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Guide to Payroll in Vietnam

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Guide to Payroll in Vietnam

Guide to Payroll in Vietnam (1)

Payroll management in Vietnam is a critical function that goes beyond the distribution of monthly salaries. It requires a sound understanding of wage structures, statutory contributions, and local labour regulations to ensure compliance and fairness.

For organisations establishing a presence, expanding teams, or managing a local workforce, effective payroll processes from the outset are essential. Transparent and accurate practices build employee confidence, foster trust, and support organisational efficiency.

This guide outlines the principal aspects of payroll in Vietnam, including minimum wage requirements, salary benchmarks, statutory deductions, reporting obligations, and final settlements. It also considers the advantages of outsourcing payroll, offering businesses a practical means of reducing administrative complexity while maintaining compliance and operational focus.

Table Of Content

How Payroll Works in Vietnam?

Payroll in Vietnam operates within a structured legal framework that requires employers to comply with social insurance obligations, tax regulations, and labour laws. A well-defined payroll system is essential to ensure accuracy and compliance with these requirements.

Most companies process payroll on a monthly basis, with salaries typically paid by the final working day of the month. In addition to gross wages, payroll calculations must include mandatory deductions for personal income tax, social insurance, health insurance, and unemployment insurance, as stipulated by Vietnamese law.

Here’s what the process usually looks like:

 

1. Start with the Gross Salary

It begins by calculating each employee’s total earnings—this includes their base salary, fixed allowances, overtime, and any bonuses agreed upon in the contract.

 

2. Apply Employee Deductions

Next, certain mandatory deductions are made from the employee’s salary. These usually cover:

  • Social Insurance
  • Health Insurance
  • Unemployment Insurance
  • Personal Income Tax

The rates are set by the government and need to be reported and paid monthly.

 

3. Add Employer Contributions

Additionally, employers are required to contribute to the same insurance schemes on behalf of their employees. These costs are separate from what is deducted from the salary.

 

4. Issue Payslips

Once deductions are done, employees receive a payslip with a breakdown of gross pay, deductions, and net pay. This step keeps things transparent and helps avoid confusion.

 

5. Submit Reports

Companies must regularly report payroll data to tax and insurance authorities. There’s also an annual income tax reconciliation, especially for employees with changing or multiple income sources.

 

6. Stay Updated on Regulations

Payroll regulations in Vietnam are subject to frequent and sometimes unexpected changes. For businesses—especially those newly entering the market—it is essential to remain vigilant and up to date to avoid compliance risks.

What Is the Minimum Wage and Average Salary in Vietnam?

Minimum Wage in Vietnam

Vietnam’s minimum wage structure is divided into two main categories:

1. Common Minimum Wage

  • This is set at VND 2,340,000 (approximately US$93) and is used to calculate salaries for employees in state-owned organisations and enterprises. It also forms the basis for calculating social insurance contributions for all enterprises (with the maximum social contribution set at 20 times the standard minimum wage).

2. Regional Minimum Wage

  • Employees of non-state businesses are subject to the regional minimum wage, which is determined by four regions designated by the government. Following a two-year freeze in spite of inflation, these were raised by 6% beginning in July 2024. The updated prices are:
Region 2022 Minimum (VND) 2022 Minimum (US$) 2024 Minimum (VND) 2024 Minimum (US$)
Region I 4,680,000 192 4,960,000 196
Region II 4,160,000 171 4,410,000 175
Region III 3,640,000 150 3,860,000 153
Region IV 3,250,000 134 3,450,000 137

3. Hourly Minimum Wages (by region, July 2024):

  • Region I: VND 23,800 (US$0.94)
  • Region II: VND 21,200 (US$0.84)
  • Region III: VND 18,600 (US$0.74)
  • Region IV: VND 16,600 (US$0.66)
Even if workers are paid on a daily or weekly basis, employers are still required to make sure that they all receive at least these minimums. The workplace’s location determines the applicable regional minimum; if a business serves several subregions, all employees must be covered by the highest applicable rate.

Average Salary in Vietnam

Depending on the sector, region, and degree of experience, salaries in Vietnam can differ significantly. Although there isn’t a set national average, the following are essential things to remember:

By Region

LocationMonthly Average Salary (VND)Equivalent in USDNotable Insights
Hanoi & Ho Chi Minh City10,500,000 – 18,000,000$415 – $710Salaries are significantly higher in these tier-1 cities, especially in sectors like tech, finance, and real estate.
Secondary Cities
(e.g. Da Nang, Hai Phong)		8,000,000 – 12,000,000$316 – $474Slightly lower cost of living leads to more moderate pay, but strong growth in logistics and tourism.

By Sector

SectorMonthly Average Salary (VND)Equivalent in USDTalent Market Insights
Information Technology20,000,000 – 35,000,000$790 – $1,380There is a high demand for skilled developers and tech engineers.
Manufacturing & Logistics9,000,000 – 15,000,000$355 – $590One of the largest employment sectors is characterised by steady wage growth.
Hospitality & Retail6,000,000 – 10,000,000$236 – $395Entry-level dominated; seasonal wage fluctuations are common.
Accounting & Finance10,000,000 – 18,000,000$395 – $710Competitive salaries, especially in international or regional firms.

Key Takeaways for Employers

  1. The Vietnamese government has established a strictly regulated wage system.
  2. Employers must adhere to region-specific minimum wage requirements, irrespective of the frequency of payment.
  3. While compliance is mandatory, offering wages above the legal minimum is often necessary to attract and retain skilled employees.
  4. Payroll calculations must consider factors such as regional wage levels, job role, and statutory contributions including health and social insurance.

Working Hours, Overtime Pay, and Employer Compliance in Vietnam

Establishing a workforce that is both efficient and compliant requires a clear understanding of Vietnam’s labour regulations. The Labour Code of 2019, together with guidance issued by the Ministry of Labour, Invalids, and Social Affairs (MOLISA), sets out the legal framework governing standard working hours, overtime provisions, and employer obligations. The key requirements are outlined below.

Standard Working Hours

Category Details
Normal Working Hours Up to 8 hours per day, 48 hours per week
Shortened Working Week Common in sectors involving dangerous or hazardous conditions; typically 6–7 hours/day
Flexible Arrangements Allowed if agreed upon in employment contracts, ensuring total hours don’t exceed weekly or monthly caps

Note: A Monday to Friday workweek is not mandated by law, but it is recommended when practical because it promotes work-life balance and is standard procedure.

Overtime Pay Regulations

Vietnam enforces strict regulations on overtime to protect employee welfare. The framework operates as follows:

Overtime ScenarioOvertime Rate (as % of Base Hourly Wage)
Weekdays (Normal Working Days)150%
Weekends (Saturday/Sunday)200%
Public Holidays or Paid Leave Days300%
Night Shift Overtime (any day)An additional 20% on top of the applicable rate


1. Daily cap: Overtime must not exceed 12 hours/day

2. Monthly cap: Overtime must not exceed 40 hours/month

3. Annual cap: Overtime must not exceed 300 hours/year for most sectors (expanded from 200 hours under recent law)

Employer Compliance:  Key Requirements in Vietnam

1. Clearly define employment terms

All contracts must include working hours, rest periods, and overtime terms in writing.

2. Maintain accurate timekeeping records

Employers must track daily attendance, working hours, and all overtime performed.

3. Obtain written consent for overtime

Overtime requires the employee’s written consent, unless it’s an emergency.

4. Mandatory rest periods

Workers must receive at least one full 24-hour break every 7 consecutive working days.

5. Breaks during long shifts

Employees working 6+ continuous hours must get a minimum 30-minute break.

6. Health & safety precautions

Employers must conduct health and safety checks before assigning overtime in hazardous work conditions.

Penalties for Non-Compliance

Non-compliance with regulations on working hours and overtime may lead to:

1. Administrative fines ranging from VND 2 million to 75 million (approx. USD 80–3,000)

2. Temporary suspension of business operations in severe cases

3. Mandatory back payment of underpaid wages with interest

 

Strategic Insight for Employers

For organisations managing teams in Vietnam—particularly those with shift-based operations or expanding workforces—several practical measures can enhance payroll accuracy and compliance:

1. Implement automated payroll and attendance systems to minimise manual errors.

2. Ensure employment contracts are updated in line with the latest legal requirements.

3. Provide regular compliance training for HR personnel and line managers.

4. Engage local payroll or HR specialists to navigate regulatory obligations more effectively.


What Are the Employee Deductions and Employer Contributions in Vietnam?

Under the Labour Code and social insurance regulations, both employer and employee salary deductions must be taken into account when managing payroll in Vietnam. These deductions apply universally, irrespective of industry or company size.

 

Employee Salary Deductions:

Employees in Vietnam typically see deductions for three main types of compulsory insurance:

1. Social Insurance (SI): 8%

2. Health Insurance (HI): 1.5%

3. Unemployment Insurance (UI): 1%

These are deducted directly from the employee’s gross monthly salary.

 

Employer Contributions:

In addition to employee deductions, employers are legally required to contribute a larger share toward the same insurance categories, along with other funds:

1. Social Insurance: 17.5%

2. Health Insurance: 3%

3. Unemployment Insurance: 1%

4. Occupational Accident and Disease Fund: 0.5%

5. Trade Union Fee (if applicable): 2% (based on company policy or union presence)

Altogether, this brings the total employer contribution to approximately 22% of each employee’s salary.

 

Important Note on Salary Basis

While the government sets clear caps, contribution amounts are determined by an employee’s monthly salary. Social and health insurance contributions are capped at 20 times the basic salary, whereas unemployment insurance is calculated up to 20 times the regional minimum wage. These limits ensure the system remains fair and manageable for both employers and employees.

 

Key Insight

Maintaining payroll compliance in Vietnam requires close attention to changes in wage levels, contribution ceilings, and insurance regulations, many of which are subject to annual revision. Accurate calculations and timely submissions are essential to avoid penalties.

For organisations with expanding teams or cross-border operations, engaging professional payroll services in Vietnam can streamline compliance, reporting, and overall workforce management.

How Are Payroll Reports, Tax Filings, and Final Settlements Handled in Vietnam?

Processing monthly salaries is only one element of payroll management in Vietnam. Employers must also comply with government requirements relating to taxation, payroll reporting, and employee terminations. The key obligations are summarised below:

 

1. Monthly Payroll Reports

  • Companies prepare detailed monthly reports showing employee earnings, deductions (like tax and insurance), and net salaries.
  • These records should be accurate and well-maintained, as local authorities may request them during audits.
 

2. Filing Personal Income Tax (PIT)

  • Employers are responsible for declaring and paying PIT on behalf of employees.
  • Filing frequency, whether monthly or quarterly, depends on the size of the business.
  • At the same time, employers must submit social, health, and unemployment insurance contributions.
 

3. Year-End Tax Finalisation

  • At the close of each financial year, a reconciliation process ensures the correct amount of tax has been paid.
  • Employers submit a final PIT report and issue a form to employees for personal tax records or refunds.
 

4. Final Settlements When Employees Leave

  • Businesses must calculate and disburse outstanding amounts such as unpaid salary, bonuses, or leave encashments.
  • PIT is finalised, and social insurance records are updated or closed.
  • This process is generally completed within 7 working days from the employee’s last day.
 

5. Staying Updated

  • Vietnam’s payroll regulations are revised frequently.
  • Many businesses choose to work with payroll service providers to ensure ongoing compliance and reduce administrative risk.

What Happens to Payroll During Termination and Final Settlement?

In Vietnam, employers are required by the Labour Code to complete all payroll settlements within 14 working days of an employee’s final day of service. This obligation applies irrespective of the reason for separation—whether resignation, termination, or contract expiry—and ensures fairness and transparency in the termination process.

The final payroll generally includes:

1. Unpaid salary for the days worked up to the departure date

2. Payment for unused annual leave, based on the remaining balance

3. Severance pay, if the employee has completed at least 12 months of service and the termination was not due to misconduct

4. Any pending bonuses or allowances that were contractually agreed upon

5. Statutory deductions, including personal income tax and social insurance contributions

Employers must ensure that all documentation is completed correctly, records are accurate, and the final payment is clearly communicated to the departing employee. Effective management of termination settlements not only upholds legal compliance but also reflects respect for the individual and helps protect the organisation’s reputation.

What are the Best Practices for Compliance and Accuracy for Payroll Services in Vietnam?

Payroll in Vietnam extends beyond salary disbursement; it demands strict adherence to legal and regulatory requirements to maintain smooth business operations. Key practices include:

1. Monitoring updates to wage, tax, and insurance regulations

2. Selecting an appropriate payroll system, whether in-house or outsourced

3. Maintaining organised documentation of contracts, salaries, and tax filings

4. Meeting all tax and insurance deadlines to avoid penalties

5. Centralising employee data for efficient management of leave, bonuses, and deductions

6. Processing final settlements for departing employees within seven working days

7. Engaging local payroll experts to navigate Vietnam’s complex requirements and maintain compliance.

 

Also Read : Payroll Outsourcing: A Cost-Effective Solution For Employers

conclusion

Managing payroll in Vietnam goes beyond calculations; it requires close attention to contribution ceilings, reporting obligations, and labour law compliance. These responsibilities not only safeguard legal conformity but also shape the employee experience and support smooth business operations.

As organisations expand in Vietnam, sustaining payroll compliance becomes increasingly important. It mitigates legal risks, strengthens employee trust, and underpins long-term stability. However, keeping pace with evolving regulations and local requirements can be complex without specialist support.


Galaxy Group offers practical, on-the-ground expertise to simplify payroll management. From initial setup through to business expansion, our team ensures compliance remains aligned with organisational objectives—enabling companies to concentrate on growth and people, while we manage the complexities behind the scenes.

Stay Compliant with Vietnam’s Payroll Regulations

Get insights on Vietnam’s 2025 payroll laws, wage updates, and compliance essentials to stay on track.

Explore Payroll Services

FAQ’S

What is the payroll system in Vietnam?

The payroll system in Vietnam handles social insurance contributions, tax deductions, and salary computation. Employers must follow laws pertaining to minimum wages and reporting deadlines. To effectively manage compliance, many businesses use local payroll services.

In Vietnam, salaries are typically paid on a monthly basis and are subject to the government-mandated minimum wage. Additionally, employers manage unemployment insurance, social insurance, health insurance, and personal income tax deductions. The majority of companies adhere to a defined framework to guarantee that workers are paid on time and in compliance.

No, the law in Vietnam does not require 13th-month pay. Nonetheless, it is a typical custom, particularly during Tết, the Lunar New Year. Numerous employers provide it as a bonus in accordance with employee contributions or business performance, or as stipulated in employment contracts or internal policies. It becomes a legally binding obligation if it is expressly mentioned in the contract or company policies.

Not always. Establishing a complete legal entity can seem like a big step if you’re just getting started or testing the waters. For this reason, many businesses choose to partner with an Employer of Record (EOR) or a local payroll provider. It’s a sensible approach to maintain compliance and appropriately compensate your staff without becoming bogged down in time-consuming paperwork and registrations.

The standard workweek is 48 hours, typically spread across six days. Overtime is allowed but must follow labour law guidelines.

Vietnam’s Manpower Laws: Key Insights for New Employers

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Vietnam’s Manpower Laws: Key Insights for New Employers

Vietnam’s Manpower Laws: Key Insights for New Employers

Vietnam has steadily emerged as one of Southeast Asia’s most promising markets for foreign investment. With over 70% of its population under 35, the country has a young, skilled, tech-savvy, and growing English-proficient workforce, making it highly attractive for global businesses.

 

Encompassing one of the lowest labour costs in the region, including the minimum wage in Vietnam, it’s no surprise that companies across industries are setting their sights on this dynamic economy. However, entering a new market, such as through business incorporation in Vietnam, comes with it’s share of responsibilities, and in Vietnam, that begins with understanding how local labour laws operate.

 

Whether setting up a new business in Vietnam or hiring through an Employer of Record (EOR) in Vietnam, being familiar with key employment regulations is essential. This blog outlines key insights from core labour-related laws that Employers must understand to navigate Vietnam’s legal landscape.

Table Of Content

Regulatory Framework in Respect of Manpower Laws in Vietnam

Vietnam’s Manpower landscape is shaped by multiple legal instruments that collectively define the rules of engagement between employers and employees, covering everything from recruitment to benefits, insurance, safety, and termination. These include:

  • The Labour Code (2019) – the principal statute that governs all individual and collective employment relationships in Vietnam.

  • The Employment Law (2013) – sets a broader framework for labour market development and vocational training.

  • The Social Insurance Law (2014) – mandates the participation of employers and employees in Vietnam’s compulsory social insurance (SI) system.

  • The Occupational Safety and Health Law (2015) – designed to safeguard workers’ physical and mental health across all sectors.

What are the Key The insights of Manpower Laws in Vietnam?

1. Employment Contracts

Ø  The Labour Code recognises two types of contracts:

  • Indefinite-Term Contracts – This type of contract is best suited for permanent roles, as it has no fixed term or termination date. The contract becomes indefinite after two consecutive fixed terms.

  • Fixed-Term Contracts – This type of contract is ideal for project-based or temporary work, allowing for a fixed term of up to 36 months. It can only be renewed once, after which it becomes indefinite if parties continue working after expiration.

Ø  Probationary Periods – Must be agreed to in writing and cannot exceed 30 days for jobs requiring vocational training and 60 days for jobs requiring college degrees or higher.

Ø  Unilateral termination – Either party may terminate the contract under specific conditions, with a 30 to 45 day notice period based on the type of contract. Failure to follow proper dismissal procedures can result in legal and financial penalties.

2. Working Hours, Overtime, and Leave

Ø  Standard working hours in Vietnam are up to 10 hours per day and 48 hours per week, where a weekly basis is applied. However, a 40-hour workweek is encouraged by the government.

Ø  Overtime is allowed provided that:

–         Employee’s overtime working hours do not exceed 50% of the regular working hours in a day.

–         In the case of weekly work, the regular working hours plus overtime do not exceed

  •         12 hours/day
  •         40 hours/month
  •         200 hours/year, extendable to 300 hours in specific sectors

Ø  Employees are entitled to at least 12 days of annual leave, plus public holidays and special leave for personal reasons. Pro-rata leave applies to employees with less than 12 months of service.

Ø  The Act also provides for an increase of 1 day annual leave with every 5 years of employment with the same employer.

3. Social Insurance

Under the Social Insurance Law 2014, all employers are required to contribute to the following for all employees with contracts of at least one month:

  • Social Insurance (SI): SI covers sickness, maternity, occupational accidents, retirement, and death.
  • Health Insurance (HI): HI provides coverage for medical examination, treatment, and hospitalisation costs, ensuring employees have access to essential healthcare services.
  • Unemployment Insurance (UI): UI offers income replacement during unemployment.

These contributions support retirement, maternity, sickness, unemployment, and medical coverage. They apply to all employees with contracts of one month or more.

4. Safe Workplaces

Employers are legally responsible for ensuring a safe and healthy working environment under the Occupational Safety and Health Law 2015. This includes:

  • Risk Prevention: Employers must conduct risk assessments, establish safety protocols, and regularly inspect workplace hazards.

  • Training: Mandatory safety and hygiene training must be provided, particularly for roles involving hazardous materials or equipment.

  • Medical Surveillance: Annual health checks are required, with increased frequency for high-risk occupations.

  • Accident Reporting and Compensation: Serious workplace injuries must be reported to labour authorities within 24 hours. Employees who are injured on the job are entitled to treatment and financial compensation, which is based on the severity and cause of the injury. Employers who hire employees in Vietnam should be aware of these obligations to ensure compliance with local labour laws.

Promoting a culture of safety is not only a legal mandate but also a vital component of employee retention and brand reputation.

5. Hiring Foreign Employees

Vietnam allows hiring foreign professionals, but only for roles where local expertise is unavailable. Employers, often with the help of recruitment services in Vietnam, must justify the hire and obtain a work permit before the employee begins work.

Commonly approved positions include

  • Managers and executives
  • Technical experts
  • Project consultants

6. Legal Protections for Vulnerable Workers

Vietnam’s labour system includes targeted protections for women and vulnerable workers:

  • Female employees with children under 12 months get a 60 minute daily break for nursing
  • Women are also entitled to menstrual leave – minimum 3 days/month with a 30 minute daily break
  • Anti-discrimination provisions mandate equal opportunities and prohibit bias in recruitment processes.

Employer Tips for Compliance

  •  Update internal policies to reflect gender protections and anti-discrimination rules.
  • Use bilingual contracts that specify the governing language and always align contract terms with statutory requirements.
  • Keep detailed records of working hours and leave to stay audit-ready and prevent disputes.
  • Ensure monthly payments are submitted on a timely basis. Non-compliance can lead to significant back-pay demands and legal consequences.
  • Safety procedures are mandatory. Implement a compliance-first culture to protect both your workforce and your reputation.
  • Partner with a licensed EOR or legal provider to handle permit applications and ensure proper onboarding.  

Why Compliance Matters More Than Ever?

Labour laws in Vietnam are actively being aligned with global standards, thanks in part to trade agreements and international economic integration. Compliance is more than just a box to tick for foreign businesses – it’s a foundation for sustainable growth.

Poor labour practices can result in penalties, reputational harm, and even the suspension of a business license. On the other hand, a compliant employer is viewed as trustworthy, ethical, and future-ready.

Read our expert guide on : Minimum Wage Trends in 2025

How Can the Galaxy Group Help?

At Galaxy Group, we specialise in making international hiring simple, compliant, and seamless. As a trusted Employer of Record (EOR) and corporate solution provider, we help you:

  • Draft legally sound employment contracts
  • Manage payroll in Vietnam and social insurance contributions
  • Navigate complex hiring procedures for foreign workers
  • Maintain a compliant and safe work environment

Whether you’re hiring one employee or building a whole team in Vietnam, Galaxy Group offers the local expertise and operational support to help you scale confidently.

Final Thoughts

Vietnam is a compelling destination for global business – but success starts with respecting the rules. By understanding the country’s labour laws and proactively managing compliance, you protect your employees, your business, and your long-term investment.

And with Galaxy Group by your side, you’ll always be one step ahead.

Disclaimer: This blog is for informational purposes only and does not constitute any legal advice.

Start Hiring Right in Vietnam

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FAQ’S

Can foreign workers be employed in Vietnam?

Yes, foreign workers can be employed in Vietnam by obtaining a work permit from the relevant authorities, and only for positions that cannot be filled by Vietnamese nationals. Common eligible roles include managers and executives, technical experts, and consultants.

Employers must conduct risk assessments, implement safety protocols, provide mandatory training on occupational health and safety, and offer annual medical check-ups. They must report serious workplace accidents within 24 hours to the authorities and provide compensation if applicable.

Employers must contribute to Social Insurance, Health Insurance, and Unemployment Insurance for employees with contracts of at least one month.
These cover benefits such as maternity, sickness, accidents, retirement, and job loss.

Employment contracts must be in writing, clearly stating job roles, salaries, working hours, benefits, and termination conditions. Bilingual contracts (English and Vietnamese) are highly recommended for foreign employers.

Minimum Wage Trends in 2025: A Comprehensive Global Overview

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Minimum Wage Trends in 2025 : A Comprehensive Global Overview

Minimum Wage Trends in 2025: A Comprehensive Global Overview
Remuneration is a critical aspect of working conditions. Decent work is productive work that provides workers with adequate earnings, ensuring satisfactory living conditions for workers and their families,” explains the International Labour Organization (ILO).
 
Policymakers across the globe seek to equalize opportunities and outcomes for their citizens through distinct labour market policies, which are influenced by each nation’s economic conditions, political landscape and cost of living.
Why Is This Important?
For employers operating internationally or those expanding into new markets, adhering to the varied labour laws in each jurisdiction is essential. A clear understanding of minimum wage rates, which differ significantly across countries, allows businesses to identify the most suitable regions for expansion while aligning with their financial plans.
Furthermore, having insight into the worldwide minimum wage strategically benefits employers planning to hire a diversified workforce.

Table Of Content

Minimum Wages Around The World

Countries with higher living costs, such as the United States and Germany, generally establish higher minimum wages to ensure workers can afford basic necessities.

 

Luxembourg, with its finance- and technology-driven economy, offers a high minimum wage of approximately USD 2,711 per month for unskilled workers. In contrast, Vietnam, which relies on low-cost manufacturing as part of its “China Plus One” strategy, has a regional minimum wage ranging from USD 151 to USD 194 per month.

 

France, with its strong tradition of labour unions advocating for higher wages, sets a minimum salary of USD 1,851 per month. In the Philippines, where union influence is comparatively weaker, the minimum wage ranges between USD 169 and USD 231 per month, depending on the region.

 

For distinct reasons, Switzerland and Ethiopia are examples of countries without a national minimum wage. Switzerland relies on collective bargaining and economic flexibility, making a national minimum unnecessary, whereas in Ethiopia, where over 80% of the workforce is employed informally in agriculture and street vending, introducing a national minimum wage could lead to higher unemployment and increased labour costs.

Regional Insights

To comprehensively compare minimum wage levels across the globe, we have categorised the data based on continents. This allows us to observe significant regional differences and clarify how minimum wages vary according to local economic conditions, labour market policies, and cost of living.

  • Europe: Minimum wages tend to be higher, particularly in wealthier nations such as Luxembourg, the United Kingdom and the Netherlands. These countries set minimum wage rules to ensure workers meet basic living expenses in their high-cost economies.
  • North America: The United States and Canada also have relatively high minimum wages, though the range varies widely within each country. The U.S. has different wage standards by state, while Canada has a progressive wage scale across provinces.
  • Asia: Minimum wages starkly contrast between advanced economies (such as South Korea) and developing nations, like Indonesia and India. The variation is due to differing economic structures – with more developed countries offering higher wages, for workers to keep up with living standards.
  • Australia and New Zealand: Both countries feature relatively high minimum wages, reflecting their higher living costs and strong labour protections.
  • South America: Minimum wages in South America tend to be lower than other continents. Countries like Brazil and Argentina have minimum wages that are significantly lower than those in Europe or North America. However, these wages are still adjusted to meet the economic context of the region.
  • Africa: African countries such as South Africa have minimum wages that are comparatively low, especially when compared to more developed regions, reflecting the economic challenges faced in many parts of the continent.
Global Minimum Wage Comparison by Country and Continent :
Global Minimum Wage Comparison by Country and Continent
While this is a non-exhaustive list of minimum wage rates across various countries, we encourage you to visit ILOSTAT for a complete list and for more precise wage comparisons using PPP-converted figures.

Countries Without a Statutory Minimum Wage

Several nations operate without a statutory minimum wage, each for distinct reasons. Let’s delve into some noteworthy examples.
Countries Without a Statutory Minimum Wages

How Galaxy Payroll Can Help?

Staying informed about minimum wage regulations is crucial for global employers to ensure compliance, maintain a competitive workforce, and avoid potential legal consequences. Given the significant wage variation across countries, businesses must carefully plan their employee distribution and scaling efforts.
 
To streamline global payroll management, services like Payroll Outsourcing and Employer of Record (EOR) offer solutions for managing market entry, hiring, complex wage laws, tax requirements, and legal compliance – without establishing a local entity.
 
At Galaxy Payroll, we specialise in assisting companies with market expansion by establishing new entities or entering new markets with a “boots on the ground” approach. Our “plug and play” solution system saves clients significant time and prevents costly errors. You can focus on expanding your business while we handle the complexities behind the scenes.
 
Partner with us for seamless corporate scaling.
 
 

Disclaimer: This blog is for informational purposes only and does not constitute any legal advice.

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FAQ’S

What is minimum wage, and why is it important for employers?

Minimum wage is the lowest hourly, daily, or monthly salary that employers must pay their employees to ensure access to basic necessities and protection against exploitation. It is a legal mandate by the government binding employers to commit to minimum wages as fixed under the statute for work performed during a given period. Minimum wage rates can vary significantly based on location (country, state or region) and sometimes even by industry or occupation.  For global employers, understanding minimum wage ensures compliance with labour laws, prevents legal penalties, and promotes fair employee compensation.

Minimum wages differ significantly by country and even by region within a country due to various factors affecting each region, such as inflation, economic conditions and labour policies. Employers should check the latest local regulations before fixing salaries.

As of 2025, countries with the highest minimum wages include Luxembourg, Netherlands, Australia, New Zealand, United Kingdom, Ireland, Germany, France, etc. with Luxembourg paying the highest at US $ 2711 to US $3254 per month. However, the exact figures vary due to exchange rates, cost of living and government policies.

Cambodia, Sudan, Burundi, Rwanda, Georgia, Eswatini, Gambia, Guinea-Bissau, Kyrgyzstan, Uganda, Ghana, Nigeria and Madagascar are some of the countries that have lower minimum wages.

Governments typically review and adjust minimum wages annually, but some make changes more frequently based on inflation or economic crises. Employers should stay updated on local labour laws to ensure compliance.

Failure to comply with minimum wage laws can result in fines, legal action, back payments to employees, and reputational damage. In some jurisdictions, repeat violations can lead to business license revocations.

Certain exceptions such as internships, apprenticeships, or training periods where lower wages are permitted, may apply. However, these exemptions vary by country and should be reviewed carefully.

Employers can monitor government labour websites, consult local legal experts, or use compliance management services to stay informed about wage updates and regulatory changes.

Yes, employers must account for payroll taxes, social security contributions, healthcare and other employee benefits. These elements can significantly impact total labour costs in different countries.

In many countries, labour unions negotiate minimum wage levels through collective bargaining, often resulting in industry-specific wage agreements that employers must follow.