Editorial · March 14, 2023
Social Insurance in Vietnam: Employer Contribution Rates
Social insurance in Vietnam costs an employer 21.5% of covered payroll and takes 10.5% from the employee's pay. That is 32% in total. The figure bundles three separate schemes: social insurance, health insurance and unemployment insurance. This note shows how the 21.5% breaks down, what the salary cap is, and how foreign staff differ.
The rates at a glance
For a Vietnamese employee on a contract longer than three months, three contributions apply each month. Social insurance alone starts from a contract longer than one month. Employers pay them in, and deduct the employee's share from wages.
- Social insurance: employer 17.5%, employee 8%.
- Health insurance: employer 3%, employee 1.5%.
- Unemployment insurance: employer 1%, employee 1%.
- Total: employer 21.5%, employee 10.5%.
Say an employee earns 10,000,000 VND a month under the contract. The employer adds 2,150,000 VND on top. The employee takes home 8,950,000 VND before income tax, because 1,050,000 VND goes to the funds.
Where the employer's 17.5% goes
The social insurance part is not one pot. Decision 595/QD-BHXH, issued by Vietnam Social Security in April 2017 under the Law on Social Insurance of 2014, splits the employer's share into three funds.
- 14% goes to the retirement and death fund.
- 3% goes to the sickness and maternity fund.
- 0.5% goes to the occupational accident and disease fund.
Those three add up to 17.5%. The employee's 8% goes only to the retirement and death fund. This is why a worker's pension builds on both sides of the payroll slip. The sickness and maternity money pays for leave benefits, and the accident fund covers work injuries.
Health and unemployment insurance
Health insurance is set at 4.5% of the monthly salary. The employer pays 3% and the employee pays 1.5%. It gives access to treatment at approved medical facilities, and it applies to staff on contracts longer than three months.
Unemployment insurance comes from the Law on Employment of 2013. Both sides pay 1% of salary. It applies to Vietnamese employees on contracts longer than three months, and it is paid out if a worker loses a job.
The salary cap
Contributions are charged on the salary written in the labor contract, but only up to a ceiling. For social and health insurance, the ceiling is 20 times the statutory pay rate, also called the base salary. In March 2023 that rate is 1,490,000 VND a month, so the ceiling is 29,800,000 VND a month. Pay above that amount is not charged.
Unemployment insurance uses a different yardstick: 20 times the regional minimum wage. In Region I, which includes Ho Chi Minh City and the urban districts of Hanoi, the minimum wage is 4,680,000 VND, so the ceiling works out to 93,600,000 VND. Region IV starts from 3,250,000 VND.
An employer with a manager paid 50,000,000 VND would pay social and health insurance on 29,800,000 VND only. Unemployment insurance would apply to the full 50,000,000 VND, since it sits under the higher ceiling.
Foreign employees
Foreign staff with a work permit and a Vietnamese labor contract of at least one year have been covered by social insurance since December 2018. Health insurance applies from a contract of three months. Unemployment insurance does not apply to them.
From January 1, 2022, the rates for foreign employees are 17.5% social insurance and 3% health insurance for the employer, a total of 20.5%. The employee pays 8% and 1.5%, a total of 9.5%. Before that date, the employer paid 3.5% for social insurance and the employee paid none.
What is changing in July 2023
The rates themselves are not changing. The cap is. On November 11, 2022, the National Assembly passed Resolution 69/2022/QH15. It raises the statutory pay rate from 1,490,000 VND to 1,800,000 VND a month from July 1, 2023, an increase of 20.8%. Because the social and health insurance ceiling is 20 times that rate, it should move to 36,000,000 VND from the same date, once the government issues its guidance.
Employers with well-paid staff should plan for this. Payroll for anyone above 29,800,000 VND will cost more from July. The rates are the same, but they apply to a larger slice of pay.
Before each payroll run, check that the contract salary on file matches what is declared to the social insurance agency.
A place on this register is not for sale.