A Guide to the Social Security Scheme in Vietnam

Social security is the responsibility of every enterprise using labor in Vietnam. However, not all employers are aware of the regulations related to social security. BW’s legal consulting experts can provide crucial information regarding insurance in Vietnam.

There are three types of social security schemes that are required for all employees in Vietnam:

– Social insurance: This type of insurance covers employees’ benefits such as sick leave, maternity leave, benefits for work-related accidents and occupational diseases, pension allowance, and mortality allowance.

– Health insurance: This allows employees to undergo medical examinations and inpatient and outpatient treatments at authorized medical facilities.

– Unemployment insurance (which replaces severance pay): This wis paid to workers at an amount that depends on the amount of time they and their previous employers contribute. The monthly unemployment allowance is 60% of the average salary in the last six months of work.

What is an enterprise’s responsibility regarding social insurance for recruiting local and foreign labor in Vietnam?

Businesses should pay attention to the following notes:

– Social insurance and health insurance apply to both Vietnamese staff and foreign employees holding a work permit and employed under labor contracts with indefinite term or definite term of at least 1 year.

– Unemployment insurance is only required for Vietnamese employees.

– For those whose contract is valid for more than three months or for an indefinite period of time, the employer will cover insurance costs — meaning that enterprises must register and pay for their employees’ insurance at the Department of Labor, Invalids and Social Affairs.

SOCIAL INSURANCE CALCULATION

As of January 1, 2018, the monthly salary as the basis for social insurance payment will be the salary plus salary-based benefits mentioned in the labor contract, however this is capped at 20 times the minimum salary for social insurance contributions set by the government.

For local workers this can be calculated as below:

For foreign workers:

To gain more information about manufacturing in Vietnam and to receive free support from BW (legal consultancy, HR consultancy, etc.), please contact our hotline (+84) 28 710 29 000 or email us at leasing@bwidjsc.com.