Avoid Labor Inspection Risks: A Practical Guide for New FDI Companies

Date: 2026.01.05

How can newly established FDI companies avoid labor inspection risks?

During 2024–2025, Vietnam has strengthened labor compliance management through annual inspection plans conducted by the Inspectorate of the Ministry of Labour – Invalids and Social Affairs (MOLISA), the Department of Work Safety, and Vietnam Social Security (VSS).

FDI enterprises are often among the groups inspected early (within the first 1–2 years), especially in manufacturing, construction, technology, and trading sectors.

According to labor inspection statistics, more than 55% of FDI companies receive warnings or penalties in their first year due to incomplete documentation or limited understanding of Vietnamese regulations.

This article summarizes the most essential points to help FDI enterprises prevent inspection risks from day one of operation.

1. Complete mandatory labor documentation – required by law

Under the Labour Code 2019 and Decree 145/2020/ND-CP, companies must prepare key labor documents as soon as they start hiring:

Mandatory documents include:

– Employee list in MOLISA’s required format
– Proper labor contracts (Vietnamese is mandatory)
– Personnel files (ID card/Citizen ID, personal information, undertakings/commitments, etc.)
– Salary, bonus, and KPI evaluation policies

If a foreign company uses templates from its headquarters without adapting them to Vietnamese law → inspections will likely require revisions.

2. Register salary scales and salary tables, and publish internally

Labor inspectors typically check:

– Whether salary scales are built correctly by position and grade
– Whether the minimum wage is above the applicable regional minimum wage
– Whether basic salary – allowances – additional payments are clearly separated

If a company lacks these documents or builds them incorrectly → penalties may range from VND 2–10 million depending on the severity.

3. Issue and register Internal Labor Regulations

For companies with 10 or more employees, registering Internal Labor Regulations (Work Rules) is mandatory by law.

This is also one of the first documents inspectors request.
If work rules are missing or non-compliant → the entire disciplinary process and contract termination procedures may be deemed invalid.

4. Manage working hours and overtime (OT) transparently

According to MOLISA, overtime violations account for over 40% of total issues found in FDI inspections.

Companies should:

– Establish clear OT policies
– Obtain employees’ OT registration/approval forms
– Maintain complete timesheet/timekeeping data
– Calculate OT correctly as required by law (150%, 200%, 300%)
– Not exceed the cap of 40 hours/month and 200–300 hours/year

Japanese companies that are accustomed to frequent OT may be more likely to draw attention.

5. Register and pay social insurance (SI) in full compliance

According to Vietnam Social Security (VSS), during 2024–2025, electronic inspections focus on:

– Late payments and SI arrears
– Under-declaring the salary base used for SI contributions
– Incorrectly excluding additional payments from the SI contribution base
– Failing to enroll employees with labor contracts of 1 month or longer

SI violations are among the most heavily penalized issues.

6. Complete Occupational Safety and Health (OSH) documentation and training

The Department of Work Safety focuses on checking:

– Risk assessment documentation
– OSH training plans and training minutes/records for groups 1–6
– Provision of personal protective equipment (PPE)
– Periodic OSH reports
– Procedures for handling workplace accidents

Many newly established companies have not yet completed these files → leading to penalties when inspected early.

7. Register foreign employees under the correct procedures

Under Decree 152/2020/ND-CP, companies must:

– Explain and register the demand for foreign workers
– Apply for work permits or work-permit exemption certificates
– Submit periodic reports on foreign labor utilization

Japanese investors often assign managers to Vietnam, but many new companies are unfamiliar with procedures → increasing the risk of penalties within the first 6 months.

8. Fully comply with required periodic reports

Inspections often find companies failing to submit the following reports:

– Semi-annual and annual labor reports
– Labor change reports
– OSH reports
– Workplace accident reports
– Foreign employee reports

These are common issues but also the easiest to avoid with a proper process.

9. Standardize disciplinary and contract termination procedures

Vietnamese courts strictly review cases where labor discipline is imposed without proper procedures.
Companies should:

– Prepare violation minutes/records
– Notify the employee representative organization
– Hold disciplinary meetings with the correct required participants
– Issue disciplinary decisions within statutory time limits

Missing even one step → may lead to losing disputes and paying compensation.

Effective solution: Establish a compliance system from day one

To minimize inspection risks, FDI enterprises should:

✔ Build a complete HR – Legal document set
✔ Train managers on Vietnamese labor regulations
✔ Conduct periodic internal compliance checks
✔ Outsource Back Office – HR – Payroll services if the company lacks in-house expertise

Many foreign companies in Vietnam choose outsourced Back Office services to ensure legal compliance from the early stage of establishment.