Social Insurance Compliance in Vietnam Is Now a Business Must
If you’re running or starting a business in Vietnam, you’re likely juggling a million things like product development, customer acquisition, and growth strategy. But there’s one area that often gets overlooked—social insurance compliance.
Effective July 1, 2025, the new Social Insurance Law (Law No. 41/2024/QH15) reshapes how employers must handle workforce benefits, and the stakes are higher than ever. For SMEs, foreign companies, and Vietnam startups, understanding these changes isn’t just about ticking boxes—it’s about protecting your bottom line, maintaining operational stability, and building trust with your team.
Miss a deadline or miscalculate a deduction, and you’re not just risking fines—you’re inviting audits, reputational harm, and potential business disruption. In this guide, we break down exactly what the current law means for your business—who’s covered, what you must contribute, how to stay compliant, and how to make this system work for your company—not against it. Whether you're a seasoned player or a newcomer to the Vietnam business landscape, this is a must-read for staying ahead.
What Is Mandatory Social Insurance in Vietnam?
Mandatory social insurance (SI) in Vietnam is a government-enforced system that provides protection to employees in the form of:
- Pensions
- Health insurance
- Maternity and sickness support
- Compensation for occupational accidents and diseases
- Survivor benefits
These are not optional benefits. They are legally required for most employment arrangements and are regulated by the Vietnam Social Security (VSS) agency. The newly issued Law No. 41/2024/QH15 replaces the previous 2014 version and introduces expanded coverage, digital processes, and tighter enforcement.
This is a major compliance area for anyone doing business in Vietnam—from domestic SMEs to foreign investors. Under this law, employers are responsible for registering, contributing, and reporting social insurance for all qualified employees and related parties. Failure to comply can lead to fines, interest penalties, and business sanctions.
Who Must Contribute to Social Insurance in Vietnam?
The short reply is that both employers and employees must contribute to Social Insurance in Vietnam. The 2025 update to Vietnam’s social insurance law broadens the scope of who must participate. If you are starting a business in Vietnam or managing a team, here’s what you need to know:
Vietnamese Employees
All Vietnamese workers with contracts of one month or more must be enrolled in the SI system. This includes:
- Indefinite and fixed-term contracts
- Seasonal and project-based roles
- Part-time staff earning above minimum wage
For Probationary employees, under Law No. 41/2024/QH15, if a probationary period is included in a labor contract of at least one month and the salary meets or exceeds the local minimum wage, compulsory social insurance is required from day one. If the probation is only under a separate, standalone probation contract, social insurance is not required during that period.
Foreign Employees
Foreign businesses in Vietnam must also comply. A foreign employee is required to contribute to social insurance if:
- They hold a work permit or practice certificate
- Their labor contract is at least 12 months
- They are not intra-company transferees
- They are not at or near retirement age
This significantly affects hiring strategies for FDI and Vietnam start-up businesses with foreign professionals.
Are you a freelancer in Vietnam? Find out what compliance rules apply to you in our detailed Freelancing in Vietnam blog.
Breakdown of Social Insurance Contributions in Vietnam
Understanding the exact contribution rates is critical for compliance and budgeting. Below are the updated contribution rates for both Vietnamese and foreign employees in Vietnam:
For Vietnamese Employees:
Total: 32% of the employee’s salary
Benefits | Employer contribution rate | Employee contribution rate |
Retirement and Survivor Fund | 14% | 8% |
Sickness and Maternity | 3% | N/A |
Occupational Accident & Disease | 0.5% | N/A |
Health Insurance | 3% | 1.5% |
Unemployment Insurance | 1% | 1% |
Total | 21.5% of employee's monthly salary | 10.5% of employee's monthly salary |
For Foreign Employees:
Total: 30% of the employee’s salary
Benefits | Employer contribution rate | Employee contribution rate |
Retirement | 14% | 8% |
Sickness and Maternity | 3% | N/A |
Occupational Accident & Disease | 0.5% | N/A |
Health Insurance | 3% | 1.5% |
Unemployment Insurance | N/A | N/A |
Total | 20.5% of employee's monthly salary | 9.5% of employee's monthly salary |
Contribution caps apply to income exceeding 20 times the government base salary, updated annually.
For most businesses in Vietnam, automation of this process through HR tools is recommended.
New Changes to Vietnamese Social Insurance Law (2025)
Vietnam’s Insurance Law 2025 brings major updates to both social and health insurance, aimed at expanding coverage and enhancing protection:
- Broader Mandatory Coverage: More groups, including household business owners and unsalaried managers, must now participate in social insurance.
- Easier Pension Access: Minimum years required for pension eligibility reduced from 20 to 15, making retirement benefits more accessible.
- Tightened Lump-Sum Rules: New participants can only withdraw social insurance as a lump sum in special cases (severe illness, emigration, or insufficient years at retirement age). Existing members face stricter withdrawal timelines.
- Flexible Contributions: Contributors can bridge employment gaps, and the salary base for social insurance now covers regular payments and allowances.
- Modernized Pension System: New multi-tiered pensions with government support for elderly (starting from age 75, or 70 for low-income).
- Payment Flexibility: Health insurance payments can now be made monthly, quarterly, or biannually.
- Wider Subsidies: More vulnerable groups, such as the poorest and victims of trafficking, receive state support for health insurance premiums.
These updates represent the most significant reforms in over a decade, focusing on inclusivity, flexibility, and better health and financial protection for all citizens.
Employer Responsibilities Under the New Vietnam Social Insurance Law 2025
Failure to meet your obligations can result in heavy fines or worse. Below are your key responsibilities:
1. Registration with VSS
- Register the company and all qualifying employees with the Vietnam Social Security (VSS) agency within 30 days of becoming liable.
- Submit signed labor contracts, salary declarations, and employee records.
2. Accurate Contributions
- Deduct employees’ share directly from salaries.
- Pay both employer and employee contributions by the end of the following month.
3. Reporting Changes
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Notify authorities about:
- New hires
- Resignations or layoffs
- Salary adjustments
- Maternity leave or long-term absence
For unpaid leave exceeding 14 days, contributions are paused and must resume once work resumes.
4. Documentation and Transparency
- Provide monthly contribution summaries to employees.
- Maintain clear, accessible records in case of inspection or audits.
- Issue annual SI reports for each employee.
5. Digital and Payroll Readiness
- Use Vietnam-based accounting software or payroll services that integrate with VSS reporting formats.
Penalties for Non-Compliance
Non-compliance is expensive and dangerous. Penalties under the 2025 law are both administrative and criminal in serious cases.
Administrative Sanctions:
- Fines of up to VND 75 million depending on violations
- Interest penalties of 0.03% per day on overdue payments
Enforcement Actions:
- Asset seizure or account freezing to recover unpaid dues
- Business suspension or license revocation for repeated offenses
Criminal Liability:
- Fraudulent reporting or intentional evasion can lead to prosecution
This makes compliance a must for anyone operating a business setup in Vietnam, especially those unfamiliar with local labor law enforcement practices.
Practical Tips for SMEs, Startups, and Foreign Investors in Vietnam
Vietnam’s social insurance system can seem complex—but it doesn’t have to be. Here are actionable tips to simplify your compliance journey:
✅ Register Promptly
- Complete employee registration with VSS within 30 days.
- Store all contracts and declarations in a centralized, cloud-based archive.
✅ Automate Payroll
- Use local HR software or partner with Vietnam accountants or payroll consultants.
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Automation improves accuracy, ensures timely payments, and keeps you audit-ready.
✅ Stay Informed
- Subscribe to updates from MOLISA (Ministry of Labour – Invalids and Social Affairs).
- Attend HR or tax briefings hosted by professional firms.
✅ Build Internal Capacity
- Train your HR/payroll team on SI law changes.
- Maintain a compliance checklist tied to monthly payroll cycles.
✅ Use Outsourcing Solutions
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Engage experts in consulting company in Vietnam to handle non-standard cases like:
- Complex stock-based compensation plans
- Dual contracts or secondments
- Mixed foreign and local workforce structures
This is especially relevant if your company is engaged in Vietnam start-up consulting, tech ventures, or hybrid business models with overseas capital.
Conclusion: Turn Compliance into a Competitive Advantage
The 2025 updates to Vietnam’s Social Insurance Law aren’t just technical changes—they’re a wake-up call for business owners to get proactive, not reactive.
Whether you’re starting a business in Vietnam, scaling your SME, or managing a foreign-invested company, aligning your HR and payroll systems with the new law sends a powerful message: you’re serious about doing business the right way.
Smart compliance protects you from legal risks, yes—but it also builds credibility with your team, strengthens investor confidence, and gives you peace of mind to focus on what really matters: growing your business.
Not sure where to start? We’re here to help.
Book a free consultation with our experts to ensure your business is fully prepared for the 2025 transition.
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Disclaimer:
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or investment advice. While every effort has been made to ensure accuracy at the time of publication, laws and regulations may change. Readers are encouraged to consult with qualified legal or financial advisors before making decisions related to foreign investment or share transfers in Vietnam. United Consulting is not liable for any actions taken based on this content.
Mandatory Social Insurance in Vietnam 2025: What Employers Need to Know