Vietnam's new social insurance regulations to impact payroll

Changes to the General Minimum Wage, extra payments to the Social, Health, Unemployment Insurance and a requirement for foreign workers to pay social insurance for the first time will all affect employees’ net take-home pay.

Vietnam is introducing a range of new social insurance regulations in 2018, which will have an impact on both payroll and employees’ net take-home pay.

Firstly, the General Minimum Wage relating to the public sector will rise from VND 1.3 million (US$57) to VND 1.39 million (US$61) from 1 July 2018. This situation will increase the cap for social insurance contributions from VND 26 million (US$1,147) to VND 27.8 million (US$1,226). The change was legislated by Congress on 13 November 2017.

Secondly, as of 1 January 2018, extra payments such as responsibility, seniority and regional allowances will need to be included when calculating the Social, Health, Unemployment Insurance (SHUI) base (gross) salary.

Employers in Vietnam have traditionally offered a low gross salary as part of their payment structure to make the SHUI lower, which benefits both them and their employees. But these ‘extra payments’ will in future have to be included in the SHUI base salary calculation, leading to reduced net take-home pay for employees.

Finally, as of 1 January 2018, foreign and expatriate employees who have a work permit or were hired in Vietnam will need to make social insurance contributions for the first time. Further guidance from the Social Insurance authority about how to implement the benefit claims process is still required, however.