HR Payroll: Employee and Employer Social Health and Insurance (SHUI) Obligations

Payroll is a complicated matter in Vietnam because there are many factors to consider: tax, insurance, and benefits, among other things.

Payroll is a complicated matter in Vietnam because there are many factors to consider: tax, insurance, local regulations, and benefits. Moreover, there are differences between foreign employees and local employees regarding social security, trade union fee, and personal income tax percentages. To reduce overhead costs and allow you to focus on your bottom line, here is why you should outsource all your payroll needs.

Read About Cekindo’s Payroll Outsourcing Services in Vietnam

Obligations Related to Payroll in Vietnam:

1. Social security

For Vietnamese employees

  • Health insurance: 1.5% from the employee and 3% from the employer
  • Social insurance: 8% of the employee and 3.5% from the employer
  • Unemployment insurance: 1% from the employee and 1% from the employer

For foreign employees

2021

  • Health insurance: 1.5% from the employee and 3% from the employer
  • Social insurance: 0% from the employee and 3% from the employer
  • Unemployment insurance: not applicable

2022 updated:

  • Health insurance: 1.5% from the employee and 3% from the employer
  • Social insurance: 8% from the employee and 17% from the employer
  • Unemployment insurance: not applicable

2. Trade union funds

  • 2% for Vietnamese and foreign employees, paid by the company
  • 1% for Vietnamese employees and foreign employees (Max 149.000VND) if company set up in house Trade Union Board

3. Personal income tax

  • 5 to 35% for local employees and foreign tax residents
  • 20% for foreign non-tax residents

Social Insurance for Foreign Employees in Vietnam

In Vietnam, there are three kinds of insurance that are compulsory for Vietnam’s employees. They are social insurance, health insurance, and unemployment insurance. Since foreign employees are only eligible for health insurance out of the three types of insurance, foreign staff’s employment taxes are lower than those of local workers.

RELATED: Payroll & HR Outsourcing in Vietnam

However, Vietnam’s Social Insurance Law that has been in force since 2016, specifies that companies can also pay for social insurance for their foreign staff starting from the beginning of 2018. Payments for foreign employees’ social insurance became mandatory from December 1st, 2018, allowing foreigners to enjoy the same benefits as local employees in Vietnam.

The rates of social insurance payment applicable to foreign employees and their employers are as below:

  • Employer: 3%
  • Employee: 0%

Other than social insurance, under the latest decree, foreign employees are eligible for compensations for their maternity leave, sick leave, occupational diseases, retirement, accidents, and death, as well as one-time pension payment upon exiting Vietnam.

Nonetheless, compulsory social insurance is only applicable to foreign employees in Vietnam when they meet the following conditions:

  • A minimum of 12 months of foreign employment contract
  • They have a work permit, relevant practical license, or certificate

Foreign staff is not eligible for mandatory social insurance in the following situations:

  • Foreigners come from an overseas office due to an internal transfer.
  • They have more than one employer in Vietnam. The social insurance is only applicable to their first employment, and each of the foreigner’s employer is responsible for labor accident and occupational diseases insurance at 0.5%
  • They are in their retirement age, which is 55 for women and 60 for men.

Minimum Wage for Payroll in Vietnam

Standard minimum wage and regional minimum wage are the two types of minimum wage in Vietnam.

RegionRegional minimum wage (VND/month)
Region I 4.420.000 VND
Region II 3.920.000 VND
Region III 3.430.000 VND
Region IV 3.070.000 VND

It is a law that employers must grant paid leaves to their employees in Vietnam. Paid leaves in Vietnam include maternity and paternity leaves, sick leave, annual leaves, and public holidays.

  • Six-month maternity leave
  • Five to ten days of prenatal checkup leave
  • A least five days of paternity leave
  • Thirty to sixty days of sick leave depending on how long employees work for a company and pay for their social insurance
  • At least twelve days of annual leaves
  • Eleven public holiday days leave

Other additional off days that employees take for themselves are considered unpaid.

Payroll Outsourcing with Cekindo

Here at Cekindo, our clients believe in our experts so much that they use our services long-term to help them achieve a cost-effective managed payroll in Vietnam. Our highly-experienced Vietnam payroll team will take the burden off your employees and your business without compromising on accuracy, compliance, and efficiency.

Cekindo takes the complexity out of Vietnam’s payroll and tax compliance. Our practical and up-to-date approaches align with the Vietnamese authorities’ latest revisions, reducing the possibilities of non-compliance and legal complications.

Our solutions are tailored to fit your unique business needs and give you peace of mind when you know that your payroll in Vietnam is processed timely and accurately.

Learn more about Cekindo’s payroll outsourcing solution now. Complete the form below.

Contact Our Consultant

Tomas Svoboda - Cekindo - Vietnam Country Manager

Verified by:​

Ing. Tomas Svoboda

Tomas is an expansion manager responsible for Vietnam. His role is to define the key potential of the Vietnamese market and to ensure that Cekindo branch in Vietnam provides its clients with smooth and hassle-free market entry solutions.