Complete Payroll Guide for Vietnam

Employee Benefits and Deductions

In addition to salary and social insurance, employers in Vietnam are required to provide certain statutory benefits to their employees. These benefits include paid leave, health insurance, and social insurance contributions.

Leave Entitlements and Benefits

Under Vietnamese labor law, employees are entitled to several types of leave, including:

• Annual leave: Employees are entitled to 12 days of paid leave per year after completing one year of service. This increases by one day for every additional five years of service with the same employer.
• Sick leave: Employees are entitled to sick leave, which is covered by social insurance. The duration and compensation depend on the employee’s length of service and the severity of the illness.
• Maternity leave: Female employees are entitled to six months of paid maternity leave, with the possibility of extending this period under certain conditions.

Employers must ensure that these leave entitlements are clearly outlined in the employment contract and that employees are compensated accordingly.

Mandatory Social and Health Insurance Deductions

In addition to social insurance contributions, employers must deduct health insurance premiums from employee salaries. Health insurance is part of the overall social insurance system and provides coverage for medical expenses, hospitalization, and outpatient treatment.

These deductions must be made in accordance with the legal requirements and remitted to the relevant authorities on time. Failure to do so can result in penalties and loss of benefits for employees.

When Non-Compliance May Occur

Non-compliance with payroll regulations in Vietnam can lead to serious consequences, including legal disputes, financial penalties, and damage to your business’s reputation. Below are some common areas where non-compliance may occur and how to avoid them:

Late Salary Payments

Employers are required to pay salaries on time, as outlined in the employment contract. Failure to meet this obligation can lead to employee complaints, fines, and potential legal action. Businesses should implement reliable payroll systems that ensure salaries are paid promptly.

Failure to Contribute to Social Insurance

Missing social insurance contribution deadlines can result in penalties, including interest charges on late payments. Employers must ensure that contributions are calculated accurately and submitted to the VSS by the required deadlines.

Incorrect Tax Reporting

Misreporting taxes or failing to withhold the correct amount of PIT can lead to audits and penalties from Vietnamese tax authorities. Employers should review their payroll processes regularly to ensure that taxes are calculated correctly and that all reports are submitted on time.

Non-Compliance with Employee Benefits

Employers who fail to provide statutory benefits, such as paid leave or health insurance, may face legal claims from employees. It is important to familiarize yourself with Vietnam’s labor laws and ensure that all benefits are provided in accordance with the law.

How AYP Can Help

Managing payroll in Vietnam can be complex, but AYP is here to help. Our Professional Employer Organisation (PEO), Employer of Record (EOR), and Payroll Outsourcing Management (POM) services are designed to simplify payroll management while ensuring full compliance with local labor laws.

Professional Employer Organisation (PEO) Services

AYP’s PEO services allow businesses to outsource their payroll functions, including salary payments, tax withholdings, and social insurance contributions. This ensures compliance with Vietnamese regulations while allowing you to focus on your core business.

Employer of Record (EOR) Services

As an Employer of Record, AYP takes on the legal responsibility for your employees in Vietnam. We handle all payroll and HR functions, including compliance with social insurance and tax regulations, ensuring your business operates smoothly and within the law.

Payroll Outsourcing Management (POM) Services

AYP’s POM services provide complete payroll management solutions. We take care of everything, from calculating salaries and deductions to filing tax reports and submitting social insurance contributions. By outsourcing your payroll to AYP, you can avoid the risks of non-compliance and ensure that your payroll processes are efficient and accurate.

With AYP handling your payroll, you can focus on growing your business while we ensure compliance with Vietnam’s payroll regulations.