Understanding Vietnam Social Insurance System

May 08, 2024

HR & Payroll

Understanding Vietnam Social Insurance System

Vietnam’s social insurance system offers a crucial safety net for employees, providing financial support in various circumstances. It’s a mandatory scheme, and employers hold the responsibility of ensuring compliance for their workforce.

Understanding the Vietnam Social Insurance System is critical for businesses that aim to remain compliant and support employee well-being. The system provides financial protection to employees in cases of illness, job loss, retirement, and more, ensuring a stable safety net in the Vietnamese labor market.

Table of Contents

Key Components of the Vietnam Social Insurance System

The Vietnam Social Insurance System consists of three main types of insurance:

1. Social Insurance

This component covers key risks and long-term protections:

Sickness and Maternity Fund: Provides financial support during periods of illness or maternity leave.
Labor Accident and Occupational Disease Fund: Offers compensation for work-related accidents or illnesses.
Pension and Survivorship Fund: Ensures retirement income and support for dependents of deceased employees.

Eligibility: Applies to employees with definite-term contracts longer than one month and indefinite-term contracts.

2. Health Insurance

Covers medical expenses, treatments, and prescription medications.
Mandatory for employees with contracts over three months (definite or indefinite).

3. Unemployment Insurance

Provides temporary financial support to employees who lose their jobs.
Applies to contracts exceeding three months.

Social Insurance Benefits

Employees contributing to the Vietnam Social Insurance System are entitled to:

Pension: For those who retire with at least 20 years of contribution.
Sick leave support
Maternity allowance
Occupational injury and disease compensation
Funeral support

Health & Unemployment Insurance Benefits

Health insurance pays for routine and emergency medical services.
Unemployment insurance ensures short-term income during job transitions.

Contribution Rates

Employers and employees share in making contributions based on a percentage of the employee’s monthly salary. The current rates are:

Insurance Type	Employee Contribution	Employer Contribution	Note
Social Insurance	8%	17.5%	Capped at a maximum of 20 times the basic wage
Health Insurance	1.5%	3%	Capped at a maximum of 20 times the basic wage
Unemployment Insurance	1%	1%	Capped at a maximum of 20 times the basic wage

Responsibilities of Employers

Registration: Employers must register their eligible employees for the social insurance system.
Contributions: Employers are responsible for calculating, deducting (for employee contributions), and remitting the required social, health, and unemployment insurance payments.
Record Keeping: Maintain accurate records of contributions made.

Understanding and adhering to Vietnam’s social insurance laws is a fundamental aspect of operating a business in the country. Compliance demonstrates responsible business practices and contributes to the well-being of employees.

Disclaimer

Social insurance regulations can change. Please consult with legal and HR professionals in Vietnam for the most up-to-date guidance.