Employee Benefits in Vietnam

Who Is Entitled to Employee Benefits In Vietnam

In Vietnam, most statutory employee benefits apply to employees working under a labor contract, whether they are Vietnamese nationals or foreign employees. Eligibility for core benefits such as social insurance, health insurance, unemployment insurance, and statutory leave is primarily determined by the existence of an employment contract and the employee’s working hours and contract term.

Full-time employees with indefinite-term or fixed-term contracts of at least one month are generally covered by compulsory social, health, and unemployment insurance. Part-time employees can also be covered if they have a qualifying labor contract. Independent contractors engaged under service or consulting agreements are not entitled to employment benefits under labor law and are instead responsible for their own social and tax contributions. Some statutory entitlements, such as paid annual leave, apply even during probation if the employee ultimately continues working for your company and the probation period is counted toward continuous service.

Overview of Employee Benefits In Vietnam

Employee benefits in Vietnam are relatively comprehensive by regional standards, with compulsory social security and generous maternity protections forming the backbone of the system. Benefits are an important part of workplace culture, and employees typically compare offers not only on base salary but also on insurance coverage, allowances, and bonuses.

Mandatory Employee Benefits In Vietnam

Mandatory benefits are legally required and form the core of any employee benefits package in Vietnam. Here's a comprehensive list of mandatory benefits in Vietnam:

Social Insurance (Pension, Sickness, Maternity, Occupational Disease, Work Accident)

Vietnam’s compulsory social insurance scheme provides long-term and short-term benefits including retirement pensions, sickness benefits, maternity benefits, and compensation for occupational diseases and work accidents. Employers and employees must contribute a percentage of the employee’s salary, up to a statutory cap, to the social insurance fund.

As of recent regulations, employers typically contribute around 17.5 percent of salary for social insurance portions (including retirement, survivorship, work accident, and occupational disease), while employees contribute around 8 percent toward retirement and survivorship. Contributions are calculated on the contractual salary up to a ceiling linked to the basic salary set by the government. Employers must register employees with the social insurance authority, maintain monthly contribution records, and submit payroll documentation. These benefits play a crucial role in providing income security during sickness, maternity, disability, and retirement.

Health Insurance

Compulsory health insurance in Vietnam gives employees access to the state health care system and subsidizes the cost of medical treatment. Both employers and employees must contribute to the health insurance fund based on the employee’s salary, up to the statutory cap.

Employers usually contribute around 3 percent of the contributable salary, while employees contribute around 1.5 percent. Registration with the social insurance agency is required, and employees receive health insurance cards to access covered services at contracted hospitals and clinics. This benefit significantly improves access to medical care and reduces out-of-pocket expenses for employees and their families, especially for inpatient and major treatments.

Unemployment Insurance

Unemployment insurance provides income support and job placement assistance to employees who lose their jobs and meet eligibility conditions. It is mandatory for Vietnamese employees working under labor contracts of at least three months, including indefinite-term contracts, and is funded by contributions from employers, employees, and the state.

Employers and employees each typically contribute around 1 percent of the contributable salary to the unemployment insurance fund. To access benefits, employees must register with the employment service center, provide termination documentation, and meet conditions such as having paid contributions for the required minimum period and actively seeking new work. This scheme supports financial stability between jobs and encourages formal employment relationships.

Statutory Paid Annual Leave

Employees in Vietnam are entitled to a minimum number of days of paid annual leave each year, which increases with seniority and depends on the nature of the work. The baseline entitlement for employees working in normal conditions is generally 12 working days per year, with additional days granted for long service or for employees in hazardous or particularly hard jobs.

Eligibility is based on full 12 months of service, but leave accrues pro rata for employees with shorter service in a year. Employers must maintain accurate leave records and pay employees their normal wages during annual leave. When employment ends, employees must be compensated for any unused accrued annual leave. This benefit underpins rest, recovery, and work–life balance, and is closely monitored by labor inspectors.

Public Holiday Leave With Pay

Vietnam recognizes several national public holidays during which employees are entitled to time off with full pay. These include key days such as New Year’s Day, the Lunar New Year (Tet) holidays, National Day, and other officially designated holidays.

If employees are required to work on a public holiday, they must receive premium pay at rates set out in the Labor Code, which can be significantly higher than ordinary working-day wages. Employers must track hours worked on holidays and reflect the correct premium payments in payroll. This benefit recognizes important cultural and national events and is a central feature of Vietnamese workplace culture.

Maternity Leave

Vietnam offers generous maternity leave funded primarily through the social insurance system. Female employees covered by social insurance are generally entitled to six months of maternity leave per childbirth, with additional days for multiple births or complicated cases, at a benefit level equal to 100 percent of their contributable salary average over a defined reference period.

To qualify, employees must have paid social insurance contributions for a minimum number of months before giving birth. Employers must help employees file claims with the social insurance agency by providing necessary documents such as the birth certificate, social insurance records, and salary statements. This benefit supports maternal health, child care, and job protection, as employees have the right to return to work after leave.

Paternity and Related Leave for Fathers

Male employees whose wives give birth are entitled to a period of paid paternity leave, with the exact number of days depending on whether the birth is natural or via surgery and whether it is a single or multiple birth. Benefits are paid through the social insurance fund for insured employees, based on the employee’s contributable salary.

Employers must process the necessary documentation, including proof of childbirth, and coordinate with the social insurance agency to ensure timely payment. This benefit reflects Vietnam’s increasing recognition of shared parental responsibilities and supports family life around childbirth.

Sickness Leave Under Social Insurance

Employees covered by social insurance are entitled to sickness benefits when they are unable to work due to illness or non-occupational injury. The number of days and benefit levels depend on length of contribution and the nature of the illness.

Sickness benefits are paid by the social insurance fund, not directly by the employer, although the employer must handle paperwork and reporting. Employees typically submit a medical certificate from a recognized healthcare provider, and benefits are calculated as a percentage of the average contributable salary over a defined period. This scheme protects employees from income loss during periods of ill health and encourages timely treatment.

Occupational Safety, Health, and Work Accident/Occupational Disease Benefits

Employers in Vietnam are legally required to provide a safe and healthy work environment, conduct occupational safety training, and comply with standards for equipment, protective gear, and workplace conditions. Employees who suffer work-related accidents or occupational diseases are entitled to medical care, rehabilitation, and compensation funded through the social insurance system and, in some cases, by the employer.

Employers must investigate and report work accidents, maintain safety records, and contribute to the work accident and occupational disease insurance component as part of their social insurance contributions. These benefits reduce the impact of workplace hazards and reinforce an employer’s duty of care.

Trade Union and Union-Related Contributions

Where employees are organized in a grassroots trade union under the Vietnam General Confederation of Labour, employers are required to pay trade union fees based on payroll. While this is not a direct cash benefit paid to employees, union contributions support collective activities, welfare programs, and representation for workers.

Employers must register with the relevant union organization and pay contributions, often at a rate around 2 percent of the payroll fund that is used for social insurance. Compliance is monitored by union authorities and labor inspectors, and participation can influence workplace relations and employee engagement.

Supplemental Employee Benefits In Vietnam

Supplemental benefits are not required by law, but can help you stand out as an employer and attract top talent. They include:

Private Health Insurance and Medical Check-Ups

Many employers in Vietnam offer private health insurance or top-up medical plans to supplement the state health insurance system. These plans often include access to private hospitals, international clinics, shorter waiting times, and broader coverage for outpatient services and prescription drugs.

Employers may fully fund premiums or share costs with employees, sometimes extending coverage to family members. Annual health check-ups at reputable clinics are also a common perk. These benefits are highly valued by professionals, especially in major cities like Ho Chi Minh City and Hanoi, and can significantly enhance your competitiveness in the talent market.

Accident and Life Insurance

Group personal accident and life insurance policies provide employees with additional financial protection in the event of death, disability, or serious injury, beyond what is available through statutory schemes. Employers typically purchase group policies from local or international insurers at negotiated rates.

These benefits demonstrate a strong commitment to employee welfare and can be a key differentiator when competing for senior or specialist talent. They are usually documented in company policy handbooks and employment contracts as part of the total rewards package.

Meal Allowances and Canteen Support

Meal allowances are very common in Vietnam, given the importance of shared meals in daily life and work culture. Employers may provide a cash meal allowance, meal vouchers, or subsidized company canteens to cover part of employees’ lunch costs.

These allowances are typically paid monthly and may benefit from favorable tax treatment up to certain limits if documented and administered correctly. Well-designed meal benefits can boost morale and daily satisfaction, particularly for employees working on-site or in industrial zones.

Transport and Housing Allowances

Some employers offer transport allowances to cover commuting costs, company shuttle buses, or support for employees who travel frequently for work. In certain sectors or for senior roles, housing allowances or company-provided accommodation may also be offered, especially in high-cost urban centers or remote project sites.

These benefits are typically specified in the employment contract or a separate benefits policy, and may be structured as fixed monthly amounts or reimbursed expenses. They reduce the financial burden of commuting and rent, which can be a significant concern for employees in Vietnam’s larger cities.

Supplemental Retirement or Savings Plans

Although the statutory pension system provides a base retirement income, some multinational employers and large Vietnamese companies offer supplemental retirement or savings schemes. These can include voluntary pension plans, group savings programs, or employer-matched contributions to long-term savings products.

Participation is often voluntary for employees, and employer contributions can be tied to tenure or performance. These programs promote long-term financial security and can be particularly attractive to mid-career and senior employees looking for stable, long-term incentives.

Performance Bonuses and 13th-Month Pay Enhancements

While a 13th-month bonus around Lunar New Year is customary in Vietnam rather than strictly mandated by law in all circumstances, many employers treat it as a standard benefit. On top of that, companies frequently offer performance-related bonuses linked to individual, team, or company results.

Bonus schemes are usually governed by internal regulations and may be discretionary or formula-based. Transparent criteria and regular communication about performance expectations help employees understand how they can increase their earnings, supporting motivation and retention.

Training, Education Sponsorship, and Language Courses

Investment in professional development is highly valued by Vietnamese employees, particularly in knowledge-based roles. Employers often fund technical training, leadership programs, and professional certifications, as well as English or other foreign language courses.

These benefits are commonly outlined in learning and development policies, with conditions such as minimum service periods or repayment clauses if employees leave shortly after training. They support skill development, career progression, and employee engagement while also building your company’s internal capabilities.

Flexible Work Arrangements and Remote Work Support

Flexible working hours, hybrid work models, and remote work allowances have become more prevalent among employers in Vietnam, especially in the technology and services sectors. While not mandated, these perks strongly influence employer attractiveness for younger and highly skilled workers.

Companies may provide equipment, internet stipends, or coworking space memberships for remote employees. Clear policies that define eligibility, performance expectations, and data security requirements help ensure flexibility benefits productivity rather than undermining it.

Wellness Programs and Employee Assistance

Some employers provide wellness benefits such as gym or sports club subsidies, mental health support, and wellness workshops. Larger organizations may partner with external providers to offer confidential counseling and employee assistance programs.

These initiatives promote physical and mental well-being, reduce stress, and can lower absenteeism. In competitive white-collar sectors, wellness benefits contribute to a positive employer brand and can complement your core health benefits.

Tax Implications of Employee Benefits in Vietnam

How Employee Benefits Are Taxed for Employees

In Vietnam, most cash allowances and in-kind benefits provided to employees are treated as taxable employment income unless a specific exemption or cap applies under tax regulations. This means items such as bonuses, housing allowances, and many other fringe benefits are included in the personal income tax calculation.

Certain benefits, however, may enjoy favorable treatment if they meet regulatory conditions. Examples can include meal allowances within prescribed limits, some travel allowances related to business needs, and employer-funded training directly connected to the employee’s job. To ensure the correct treatment, your payroll team must classify each benefit type accurately and apply the current guidance issued by the tax authorities.

How Employee Benefits Are Treated for Employers

For corporate income tax purposes, most reasonable and properly documented employee benefit expenses are deductible business expenses in Vietnam. This includes statutory contributions to social, health, and unemployment insurance, as well as many supplemental benefits such as training costs, certain allowances, and group insurance premiums.

To be deductible, expenses must be directly related to business operations, supported by invoices and contracts that meet Vietnamese tax invoice requirements, and recorded in your accounting books. Excessive or non-business-related benefits, or those without proper documentation, may be disallowed and increase your taxable profit.

Tax Advantages of Specific Benefits

Some benefit types can be structured to take advantage of more favorable tax treatment. For example, employer-funded training with a direct link to job requirements is typically non-taxable for employees and deductible for employers. Meal allowances and certain welfare expenses may be tax efficient when they fall within regulated caps or are funded out of post-tax welfare funds in line with local guidance.

Similarly, contributions to compulsory social security schemes are deductible for employers and do not count as taxable income for employees. Understanding these distinctions allows you to design benefit packages that maximize net value for employees without disproportionately increasing your tax burden.

Documentation and Compliance Requirements

Proper documentation is essential to support the tax treatment of benefits in Vietnam. Employers must maintain detailed payroll records, labor contracts, internal policies governing benefits, invoices from service providers, and evidence of payment such as bank transfer slips.

Benefits must be accurately reflected in monthly personal income tax declarations, social insurance reports, and annual finalizations. Internal regulations on wages and bonuses should clearly describe the nature of each benefit and eligibility criteria. Robust documentation and consistent reporting greatly reduce the risk of reassessment during tax or labor inspections.

Legal Considerations for Employee Benefits in Vietnam

The main legal framework governing employee benefits in Vietnam includes the Labor Code, the Law on Social Insurance, the Law on Health Insurance, the Law on Employment (for unemployment insurance), and accompanying decrees and circulars. These laws define mandatory benefits, contribution rates and bases, eligibility conditions, and the rights and obligations of employers and employees.

Non-compliance with benefit-related obligations can result in administrative fines, back payments of unpaid contributions, late payment interest, and, in serious or repeated cases, potential criminal liability for individuals responsible. Common issues include failure to register employees for compulsory insurance, under-reporting salaries for contribution purposes, and not granting statutory leave or paying the correct premiums for holiday and overtime work.

Authorities such as the social insurance agency, labor inspectorate, and tax office have the power to conduct inspections, request documents, and impose sanctions. You should conduct regular internal audits of benefits and payroll practices, at least annually, and whenever regulations change. Working with local legal or payroll specialists and keeping internal policies updated with the latest legal requirements is essential to maintaining compliance.

How Benefits Impact Employee Cost

Mandatory benefits in Vietnam add a significant but predictable layer on top of gross salary. When you factor in employer contributions to social insurance, health insurance, unemployment insurance, and union fees, the total employer cost can typically range from around 21 percent to 25 percent above gross salary, depending on the specifics of each scheme and any caps in force at the time.

Supplemental benefits such as private medical coverage, allowances, and bonuses will further increase your total compensation cost, but they can also deliver strong returns in terms of attraction, retention, and productivity. By carefully designing your benefits mix, using salary caps efficiently, and benchmarking your packages against local market practice, you can manage costs while still offering compelling value to employees in Vietnam.