VI Overtime Pay in Vietnam 2026: Calculation, Rates and PIT Exemption
Overtime pay in Vietnam 2026 is calculated using statutory rates of at least 150%, 200% or 300%, depending on when the additional work is performed. Employees working at night may also be entitled to additional payments under Vietnamese labour law.
An important development in 2026 concerns personal income tax (PIT). Under Decree No. 253/2026/ND-CP, qualifying overtime and night-work remuneration is exempt from PIT in full, rather than only the additional premium previously exempt under the former tax rules.
For foreign-invested enterprises (FDIs), HR departments and payroll managers, these requirements affect both employee compensation and payroll tax compliance. Businesses must calculate overtime correctly, observe statutory working-hour limits and maintain adequate records to support the applicable tax exemption.
This article explains overtime pay in Vietnam in 2026, including calculation formulas, practical examples, night-work premiums and the updated PIT treatment.
1. Legal Framework for Overtime Pay in Vietnam 2026
The principal legal basis is Labour Code No. 45/2019/QH14 dated 20 November 2019, which entered into force on 1 January 2021.
Article 98 establishes the minimum remuneration for overtime and night work, while Article 107 regulates the conditions and limits for organising overtime.
The detailed calculation methods are provided in Decree No. 145/2020/ND-CP dated 14 December 2020, detailing and guiding the implementation of certain provisions of the Labour Code concerning working conditions and labour relations.
In particular, Article 55 addresses overtime remuneration, Article 56 covers night-work remuneration, and Article 57 regulates overtime performed at night.
The applicable overtime rates and working-hour limits originate from these labour regulations. They should not be presented as newly introduced requirements in 2026.
What has changed significantly in 2026 is the PIT treatment of qualifying overtime and night-work remuneration under the new personal income tax legislation.
2. Overtime Pay Rates in Vietnam: 150%, 200% and 300%
Under Clause 1, Article 98 of the Labour Code, overtime remuneration is determined based on the applicable piece-rate wage or actual wage paid for the work being performed.
For employees paid by time, the following statutory minimum rates apply.
| When overtime is performed | Minimum overtime rate |
|---|---|
| Normal working day | 150% |
| Weekly rest day | 200% |
| Public holiday, Tet holiday or paid leave day | 300% |
These percentages are statutory minimums. Employers may offer higher rates through employment contracts, collective labour agreements or internal remuneration policies.
2.1. Overtime on normal working days
Employees working beyond their normal working hours on an ordinary working day must receive at least 150% of the applicable hourly wage.
For example, assume an employee has an eligible actual hourly wage of VND 60,000 and works an additional two hours.
Overtime remuneration = VND 60,000 × 150% × 2
Total overtime pay: VND 180,000
This amount represents payment for the two additional working hours, assuming all relevant legal conditions are satisfied.
2.2. Overtime on weekly rest days
When employees work on their designated weekly rest days, the minimum overtime rate is 200%.
Using the same hourly wage of VND 60,000, two hours of overtime would result in:
Overtime remuneration = VND 60,000 × 200% × 2
Total overtime pay: VND 240,000
Employers must identify the employee’s actual weekly rest day under the applicable working schedule.
Sunday is not automatically a weekly rest day for every employee, particularly in businesses operating rotating shifts or continuous production schedules.
2.3. Overtime on public holidays and Tet holidays
Overtime performed on public holidays, Tet holidays or paid leave days is generally compensated at a minimum rate of 300%.
For an employee with an eligible hourly wage of VND 60,000 who works two additional hours:
Overtime remuneration = VND 60,000 × 300% × 2
Total overtime pay: VND 360,000
For employees receiving daily wages, the statutory 300% calculation excludes the normal wage payable for the relevant paid holiday.
For monthly-paid employees, employers should determine whether the holiday entitlement has already been included in the monthly salary before calculating the total amount payable.
Therefore, describing holiday work as a universal 400% payment without examining the employee’s remuneration arrangement may be misleading.
3. How to Calculate Overtime Pay for Monthly-Paid Employees
Accurate overtime pay in Vietnam requires determining the actual hourly wage used in the calculation.
Under Point a, Clause 1, Article 55 of Decree No. 145/2020/ND-CP, the hourly wage is calculated based on the actual remuneration for the employee’s job during the relevant period, divided by the corresponding actual working hours, subject to statutory limitations.
3.1. Overtime calculation formula
For employees paid by time:
Overtime pay = Actual hourly wage × Applicable overtime rate × Overtime hours
The actual hourly wage is determined by dividing the eligible actual remuneration for the work performed during the relevant month, week or day by the corresponding actual working hours.
Certain payments must be excluded from the calculation base under Article 55, including overtime payments, night-work premiums, statutory bonuses and specified allowances or benefits unrelated to the employee’s contractual job performance.
Employers should not automatically use a contractual figure labelled “basic salary” without checking the actual remuneration components covered by the regulation.
3.2. Can companies use 26 working days for every month?
Using a fixed 26-day divisor without examining the applicable working schedule may lead to incorrect overtime calculations.
The calculation must follow Article 55 and consider the employee’s actual working hours and the normal working-time arrangements selected by the employer.
The Ministry of Home Affairs has also provided guidance on determining the actual hourly wage for overtime calculations.
Consequently, businesses should review their internal working-time policies and the relevant payroll period rather than applying a fixed divisor to every employee in every month.
3.3. Example of overtime calculation for a monthly-paid employee
Consider a hypothetical employee with the following remuneration and working-time information.
| Payroll component | Amount |
|---|---|
| Eligible actual monthly remuneration | VND 11,000,000 |
| Corresponding normal working hours | 176 hours |
| Actual hourly wage | VND 62,500 |
| Overtime hours on a normal working day | 4 hours |
| Applicable overtime rate | 150% |
Actual hourly wage:
VND 11,000,000 ÷ 176 = VND 62,500
Overtime remuneration:
VND 62,500 × 150% × 4 = VND 375,000
Total overtime pay: VND 375,000
This example assumes that the VND 11 million represents remuneration eligible for inclusion under Article 55 and that the 176 working hours meet the applicable legal requirements.
In actual payroll processing, the employer must verify the employment contract, normal working schedule, attendance records and remuneration components.
4. How Is Night Work and Night Overtime Calculated?
Night-work remuneration requires additional attention because working at night and working overtime at night are legally different situations.
Under Article 106 of the Labour Code, night working hours are defined as the period between 10:00 p.m. and 6:00 a.m. the following day.
4.1. Employees working normal night shifts
Under Clause 2, Article 98, employees working at night are entitled to an additional payment of at least 30% of the applicable wage calculated under the statutory rules.
This premium applies to qualifying night work even when the hours fall within the employee’s normal working schedule.
For example, an employee working an ordinary night shift should not automatically be classified as working overtime merely because the shift takes place at night.
4.2. Employees working overtime at night
Night overtime involves additional remuneration beyond the ordinary overtime rate.
Under Clause 3, Article 98 and Article 57 of Decree No. 145/2020/ND-CP, employers must account for the overtime remuneration, the additional payment for night work and the additional payment specifically applicable to night overtime.
The combined rates depend on the type of day and the wage used for the corresponding daytime work.
Under specified conditions, the resulting minimum rates may be illustrated as follows:
| Type of night overtime | Illustrative combined rate |
|---|---|
| Normal working day | 200% or 210%, depending on the applicable calculation |
| Weekly rest day | 270% |
| Public holiday or Tet holiday | 390% |
These combined percentages represent particular statutory calculation outcomes. They should not replace the detailed formula under Article 57 when the relevant wage conditions differ.
4.3. Example: Night overtime on a weekly rest day
Assume an employee earns an eligible hourly wage of VND 60,000 and performs two hours of overtime during the statutory night period on a weekly rest day.
Under the assumptions supporting a combined rate of 270%:
Night overtime remuneration = VND 60,000 × 270% × 2
Total night overtime pay: VND 324,000
The example is illustrative. Employers must verify the applicable wage components, type of working day and actual shift times before using the calculation in payroll.
5. Overtime Working-Hour Limits Under Vietnamese Labour Law
Correctly calculating overtime pay in Vietnam does not automatically mean the employer has complied with all legal requirements.
Article 107 of the Labour Code establishes conditions for organising overtime, including employee consent and limits on additional working hours, subject to statutory exceptions.
Under the ordinary framework, employers must comply with the applicable daily overtime limits, a maximum of 40 overtime hours per month and a general limit of 200 overtime hours per year.
Certain industries and legally specified circumstances may permit up to 300 overtime hours annually when the relevant conditions and procedures are satisfied.
The daily limits also require attention. Generally, overtime must not exceed 50% of normal daily working hours. Where normal working time is arranged weekly, the combined normal and overtime hours must not exceed 12 hours per day.
Importantly, monthly and annual limits must be satisfied simultaneously.
For example, an employee working 45 overtime hours in one month does not meet the ordinary 40-hour monthly limit merely because total annual overtime remains below 200 hours.
Businesses should therefore track overtime hours by day, month and year, rather than relying solely on annual summaries.
This distinction is also relevant when determining whether remuneration qualifies for the updated PIT exemption.
6. New for 2026: PIT Exemption for Overtime and Night-Work Pay
One of the most significant developments affecting overtime pay in Vietnam 2026 is the updated personal income tax exemption.
Under Law No. 109/2025/QH15 on Personal Income Tax, dated 10 December 2025, qualifying wages and remuneration for night work and overtime are exempt from PIT.
The detailed provisions are set out in Government Decree No. 253/2026/ND-CP dated 30 June 2026, detailing certain articles and measures for the organisation and implementation of the Law on Personal Income Tax.
The Decree took effect on 1 July 2026, subject to the specific application rules for resident individuals.
6.1. What has changed compared with the previous PIT rules?
Previously, under Point i, Clause 1, Article 3 of Circular No. 111/2013/TT-BTC dated 15 August 2013 of the Ministry of Finance, guiding the implementation of the Law on Personal Income Tax and relevant implementing regulations, the exemption generally applied to the portion of overtime or night-work remuneration exceeding the amount payable for equivalent work during normal working hours.
Under the new rules, the full qualifying overtime or night-work remuneration may be exempt from PIT, not merely the additional premium.
| Tax treatment | Previous regulations | New 2026 regulations |
|---|---|---|
| Scope of PIT exemption | Generally, the additional amount above normal working-time pay | Full qualifying overtime or night-work remuneration |
| Principal legal basis | Circular No. 111/2013/TT-BTC | Law No. 109/2025/QH15 and Decree No. 253/2026/ND-CP |
| Conditions | Applicable documentation and previous tax requirements | Compliance with labour conditions, working-hour rules and documentation requirements |
| Amounts exceeding legal limits | Subject to applicable tax rules | The excess remains taxable under Article 26 |
The distinction is important for payroll teams because the amount excluded from taxable employment income can be materially different.
6.2. Example: PIT treatment before and after the change
Assume an employee has an actual hourly wage of VND 60,000 and performs two hours of lawful overtime on a normal working day.
At the statutory minimum rate of 150%, the overtime payment is:
VND 60,000 × 150% × 2 = VND 180,000
Under the previous tax treatment:
The equivalent normal-time remuneration for two hours would be VND 120,000. The additional premium would be VND 60,000.
Accordingly, the amount generally qualifying for PIT exemption was VND 60,000.
Under the new rules:
The full VND 180,000 may qualify for PIT exemption, provided the overtime and payment comply with applicable legal conditions.
| Calculation | Previous treatment | New treatment |
|---|---|---|
| Total overtime remuneration | VND 180,000 | VND 180,000 |
| Amount eligible for PIT exemption | VND 60,000 | VND 180,000 |
| Amount not covered by this exemption | VND 120,000 | VND 0 |
This illustration concerns the PIT classification of overtime remuneration, not the employee’s final personal income tax liability.
The actual tax impact depends on the employee’s other income, tax residence status, deductions and applicable tax calculation rules.
6.3. When does the new PIT exemption apply?
Article 69 of Decree No. 253/2026/ND-CP establishes the effective date and specific application periods.
For resident individuals, the provisions relating to employment income apply from the 2026 tax year. Consequently, the new treatment is relevant to qualifying remuneration from 1 January 2026 when determining the tax liability for that tax year.
For non-resident individuals, the new treatment applies from 1 July 2026, the Decree’s effective date, as no corresponding earlier application period is specified.
| Taxpayer status | Application period |
|---|---|
| Resident individual | From the 2026 tax year, beginning 1 January 2026 |
| Non-resident individual | From 1 July 2026 |
Employers should distinguish the legal application period from the administrative procedures for reviewing withholding, tax declarations and annual tax finalisation.
Where PIT was previously withheld from remuneration that qualifies for exemption under the new rules, the appropriate adjustment should be determined under the relevant tax administration procedures. A tax exemption does not automatically result in an immediate refund.
6.4. Conditions for the full PIT exemption
Clause 1, Article 26 of Decree No. 253/2026/ND-CP requires the overtime or night work to comply with the conditions and working-time requirements under labour legislation.
Therefore, employers must determine whether the relevant working hours qualify as lawful overtime or night work.
The provisions of the 2019 Labour Code concerning employee consent and maximum working hours remain relevant.
In addition, Clause 3, Article 26 provides that remuneration exceeding the limits prescribed by law is included in taxable income.
For this reason, companies should avoid treating every amount labelled “overtime pay” as automatically tax-exempt.
Payroll records must distinguish qualifying overtime and night-work remuneration from other allowances, bonuses and payments that do not meet the statutory exemption conditions.
6.5. Documents required to support the PIT exemption
Article 26 also requires employers paying the income to prepare records showing the time spent on night work or overtime and the corresponding remuneration paid.
The relevant statement must be retained by the employer and presented to the tax authorities upon request.
Where no separate statement is prepared, the employer remains responsible for substantiating the remuneration through payroll records, timesheets, employment contracts and other legally valid documentation.
For practical compliance purposes, HR and Payroll teams should ensure that approved overtime arrangements, attendance data and employee remuneration records are consistent.
Companies should also configure payroll systems to distinguish qualifying tax-exempt overtime income from other taxable employment income.
For further analysis, see PHAM CONSULT’s existing article:
7. How Should Companies Handle Holidays Falling on Weekly Rest Days?
The classification of a working day directly affects the applicable overtime rate.
Under Clause 3, Article 55 of Decree No. 145/2020/ND-CP, when a public holiday coincides with a weekly rest day, overtime performed on that date is compensated according to the rules applicable to public holidays.
However, overtime performed on the substitute weekly rest day is generally compensated according to the rules applicable to weekly rest days.
For companies operating rotating shifts, the distinction should be reflected accurately in working schedules and timesheets.
Employers should retain the relevant working calendars and supporting records when rest days are exchanged or rescheduled.
8. Payroll Compliance: Common Issues Businesses Should Review
Businesses calculating overtime pay in Vietnam should examine several areas where errors frequently arise.
The first is the determination of the actual hourly wage. Using a fixed monthly divisor or including remuneration components that should be excluded may result in incorrect overtime payments.
Another concern is the classification of normal working days, weekly rest days and public holidays. Incorrect classifications can lead to the application of inappropriate overtime rates.
Night shifts require particular attention because ordinary night work and overtime performed at night involve different compensation requirements.
In addition, companies must monitor whether overtime arrangements comply with the statutory working-hour limits and employee consent requirements.
Following the 2026 PIT changes, payroll systems should also distinguish qualifying exempt overtime income from taxable employment income.
Accurate timesheets, approval records and supporting payroll documents are essential for both labour compliance and tax reporting.
9. Frequently Asked Questions About Overtime Pay in Vietnam 2026
Is all overtime pay exempt from PIT in 2026?
Qualifying overtime and night-work remuneration may be exempt in full under the new PIT rules. However, the exemption requires compliance with labour regulations and the supporting documentation requirements of Decree No. 253/2026/ND-CP. Amounts exceeding statutory limits are not automatically exempt.
Is overtime on Sunday always paid at 200%?
No. The 200% minimum applies to overtime performed on an employee’s designated weekly rest day. The actual working schedule must be reviewed.
Can an employee work 45 overtime hours in one month if annual overtime is below 200 hours?
Under the ordinary rules, no. The monthly limit of 40 hours and the annual limit of 200 hours must generally be satisfied simultaneously, subject to legally prescribed exceptions.
Does night work always qualify as overtime?
No. Ordinary scheduled work performed between 10:00 p.m. and 6:00 a.m. is night work, but it is not necessarily overtime. The applicable remuneration depends on the employee’s normal working schedule.
Should overtime be calculated using basic salary?
Not automatically. For time-paid employees, Article 55 of Decree No. 145/2020/ND-CP requires the relevant actual hourly wage to be determined using the prescribed method and permitted remuneration components.
10. How PHAM CONSULT Can Support Your Business
Managing overtime pay in Vietnam 2026 requires coordination between HR, Finance and Payroll, particularly for foreign-invested enterprises and companies operating multiple shifts or production facilities.
PHAM CONSULT provides payroll and labour compliance support to businesses operating in Vietnam. Our services cover payroll calculation and processing, employee remuneration records, personal income tax compliance, social insurance procedures and relevant labour documentation.
In relation to overtime and night-work remuneration, PHAM CONSULT can assist businesses in reviewing payroll calculation methods, reconciling attendance data with payment records and assessing the application of PIT exemptions under current regulations.
Our payroll support can also help companies identify inconsistencies between internal remuneration policies, employment contracts and statutory labour requirements.
For businesses with complex compensation structures, a structured payroll review can support more reliable reporting and better control over employment-related compliance risks.
Learn more about our services:
PHAM CONSULT – Personal Income Tax Exemption for Overtime and Night Work
For assistance with overtime calculations, payroll processing or employment tax compliance, contact PHAM CONSULT to discuss your business requirements.
Legal References
- Labour Code No. 45/2019/QH14 dated 20 November 2019, particularly Articles 98, 106 and 107.
- Decree No. 145/2020/ND-CP dated 14 December 2020, particularly Articles 55, 56 and 57.
- Law No. 109/2025/QH15 on Personal Income Tax dated 10 December 2025, particularly Clause 8, Article 4.
- Decree No. 253/2026/ND-CP dated 30 June 2026, particularly Articles 26 and 69.
- Government guidance on overtime wage calculations.
- Government guidance on PIT-exempt employment remuneration.
Disclaimer: This article is intended for general informational purposes and reflects the relevant legislation and official guidance available as of 5 November 2026. It does not constitute legal or tax advice for any specific employment or payroll arrangement. Businesses should evaluate employee contracts, actual working schedules, payroll records and applicable legal requirements before implementing changes.
