Understanding Vietnam's Social Insurance System

May 08, 2024

HR & Payroll

Understanding Vietnam’s 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.

Table of Contents

Key Components

The system consists of three primary components:

Social Insurance:
- Covers risks associated with:
  - Sickness and Maternity Fund: Provides financial support during illness and maternity leave.
  - Labor Accident and Occupational Disease Fund: Offers compensation for work-related injuries and illnesses.
  - Pension and Survivorship Fund: Provides retirement income and support for surviving dependents of deceased employees.
- Applies to employees under definite term contracts (over one month) or indefinite term contracts.
Health Insurance:
- Provides coverage for employees’ medical expenses.
- Applies to employees with labor contracts exceeding a three-month duration (definite term) or indefinite term contracts.
Unemployment Insurance:
- Offers financial assistance to employees who experience job loss.
- Applies to employees who have labor contracts exceeding three months (definite term) or indefinite term contracts.

Social Insurance Benefits

Pension: Employees who reach retirement age as stipulated by the Labor Code 2019 and have paid Social Insurance for 20 years or more will be entitled to a state pension. The amount of the monthly pension depends on the number of years the employee participated in the Social Insurance fund, but not exceeding 75% of the legal average monthly salary.
Sick payment support
Maternity allowance
Work-related injury allowance and occupational disease allowance
Funeral payment

Health Insurance Benefits

Covers costs of medical examinations, treatment, and prescribed medications at designated healthcare facilities.

Unemployment Insurance Benefits

Provides temporary financial support to eligible employees who have lost their jobs.

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.