When Vietnamese employees work under labor contracts for full 1 month or more, they will be subject to compulsory social insurance participation according to the provisions of Clauses 1 and 2, Article 2 of the Law on Social Insurance 2014. However, despite paying monthly, most Vietnamese workers are still not completely sure how that contribution is distributed, how much percentage is deducted into each fund, how many funds, etc.
According to current regulations, in 2023, when policies to support workers and businesses on social insurance contributions due to Covid-19 expire, Vietnamese employees and employers will have to pay the following social insurance contributions to the funds:
• The rate of contribution to the social insurance fund is 25.5%, of which: 8% of employees, 17.5% of employers.
• The rate of contribution to the health insurance fund is 4.5%, of which: 1.5% for employees, 3% for employers.
• The rate of contribution to unemployment insurance fund is 2%, of which: 1% for employees, 1% for employers.
The total contributions for all funds will be 32% of the employee’s actual salary.
Particularly for enterprises operating in occupations with high risks of occupational accidents and diseases, if they are eligible, have a written request and are approved by the Ministry of Labor, War Invalids and Social Affairs, they may contribute to the occupational accident and disease fund at a lower rate (0.3%).
The nature of the distribution of social insurance payments in Vietnam
When paying social insurance monthly, employees only have one concept, the general social insurance fund, which does not include the three insurance funds above.
In general, this confusion comes from the fact that the most important social insurance fund is often equated to include all three different types of social insurance above.
Basically, the monthly social insurance contribution payment can be divided into 3 types: Social Insurance Fund, Unemployment Insurance Fund, Health Insurance Fund.
In particular, the social insurance fund will include 3 types of social insurance regimes: retirement, sickness – maternity, labor accident – occupational disease.
When employees claim benefits related to the above 3 regimes, the Social Insurance Fund will be responsible for paying them. The money used to pay employees will come from the social insurance fund. For example, employees who are eligible for pension will be paid monthly by the Social Insurance Fund.
Similarly, if female employees claim the maternity benefit as a benefit of 6 months of social insurance based on the average salary paid for social insurance for the 6 consecutive months before leaving to enjoy the maternity regime, they will receive benefits from the social insurance fund.
The remaining 2 funds are unemployment insurance fund and health insurance fund, which are completely separate from the social insurance fund (including the above 3 regimes). If the employee claims to receive unemployment benefits, it will be paid by the unemployment insurance fund (It should be noted that the severance allowance for the period working before 2009 will not be paid by this fund but paid by the employer at that time).
Health insurance contributions will be paid by the health insurance fund. When employees go for medical examination and treatment at medical facilities under the health insurance system for supported diseases, and forms of medical examination and treatment, such money will be temporarily paid by the medical examination and treatment facility for citizens with health insurance.
At the end of the year, the facility will send a report to the health insurance fund and the fund will be responsible for paying this amount (However, it is difficult for any facility to have enough financial capacity to advance money throughout the year, so health insurance organizations will have to advance funding for medical examination and treatment establishments with health insurance coverage of 80% of the amount expected to be paid in the year).