Guide to Calculate Salary Paid for Social Insurance in Vietnam

Participating in social insurance is one of the fundamental rights afforded to employees. Social insurance is a State policy aimed at partially compensating for the economic loss employees incur when they are unable to work under circumstances defined by law. Accordingly, employees’ wages serve as the basis for calculating social insurance contributions. Please refer to the following guide to calculate salary paid for social insurance in Vietnam from Viet An Law – Tax Agent.

Components of Wages in Vietnam

Pursuant to Article 90 of the Vietnam Labor Code 2019, wages are defined as follows:

“Wages are the monetary amounts paid by employers to employees under an agreement for performing work, including the wage for the job or position, wage allowances, and other additional payments.”

Thus, employees’ wages comprise the following:

• Basic Wage (for the job or position).
• Allowances and Subsidies (e.g., position allowance, seniority allowance, meal allowance, telephone allowance).
• Other Payments (if applicable).

Guide to calculate salary paid for social insurance in Vietnam

The Social Insurance Law 2014 identifies two categories of employees when calculating wages for social insurance contributions: Employees subject to the wage regime set by the State and employees subject to the wage regime set by the employer:

For Employees with wages determined by the State

The State-prescribed wage regime refers to the calculation of wages for employees based on statutory regulations for wage grades and levels. This regime typically applies to officials, civil servants, and public employees.

According to Clause 1, Article 89 of the Social Insurance Law 2014, in this case, the monthly wage used as the basis for social insurance contributions includes the wage determined by grade, level, military rank, and allowances for position, seniority exceeding the bracket, and professional seniority (if applicable).

However, for individuals working on a part-time basis in communes, wards, and townships, the monthly wage for social insurance contributions is based on the statutory base salary.

For Employees with wages determined by Employers

For employees working under an employer-determined wage regime, the wage for social insurance contributions must comply with Article 90 of the Labor Code 2019 and must not be lower than the regional minimum wage specified in Decree 74/2024/ND-CP:

According to Clause 2, Article 89 of the Social Insurance Law 2014 and Article 17 of Decree 115/2015/ND-CP, in this case, the monthly wage for social insurance contributions includes:

• Basic wage, wage allowances; and
• Other additional payments stipulated in the labor contract.

For business managers who receive a salary, social insurance contributions are based on the wage set by the enterprise, except for full-time managers in State-owned single-member limited liability companies.

For cooperative managers, contributions are based on the wage decided by the members’ assembly.

Allowances included and excluded in social insurance contributions

As mentioned above, wages for social insurance contributions for employees under the employer-determined wage regime include certain allowances that are subject to or exempt from social insurance contributions. Specifically:

• Allowances included in social insurance contributions include:
• Allowances that compensate for working conditions, job complexity, living conditions, and labor attraction are not fully reflected in the basic wage in the labor contract.
• Fixed supplementary payments specified in the labor contract and paid regularly in each wage period.

Examples: Seniority allowance, position allowance, hazardous work allowance.

• Allowances excluded from social insurance contributions include:
• Bonuses and innovation rewards.
• Meal allowances and subsidies for fuel, phone, transportation, housing, childcare, and dependent care.
• Support for employees due to family events (e.g., bereavement, marriage, birthdays).
• Assistance in cases of occupational accidents or diseases.
• Irregular supplementary payments that are not fixed and tied to work performance.

Examples: Performance bonuses, fuel allowances, birthday gifts.

Current Social Insurance contribution rates

For Employees Fund

• Retirement and Survivors’ Fund: 8%
• Sickness and Maternity Fund: 0%
• Occupational Accident and Disease Fund: 0%
• Unemployment Insurance Fund: 1% (0% for foreign employees)
• Health Insurance Fund: 1.5%

For Employers Fund

• Retirement and Survivors’ Fund: 14%
• Sickness and Maternity Fund: 3%
• Occupational Accident and Disease Fund: 0.5%
• Unemployment Insurance Fund: 1% (0% for foreign employees)
• Health Insurance Fund: 3%

Is it compliant for the wage used as the basis for social insurance contribution to be lower than the actual wage received?

According to Clause 1, Article 90 of the Labor Code 2019, an employee’s actual wage includes the basic wage, allowances, and other additional payments. However, not all allowances are included in the wage for social insurance contributions.

Therefore, social insurance contribution wages are often lower than actual earnings. This does not automatically constitute a violation unless the employer fails to declare the appropriate components subject to social insurance contributions.

The above provides a legal guide to calculate salary paid for social insurance in Vietnam. For any further legal support, please contact Viet An Law – Tax Agent for timely assistance.