unemployment insurance contribution base.
• The Talentnet-Mercer TRS 2025 survey recorded record-low salary increases at MNCs, lower than during the COVID period, while local enterprises reached 5.5–6.2%. Yet despite paying higher performance bonuses than MNCs and closing the base salary gap by up to 43% at the leadership level, local firms still see higher voluntary turnover. How a bonus policy is designed matters more than the bonus figure itself.

Vietnam’s average Tet bonus reached VND 8.69 million per worker in 2026, a 13% increase year-on-year based on data from more than 50,000 enterprises compiled by the Ministry of Home Affairs. For FDI employers operating in a market where year-end compensation directly affects post-Tet attrition, understanding the legal status of the 13th month salary is not just a compliance question: it is the starting point for building a bonus policy that protects the business.

When the 13th month salary becomes a legal obligation

Under Article 104 of the Vietnam Labor Code 2019, a bonus is defined as a payment the employer gives to employees based on business results and individual performance. Whether to pay and how much to pay is at the employer’s discretion. There is no statutory requirement to provide a 13th month salary.

The 13th month salary becomes a legal obligation when the employer has committed to it through any of these three mechanisms: an employment contract that includes a 13th month salary clause; a collective labor agreement that recognizes it as an employee entitlement; or an internal bonus policy that has been formally published at the workplace. Once committed through any of these forms, the employer cannot unilaterally modify or cancel the arrangement without completing a new consultation process with employee representatives.

Understanding which of these three mechanisms applies to your current workforce is the first step toward building a salary and compensation structure that is sound from a legal standpoint.

Three gaps in bonus policy that quietly erode employee trust

The risk does not come from deciding not to pay a 13th month salary. It comes from gaps in the bonus policy that erode employees’ trust in the organization long before any dispute arises.

• No published bonus policy. Without a clear policy, employees have no basis to understand or trust how the company makes decisions. Article 104 of the 2019 Labor Code requires bonus policies to be made public after consulting employee representative organizations; non-compliance can carry an administrative fine of VND 10 to 20 million for organizations under Decree 12/2022. But the real risk is trust eroding well before any dispute surfaces.
• Vague policy language. Phrases such as “subject to business results” or “at management’s discretion” create a gap in interpretation. Each employee fills that gap with their own expectations, and when reality does not match, a sense of unfairness forms faster than any legal dispute.
• Abrupt changes to the bonus policy. Cutting or adjusting a bonus policy without prior consultation is the clearest signal that a company does not take its commitments to employees seriously. Senior talent, the group with the most market options, often decides to leave after changes like these rather than after any open dispute. Legally, unilaterally altering a published policy can also be treated as a breach of the collective labor agreement.

Once you have identified which gap exists in your current bonus framework, the next step is ensuring accurate calculation through the right payroll solution, especially for cases that fall outside the standard formula.

How to calculate the 13th month salary and Tet bonus correctly

No specific calculation formula is mandated by law. The most widely adopted method in the market is:

13th Month Salary = (Months Worked in the Year ÷ 12) × Average Monthly Salary

Applied to three common scenarios: an employee who has worked the full calendar year receives one full month’s salary; an employee who joined mid-year receives a prorated amount based on actual months completed; and an employee who has resigned before the payment date has no legal entitlement unless the employment contract or company policy explicitly provides otherwise.

A point that many FDI employers conflate in their internal documentation: the 13th month salary is typically a fixed payment equivalent to one month’s base salary, while the Tet bonus is a variable payment tied to business and individual performance. Where companies pay both, each should be defined separately in the bonus policy to manage employee expectations and reduce the risk of disputes.

Regarding personal income tax (PIT) obligations and insurance contributions for these payments:

Getting the calculation right is a prerequisite. But market data increasingly shows that employers who calculate correctly and pay competitively are still facing higher-than-expected post-Tet attrition.

Paying by the rules but still losing people: three practical adjustments

Research published by Talentnet in November 2025 documents a counterintuitive pattern in Vietnamese compensation: local Vietnamese companies are paying higher performance bonuses than multinational competitors, yet their voluntary turnover rates remain higher. Many CEOs and senior executives hired from major corporations leave within 12 to 18 months despite competitive compensation packages.

The common thread is that these employees do not leave impulsively. They leave after a plan is already in place, typically after the year-end bonus has been collected. This is a cyclical risk that correct payroll calculation alone cannot solve. Three practical adjustments can change that dynamic:

Adjustment 1: Separate the 13th month salary from performance bonuses in writing. The 13th month salary is fixed; the Tet bonus varies with results. When the two are combined under vague language, employees cannot identify which portion is guaranteed and which is conditional. Unmanaged expectations are a significant driver of post-Tet disengagement.

Adjustment 2: Benchmark bonus budgets against market data before the negotiation season. The Talentnet-Mercer Total Remuneration Survey 2025 shows that multinationals in Vietnam typically pay between 1 and 2.5 months’ salary depending on KPIs and regional results. Knowing where your organization sits on that range before entering bonus discussions prevents budget decisions made by approximation.

Adjustment 3: Publish bonus criteria before the evaluation period begins. A study of 208 employees in Hanoi (NIC Global, 2025) found that clear criteria and transparent process matter more than the bonus amount itself in employee retention decisions. The question employees are asking is not only “how much?” but “based on what?” – and when the answer is “management’s discretion,” that becomes the starting point for accumulated dissatisfaction.

Conclusion

Vietnam’s 13th month salary is both a legal question and a business design decision. The legal question covers when it applies, how to calculate it, and how it is taxed: it has a clear answer. The business question of how to design a bonus policy that both complies and retains requires active attention to documentation, benchmarking, and criteria transparency.Talentnet’s payroll services handle the full payroll lifecycle including 13th month salary processing, PIT calculation and reporting, and social insurance filings, ensuring accuracy and compliance across every pay cycle.