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Vietnam Social Insurance has submitted a proposal to the Ministry of Labor, Invalids, and Social Affairs, requesting a clear definition of bonuses, meal allowances, fuel costs, and other benefits that are not subject to mandatory social insurance contributions. The objective of this proposal is to ensure transparency and facilitate the social insurance collection process.
In its feedback on the draft decree and circular guiding the implementation of mandatory social insurance contributions under the revised Social Insurance Law, which will take effect on July 1, 2025, Vietnam Social Insurance agrees with the general principles but emphasizes the necessity of specifying which types of income are exempt from social insurance contributions.
Under the current draft, the salary used as the basis for mandatory social insurance contributions for employees in the business sector includes: base salary according to job position or title, salary allowances, and other additional payments. The base salary is determined based on an agreement between the employee and the employer and is explicitly stated in the company’s salary scale.
Salary allowances compensate for factors such as harsh working conditions, job complexity, difficult living conditions, or labor attraction—elements that the base salary does not fully reflect. However, these allowances do not include payments dependent on work performance, seniority, or job quality.
Other additional payments are specific amounts paid together with the salary on a stable and regular basis in each payroll period. However, payments linked to productivity, work process, or job performance are not included in the calculation for social insurance contributions.
Clearly Defining Non-Contributory Income
Vietnam Social Insurance believes that more detailed regulations are needed regarding salary allowances and additional payments that are exempt from mandatory social insurance contributions. Specifically, the following items should be excluded from contribution calculations:
- Bonuses in cash, assets, or other forms that employers provide to employees based on business performance.
- Innovation and creativity bonuses.
- Mid-shift meal allowances, fuel allowances, phone allowances, travel expenses, housing allowances, childcare, and child-rearing support.
- Support for employees in cases of a family member’s death or marriage, as well as birthday gifts.
- Allowances for employees facing difficulties due to work-related accidents, occupational diseases, or other special benefits explicitly stated in the labor contract.
Vietnam Social Insurance explains that, in practice, companies have a wide variety of salary allowances and additional payments, often with different names and regional variations, making it difficult to determine which items are subject to social insurance contributions. Without clear regulations, the social insurance collection process may encounter difficulties, leading to disputes between employers, employees, and the insurance agency.
Preventing Loopholes to Reduce Social Insurance Contributions
The revised Social Insurance Law continues to inherit the existing regulations on mandatory social insurance contribution bases while providing more specific provisions regarding salary based on job positions and regularly paid, stable income.
However, in practice, many businesses tend to split employees’ income into multiple categories to lower social insurance contribution costs. This results in cases where employees earn tens of millions of VND per month but have an average social insurance contribution base of only about 5.7 million VND, barely exceeding the regional minimum wage.
Clarifying Regulations for Part-Time Employees
Additionally, Vietnam Social Insurance proposes that the Ministry of Labor, Invalids, and Social Affairs introduce specific regulations on the salary basis for social insurance contributions for part-time employees.
Accordingly, the salary used for social insurance contributions should be based on the monthly wage agreed upon in the labor contract. For employees paid by the hour or by the day, the contribution salary should be calculated by multiplying the hourly/daily wage by the normal number of working hours/days in a month.
For weekly wages, the contribution base should be determined by multiplying the weekly wage by 52 weeks and dividing by 12 months. Such clear regulations will help ensure consistency and ease of implementation in practice.
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