Eligibility Criteria and Calculation Methods for Social Insurance in Vietnam

In Vietnam, three main public insurance schemes are in place: social insurance (BHXH), health insurance (BHYT), and unemployment insurance (BHTN), and both companies and employees are obligated to participate.
For many companies, it can be difficult in practice to understand “who must be enrolled” and “which amounts should be used as the basis for calculation.”
In this article, we will整理 Vietnam’s social insurance system with a focus on eligibility criteria and calculation methods, and summarize the key points that Japanese companies should keep in mind.

1. Who Is Covered by Vietnam’s Social Insurance System?

First, let’s confirm who is required to enroll in social insurance. The basic idea is that employees who have an employment contract with a Vietnamese entity for a certain minimum period are subject to mandatory enrollment.

1-1. Basic Categories of Eligible Employees

Key point:
As a rule of thumb, employees with an employment contract of 3 months or longer are subject to mandatory social insurance enrollment. Even in the case of part-time or short-term contracts, some employees may still be eligible depending on the contract terms, so it is important to carefully review the contents of the employment contract.

2. Social Insurance Obligations for Foreign Employees (Expatriates)

Under Decree 143/2018, foreign employees who meet certain conditions are also required to enroll in Vietnam’s social insurance system. However, there are exceptions for Japanese expatriates and others, and misjudgments can lead to compliance risks.

2-1. Main Cases Where Enrollment Is Required

2-2. Typical Cases Where Enrollment Is Not Required

Important:
The treatment of expatriates requires case-by-case judgment, taking into account the type of employment contract and any arrangements to avoid double social insurance coverage between countries. It is crucial to work with local accounting firms or specialists and clearly define your company’s policy in advance.

3. Structure of Social, Health, and Unemployment Insurance

Vietnam’s public insurance system is broadly composed of the following three schemes:

For each of these three schemes, both employees and employers contribute premiums at fixed rates specified by law.

4. Contribution Rates and the Salary Base

Social insurance premiums are calculated based on an amount called the “social insurance salary base (Insurance Salary)”. The legally defined contribution rates are applied to this salary base to determine the monthly premiums.

4-1. Employee and Employer Contribution Rates (Typical Example)

4-2. Allowances Included in / Excluded from the Salary Base

Whether a specific allowance should be included in the insurance salary base is determined based on the company’s internal salary regulations and interpretation of the relevant laws. Typical examples are as follows:

Allowances Often Included in the Salary Base

Allowances Often Excluded from the Salary Base

Important:
If the treatment of allowances is left ambiguous, it can later be discovered that contributions have been “overpaid” or “underpaid.” It is important to clearly define which allowances are included in the salary base in your internal regulations and align your understanding with your accounting firm or tax advisor.

5. How to Calculate Social Insurance Premiums

Next, let’s look at the actual calculation formulas. We will start with the basic formulas for the employee and employer contributions.

5-1. Calculation Formulas for Employee Contributions

Social Insurance (BHXH)  = Insurance Salary × 8%
Health Insurance (BHYT)  = Insurance Salary × 1.5%
Unemployment Insurance (BHTN) = Insurance Salary × 1%

5-2. Calculation Formulas for Employer Contributions

Social Insurance (BHXH)  = Insurance Salary × 17.5%
Health Insurance (BHYT)  = Insurance Salary × 3%
Unemployment Insurance (BHTN) = Insurance Salary × 1%

In practice, these amounts are usually calculated automatically using a payroll system or Excel, and then reflected in monthly payslips as well as in government filings and payments.

6. Example: When the Insurance Salary Base Is 10,000,000 VND

Let’s calculate the employee and employer contributions for an employee whose insurance salary base is 10,000,000 VND.

6-1. Employee Contributions

6-2. Employer Contributions

As you can see, even with the same insurance salary base, the amounts borne by the employee and the company differ significantly. When simulating personnel costs or designing salary tables, it is important to understand the total cost, including social insurance contributions.

7. Common Issues Resulting from Enrollment Gaps and Calculation Errors

If you misjudge who should be enrolled or how to set the insurance salary base, the following types of problems may occur:

Key point:
Social insurance is an area that must be reviewed regularly in line with salary regulation changes and legal revisions, rather than being “set once and forgotten.” Particular care is needed if settings and operations are highly dependent on specific individuals.

8. Summary: Understanding the System and Standardizing Operational Rules Are Key

The eligibility criteria and calculation methods for Vietnam’s social insurance can be difficult to grasp for first-time HR or payroll staff, because many of the underlying assumptions and local rules differ from Japan.
However, once the main points are organized, you can reduce them to relatively simple rules such as:

In other words, the key is to break things down into simple, easy-to-follow rules.

Along with understanding the制度, building a “system that allows anyone to perform the calculations in the same way”
is the quickest way to stabilize social insurance operations at your Vietnam office.

For Companies Looking to Standardize Social Insurance and Payroll Operations in Vietnam

EST is an HR, labor, attendance, and payroll management system designed specifically for Vietnam offices.
By managing social insurance salary rules as master data and configuring automatic calculation logic, EST helps standardize operations that tend to become overly dependent on individual staff members.

If you are facing challenges in payroll processing or HR and labor management at your Vietnam office, please feel free to contact us.

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