Overview on Compulsory Social Insurance In Vietnam

In addition to PIT obligations, the social security contributions are also calculated on employees’ gross salaries and shared between the employer and the employee in accordance with statutory rates.

Social Security

With the exception of certain specifically exempted cases, employees working under labour contracts in Vietnam are subject to three compulsory social security schemes, collectively referred to as Social – Health – Unemployment Insurance (SHUI):

a.        Social Insurance (SI), comprising three sub-funds:

-             Sickness and Maternity Fund

-             Labour Accident and Occupational Disease Fund

-             Pension and Survivorship Fund

b.        Health Insurance (HI)

c.        Unemployment Insurance (UI). In addition to the current practice, the new Employment Law 2025 also extends UI coverage to 03 new groups as below, besides employees with indefinite-term and fixed-term contracts:

(i)         Employees with labour contracts of at least 01 month but less than 03 months, including other agreements of similar nature involving paid employment under the management and supervision of one party;

(ii)        Part-time employees whose monthly salary equals or exceeds the minimum monthly salary used as the basis for compulsory SI contribution under the Law on Social Insurance;

(iii)      Business managers, controllers, representatives of the capital of enterprises, members of the Board of Directors, General Directors, Directors, members of the Board of Controllers, controllers and other elected management positions of cooperatives and cooperative unions who receive salaries.

These contributions are determined based on employees’ gross salary, subject to government-prescribed thresholds. Employers are required to withhold the employee’s portion before paying salaries and to remit both the employee’s and employer’s contributions to the relevant Social Insurance Funds on a monthly basis.

The contribution rates are allocated as follows: For Social Insurance (SI), employees contribute 8%, employers contribute 17.5%, making a total of 25.5%. For Health Insurance (HI), employees contribute 1.5%, employers contribute 3%, totaling 4.5%. For Unemployment Insurance (UI), employees contribute 1%, employers contribute 1%, for a total of 2%. Accordingly, the overall mandatory insurance contributions amount to 10.5% from employees, 21.5% from employers, and a combined total of 32% 

Contribution Obligations Of Foreign Employees

Specifically to foreign employees, they are required to participate in compulsory social insurance schemes in accordance with prevailing legislation. Foreign employees must contribute to social insurance if they hold a valid work permit, practicing certificate, or practicing license issued by a competent Vietnamese authority, and are employed under an indefinite-term labour contract or a fixed-term labour contract of at least 12 months. Certain exemptions apply, including intra-company transferees and employees who have reached the statutory retirement age as prescribed in the Labour Code 45[1].

In addition, pursuant to the Law on Health Insurance 2008 (as amended in 2014), foreign employees with labour contracts of at least three months are required to participate in health insurance, while they remain exempt from unemployment insurance in accordance with the Law on Employment 2013. The wage base for calculating social and health insurance contributions is determined in the same manner as for Vietnamese employees, including salary, allowances, and other supplements stipulated in the labour contract, subject to a statutory ceiling of 20 times the Government-announced basic salary.

With respect to retirement age, foreign employees are subject to the same progressive retirement age schedule applicable to Vietnamese employees.

The current statutory contribution rates for foreign employees are as follows: For Social Insurance (SI), employees contribute 8% while employers contribute 17.5%, making a total of 25.5%. For Health Insurance (HI), employees contribute 1.5% and employers contribute 3%, totaling 4.5%. Foreign employees are not required to contribute to Unemployment Insurance (UI). Accordingly, the overall contribution rates amount to 9.5% from employees, 20.5% from employers, and a combined total of 30% 

General notes:

• The above is summarised from the current legislations and practices for internal reference only.

• This document cannot be relied upon by any other parties nor included in any submissions, reports, documents or letters required by the relevant regulatory bodies without our prior written consent and/or subject to our approval on the appropriate form and contents; and

• Please kindly noted that SP&A is not a legal firm, our comments provided under this document may include reviewing regulatory documents to be identified as general management consultancy, therefore, should not be considered, nor intended to be, a legal advice.