The paper analyses how voluntary private standards affect labour productivity of small and medium firms from the food sector in Vietnam. The results based on a three-year panel show that the application of private standards improves labour productivity. These gains primarily occur to firms operating above a threshold labour-intensity level. Firms with low labour intensity are not likely to experience gains in labour productivity from standards. This implies that employee compensation increase due to standards is a likely mechanism for labour productivity gains. The results are robust to several specification changes and instrumental variable estimation.