Social Insurance (SI)
1. Two types of Social Insurance
1.1 Mandatory social insurance: This type of social insurance is organized by the State, and both employees and employers are required to participate.
1.2 Voluntary social insurance: This type of social insurance is organized by the State, and participants can choose their contribution level and method according to their income. The government also has policies to support social insurance payments so that participants can enjoy retirement and survivor benefits.
2. Social insurance schemes
According to Article 4 of the Social Insurance Law 2014, the social insurance scheme are as follows:
a. Mandatory social insurance: Sickness; maternity; occupational accidents, diseases; retirement; death.
b. Voluntary social insurance: Retirement; death.
c. Supplementary pension insurance as prescribed by the Government
3. The maximum salary for mandatory social insurance contribution
According to Clause 3, Article 89 of the 2014 Law on Social Insurance, the maximum salary for mandatory social insurance contribution is 20 times the minimum wage.
Currently, based on Clause 2, Article 3 of Decree 24/2023/NĐ-CP, the minimum wage has been adjusted to VND 1,800,000 per month. Therefore, the maximum salary for mandatory social insurance contribution will be calculated as follows: 20 x 1,800,000 = VND 36,000,000 per month.
4. The mandatory social insurance contribution, voluntary insurance, and health insurance for Vietnamese workers
4.1 Employees contribute
a. 8% of their monthly salary to the retirement and death fund;
b. 1% to the voluntary insurance fund;
c. 1.5% to the medical insurance fund.
4.2 Employers contribute to the social insurance fund of employees as follows:
a. 3% to the sickness and maternity fund;
b. 0.5% to the occupational accident and disease insurance fund;
c. 1% to the voluntary insurance fund;
d. 3% to the medical insurance fund.
4.3 For businesses operating in high-risk industries regarding occupational accidents and occupational diseases, if eligible and approved by the Ministry of Labor – Invalids and Social Affairs, they can contribute to the fund for occupational accidents and occupational diseases at a lower rate of 0.3%.
4.4 Employers contribute 14% to the retirement and death fund.
Legal basis
Article 85, 86 of the Social Insurance Law 2014
Article 44, paragraph 2 of Article 92 of the Occupational Safety and Health Law 2015.
Article 4 of Decree 58/2020/ND-CP.
Article 57 of the Employment Law 2013.
Paragraph 1 of Decision 595/QD-BHXH dated April 14, 2017.
5. The mandatory social insurance contribution, voluntary insurance, and health insurance for foreign workers
5.1 Employees contribute
a. 8% of their monthly salary to the retirement and death fund;
b. 1.5% to the medical insurance fund.
5.2 Employers contribute to the social insurance fund of employees as follows:
a. 3% to the sickness and maternity fund;
b. 0.5% to the occupational accident and disease insurance fund;
c. 1% to the voluntary insurance fund;
d. 3% to the medical insurance fund.
5.3 For businesses operating in high-risk industries regarding occupational accidents and occupational diseases, if eligible and approved by the Ministry of Labor – Invalids and Social Affairs, they can contribute to the fund for occupational accidents and occupational diseases at a lower rate of 0.3%.
5.4 Employers contribute 14% to the retirement and death fund.
Legal basis:
1. Article 85, 86 of the Social Insurance Law 2014
2. Article 44, paragraph 2 of Article 92 of the Occupational Safety and Health Law 2015.
3. Article 4 of Decree 58/2020/ND-CP.
4. Article 57 of the Employment Law 2013.
5. Paragraph 1 of Decision 595/QD-BHXH dated April 14, 2017.
Salary Policies (SP)
1. Wage payment principles for employees (Article 94 of the 2019 Labor Code)
Employers must pay salaries directly, fully, and on time to employees. In cases where employees cannot receive salaries directly, employers may pay salaries to individuals authorized by the employees legally.
Employers are not allowed to restrict or interfere with employees’ right to decide on the expenditure of their salaries; they are not allowed to compel employees to spend their salaries on purchasing goods or using services from the employer or other designated units.
2. How are wage paid to employees determined? (Article 95 of the 2019 Labor Code)
Employers pay salaries to employees based on agreed-upon amounts, labor productivity, and their performance at work.
The salary stated in the labor contract and the salary paid to employees are in Vietnamese Dong. In the case of foreign employees in Vietnam, payment may be made in foreign currency.
Each time salaries are paid, employers must notify employees of the salary payment schedule, including details of the salary, overtime pay, night shift pay, deductions (if any), in a salary payment statement.
3. Wage payment methods for employees (Article 96 of the 2019 Labor Code, Article 54 of Decree 145/2020/NĐ-CP)
Employee wages are paid in cash or transferred to the employee’s personal bank account. Employers must bear the associated fees for opening accounts and transferring salaries when opting to pay salaries through employees’ personal accounts.
Employers and employees agree on one of the following three wage payment methods:
1.1 Payment by time
Time-based wages are paid to employees who receive wages based on time worked, depending on the agreed-upon time period in the labor contract, specifically:
a. Monthly wages are paid for one month of work;
b. Weekly wages are paid for one week of work. In cases where the labor contract stipulates monthly wages, weekly wages are determined by multiplying the monthly wage by 12 and dividing by 52;
c. Daily wages are paid for one day of work. In cases where the labor contract stipulates monthly wages, daily wages are determined by dividing the monthly wage by the number of normal working days in the month as regulated by the law selected by the enterprise. In cases where the labor contract stipulates weekly wages, daily wages are determined by dividing the weekly wage by the number of working days in the week as agreed upon in the labor contract;
d. Hourly wages are paid for one hour of work. In cases where the labor contract stipulates monthly, weekly, or daily wages, hourly wages are determined by dividing the daily wage by the number of normal working hours in the day as regulated in Article 105 of the Labor Code.
1.2 Payment by output
Output-based wages are paid to employees who receive wages based on output, depending on the completion level of the quantity and quality of products according to labor norms and assigned product prices.
1.3 Payment by task
Task-based wages are paid to employees who receive task-based wages, depending on the volume, quality of work, and completion time.
4. Salary payment deadlines for employees (Article 97 of the 2019 Labor Code)
4.1 Employees receiving wages by the hour, day, or week shall be paid after the respective hours, days, or weeks of work, or may be paid collectively as agreed upon by both parties, but not exceeding 15 days in one payment.
4.2 Employees receiving monthly wages shall be paid once a month or once every half-month. The payment timing shall be agreed upon by both parties and must be determined at a regular interval.
4.3 Employees receiving wages based on output or tasks shall be paid according to the agreement of both parties; if the work needs to be done over multiple months, monthly advances shall be made based on the volume of work completed in the month.
4.4 In cases where, due to force majeure, the employer has exhausted all measures but cannot pay wages on time, payment must not be delayed by more than 30 days; if wages are delayed for 15 days or more, the employer must compensate the employee with an amount at least equal to the interest accrued on the delayed amount calculated at the interest rate for one-month term deposits announced by the bank where the employer’s account for paying wages to the employee is held at the time of wage payment.
5. Overtime pay
The formula for calculating overtime pay is specifically regulated in Article 55 of Decree 145/2020/NĐ-CP:
5.1. For employees receiving time-based wages, overtime pay is paid for work performed outside normal working hours as stipulated by the employer in accordance with Article 105 of the Labor Code and is calculated according to the following formula:
Overtime pay = Wages (per hour) for work performed on a regular workday x 150%/200%/300% x Working hours
5.2. For employees receiving output-based wages, overtime pay is paid for work performed outside regular working hours to produce additional quantity or volume of products beyond the quantity or volume of products according to the agreement with the employer and is calculated according to the following formula:
Overtime pay = Wages (per hour) for work performed on a regular workday x 150%/200%/300% x Working hours
6. Night work pay
The formula for calculating night work pay is specifically regulated in Article 56 of Decree 145/2020/NĐ-CP:
6.1 For employees receiving time-based wages, night shift pay is calculated as follows:
Night work pay = (Wages (per hour) for work performed on a regular workday + Wages (per hour) for work performed on a regular workday x (at least) 30%) x Nigth working hours
6.2 For employees receiving output-based wages, night shift pay is calculated as follows:
Night work pay = The unit price of product wages for regular working days + The unit price of product wages for regular working days x (at least) 30% x Night working hours
7. Overtime pay for night work
The formula for calculating overtime pay for night shifts is specifically regulated in Article 57 of Decree 145/2020/NĐ-CP:
7.1 For employees receiving time-based wages, overtime pay for night work is calculated as follows:
Overtime pay for night work = Wages (per hour) for work performed on a regular workday x 150%/200%/300% x Working hours + Wages (per hour) for work performed on a regular workday x (at least) 30% + 20% x Wages (per hour) during daytime for regular working days, weekly rest days, or holidays with wage entitlement.
7.2 For employees receiving output-based wages, overtime pay for night shifts is calculated as follows:
Overtime pay for night work = The unit price of product wages for regular working day x 150%/200%/300% x Working hours + The unit price of product wages for regular working days x (at least) 30% + 20% x The unit price of product wages for for regular working days, weekly rest days, or holidays with wage entitlement x Product quantity
