1. Understanding Gross Salary and Allowances
In Vietnam, gross salary refers to the total compensation paid to an employee before any deductions for taxes, social insurance, and other mandatory contributions. It typically includes the base salary, allowances, and other benefits.
Components of Gross Salary
| Component | Description | Example (VND) | Example (USD) |
|---|---|---|---|
| Monthly Gross Income | Total monthly compensation before any deductions. | 100,000 | 3.94 |
| Monthly Allowance | Additional payments for specific needs (e.g., housing, transport). | 10,000 | 0.39 |
| Total Gross Salary | Total of base salary and allowances. | 110,000 | 4.33 |
2. Employer Contributions (Burden on Employer)
In Vietnam, employers are required to make various contributions to social insurance, health insurance, unemployment insurance, and union fees.
Contribution Breakdown
| Contribution Type | Employer’s Rate | Example (VND) | Example (USD) | Details / Logic Behind the Burden |
|---|---|---|---|---|
| Health Insurance | 3% of Gross Income | 3,000 | 0.12 | Contribution to health insurance for employee medical benefits. |
| Social Insurance | 17.5% of Gross Income | 17,500 | 0.69 | Contribution to social insurance for employee retirement and benefits. |
| Unemployment Insurance | 1% of Gross Income | 1,000 | 0.04 | Contribution to unemployment insurance. |
| Union Fees | 2% of Gross Income | 2,000 | 0.08 | Contribution to union fees for employee representation. |
Total Employer Contribution Cost
| Total Employer Contribution Cost | Total (VND) | Total (USD) |
|---|---|---|
| Total Employer Contribution Cost | 23,500 | 0.92 |
3. How the Employer’s Burden is Calculated
For an employee earning 100,000 VND gross salary, the employer’s contributions are as follows:
| Contribution Type | Employer Contribution (VND) | Calculation Explanation | Cap Amount (VND) |
|---|---|---|---|
| Health Insurance | 3,000 | 3% of the total income (100,000 × 3%) | Capped at 46,800,000 |
| Social Insurance | 17,500 | 17.5% of the total income (100,000 × 17.5%) | Capped at 46,800,000 |
| Unemployment Insurance | 1,000 | 1% of the total income (100,000 × 1%) | Capped at 99,200,000 |
| Union Fees | 2,000 | 2% of the total income (100,000 × 2%) | Capped at 46,800,000 |
Total Employer Contribution Cost: 23,500 VND
4. Overtime Laws and Regulations
In Vietnam, overtime pay for employees working beyond standard hours is governed by labor laws.
Overtime Pay Rates
| Scenario | Hourly Rate (VND) | Multiplier | Overtime Pay (VND) |
|---|---|---|---|
| Weekday Overtime | 3,333 | 1.5x | 5,000 |
| Weekend Overtime | 3,333 | 2x | 6,667 |
| Public Holiday Overtime | 3,333 | 3x | 10,000 |
5. Income Tax and Salary Payments
Vietnam uses a progressive income tax system. The tax rates increase with higher income levels.
Income Tax Calculation Example
For an employee earning 110,000 VND monthly (gross salary including allowance):
| Taxable Income (VND) | Tax Rate | Tax Payable (VND) |
|---|---|---|
| 0 – 5,000,000 | 5% | 500 |
| 5,000,001 – 10,000,000 | 10% | 500 |
| 10,000,001 and above | 15% | 1,500 |
Total Tax Payable: 2,500 VND
6. Working Hours and Pay Schedule
| Category | Details |
|---|---|
| Standard Working Hours | 8 hours per day, 48 hours per week. |
| Overtime | Paid as per the multiplier rates. |
| Pay Schedule | Salaries must be paid monthly, no later than the 7th day of the following month. |
7. How GlobainePEO Eases Payroll Management
By partnering with GlobainePEO, businesses can simplify payroll management in Vietnam, ensuring compliance with local labor laws and regulations:
- Compliance Assurance: Ensure adherence to all tax, social insurance, and union fee obligations.
- Simplified Payroll Processes: Manage allowances, overtime, and statutory deductions efficiently.
- Local Expertise: Leverage our deep knowledge of Vietnam’s payroll system.
- Cost Efficiency: Minimize risks and penalties associated with non-compliance.
- Employee Benefits: Manage social security, health, and retirement contributions seamlessly.
Summary Table: Payroll Breakdown in Vietnam (VND)
| Category | Amount (VND) | Percentage of Gross Salary | Details / Logic Behind the Burden |
|---|---|---|---|
| Monthly Gross Income | 100,000 | 90.91% | Total salary before allowances or deductions. |
| Monthly Allowance | 10,000 | 9.09% | Additional payments for specific needs like housing or transport. |
| Health Insurance | 3,000 | 2.73% | Contribution to employee health coverage. |
| Social Insurance | 17,500 | 15.91% | Contribution to social insurance for retirement and benefits. |
| Unemployment Insurance | 1,000 | 0.91% | Contribution for unemployment coverage. |
| Union Fees | 2,000 | 1.82% | Contribution to union representation fees. |
| Total Employer Contribution Cost | 23,500 | 21.36% | Sum of employer contributions for health, social, unemployment insurance, and union fees. |
| Overall Cost (Total Gross + Employer Contributions) | 133,500 | 100% | Total cost of employment, including salary, allowances, and employer contributions. |
How GlobainePEO Can Help with Payroll in Vietnam🌐
Globaine Payroll is committed to simplifying global payroll management with zero errors. Our advanced platform leverages powerful payroll calculator software to streamline processing for workforces in over 150 countries, ensuring accuracy, compliance, and efficiency at every step.