Social insurance in Vietnam is a cornerstone of the country’s labor protection system, ensuring that employees have financial security in times of need. Covering a wide range of benefits—from sickness and maternity leave to pensions and unemployment support—this system is designed to provide stability and security for workers throughout their careers and into retirement. Whether you are an employer or an employee, understanding Vietnam’s social insurance framework is essential for compliance and financial planning. In this comprehensive guide, we explore the structure, benefits, contribution rates, and key regulations governing social insurance in Vietnam.
The Basics of Social Insurance in Vietnam
Social insurance (Bảo hiểm xã hội - BHXH) is a mandatory system that requires both employers and employees to contribute a percentage of wages into a government-managed fund. These contributions ensure that employees receive benefits in cases of illness, maternity, work-related accidents, retirement, and unemployment. Vietnam’s social insurance system consists of three main categories:
- Compulsory Social Insurance (SI): Applicable to Vietnamese and foreign employees working under contracts of one month or more.
- Health Insurance (HI): Provides coverage for medical examinations and treatments at authorized healthcare facilities.
- Unemployment Insurance (UI): Exclusive to Vietnamese employees with contracts of three months or more, offering financial support during job loss.
For foreign employees, participation in Vietnam’s social insurance system became mandatory on December 1, 2018, under Decree 143/2018/ND-CP.
Who Must Contribute?
For Vietnamese Employees
- All employees under labor contracts of at least one month must contribute.
- Employers must register and contribute on behalf of their employees.
For Foreign Employees
- Foreign employees are subject to mandatory social insurance if they:
- Hold a valid work permit.
- Have a labor contract of one year or more.
- Are under 60 years old (men) or 55 years old (women), with the retirement age gradually increasing to 62 for men by 2028 and 60 for women by 2035.
- Are not intra-company transferees (i.e., managers, executives, or specialists who worked for at least 12 months in a foreign office before transferring to Vietnam).
How Much Do Employers and Employees Contribute?
The contribution rates for social insurance are divided between employees and employers as follows:
Type of Insurance | Employer Contribution (%) | Employee Contribution (%) | Total (%) |
Social Insurance | 17.5% | 8% | 25.5% |
Health Insurance | 3% | 1.5% | 4.5% |
Unemployment Insurance (Vietnamese only) | 1% | 1% | 2% |
Total (Vietnamese Employees) | 21.5% | 10.5% | 32% |
Total (Foreign Employees) | 20.5% | 9.5% | 30% |
Salary Cap for Contributions
- Social and health insurance contributions are capped at 20 times the statutory pay rate.
- Unemployment insurance contributions are capped at 20 times the regional minimum wage.
As of July 1, 2024, the statutory pay rate in Vietnam will increase to VND 2,340,000 (approx. USD 92), adjusting the salary caps accordingly.
What Benefits Does Social Insurance Cover?
Vietnam’s social insurance system provides five key benefits:
- Sickness Benefits: Employees receive 75% of their average monthly salary while on sick leave. The duration varies based on the illness severity and length of employment.
- Maternity Benefits: Female employees receive 100% of their average salary for six months of maternity leave. Fathers can also take paternity leave ranging from 5 to 14 days depending on the circumstances of childbirth.
- Accident and Occupational Disease Benefits: Covers medical expenses and compensation for work-related injuries or illnesses. In case of disability or death, compensation is paid to the employee or their family.
- Retirement Benefits: Employees who reach retirement age and have contributed for at least 20 years receive a monthly pension. The pension amount is based on the average salary over the contribution period.
- Survivor Benefits: In the event of an employee’s death, their family receives a funeral allowance and monthly or lump-sum survivor benefits.
For unemployment insurance, eligible employees who lose their job receive 60% of their average salary from the last six months of employment for a maximum of 12 months, depending on their contribution history.
Claiming Social Insurance Benefits
To claim benefits, employees must submit the required documents to the Vietnam Social Security (VSS) office. Processing times vary by benefit type, but unemployment insurance is usually paid within 10 days of approval.
One-Time Withdrawal for Foreign Employees
Foreign employees can withdraw their entire contributed amount if they:
- Reach retirement age without meeting the 20-year contribution requirement.
- Have a fatal illness such as cancer or HIV.
- Leave Vietnam permanently after employment ends.
- Have their work permit expire and not renewed.
Requests must be submitted 30 days before contract expiration, and payment is typically processed within 10 days.
How to Register for Social Insurance?
Employers must register their employees with the Vietnam Social Security (VSS) within 30 days of their start date. The registration process involves:
- Submitting a social insurance declaration form (Form TK1-TS).
- Providing a copy of the labor contract and business registration certificate.
- Receiving an assigned Social Insurance Code.
- Making monthly contributions to the VSS.
For self-employed workers, voluntary social insurance is available through local social insurance offices or authorized agencies such as post offices.
Final Thoughts
Social insurance is more than just a legal requirement—it is a vital safety net for employees and their families. By ensuring compliance with Vietnam’s social insurance regulations, both employers and employees contribute to a system that provides financial protection during times of need.
As the system continues to evolve, it is crucial to stay updated on contribution rates, benefit policies, and legal requirements. For businesses operating in Vietnam, proper social insurance compliance not only avoids legal penalties but also fosters a stable and productive workforce.