When your business grows, you'll confront new laws and employment processes in different countries. Benefits planning is one of many undertakings. With the right approach, your employee benefits planning in Vietnam can make...
When your business grows, you'll confront new laws and employment processes in different countries. Benefits planning is one of many undertakings. With the right approach, your employee benefits planning in Vietnam can make your company competitive.
When your business grows, you’ll confront new laws and employment processes in different countries. Benefits planning is one of many undertakings. With the right approach, your employee benefits planning in Vietnam can make your company competitive.
Vietnam Compensation Laws
The primary law governing employee benefits and compensation in Vietnam is the Labor Code 2019, implemented on 1 January 2021.
A decree was issued by the government to provide a minimum wage/salary applicable to all employers. Currently, there are four regional minimum salary levels applicable to employers, ranging from VND 3,250,000 (the lowest level) to VND 4,680,000 (the highest level) per month, depending on the Region set out in the table below (effective July 2022). Employers are required to pay a salary to their employees which are not lower than the minimum salary level applicable in their region for untrained workers doing the simplest tasks. For trained workers, the salary must be at least 7% higher than the regional minimum salary.
The monthly Minimum Wages by region are listed below:
Region I – VND 4,680,000
Region II -VND 4,160,000
Region III – VND 3,640,000
Region IV – VND 3,250,000
Employees who work more than the standard eight-hour day or 48-hour workweek should get paid for overtime. The overtime pay is at least 150 % of the actual hourly wage on a normal working day, at least 200 % on a weekly day off, and at least 300 % on a public holiday or paid days off.
Guaranteed Benefits in Vietnam
Before you consider fringe benefits, you need to ensure you meet the requirements outlined in the labor laws. In Vietnam, employers are required to provide:
Time off for public holidays
Social insurance contributions
Health insurance contributions
Vietnam Benefits Management
Your benefits plan should support your company’s growth. With the proper planning, your benefits can encourage job seekers to apply for your vacancies over those of competitors. Benefits can also improve morale within the workplace and increase retention rates, limiting the need for you to onboard and train new hires.
Fringe benefits, or provisions not required by law, might include:
Gym or club memberships
Allowances for living costs
Supplementary health and life insurance
Designing Vietnam Employee Benefits Plans
When it’s time to start planning, you might feel challenged by the design process. You need to find a balance between your resources and your employees’ needs. With the right research and preparation, a competitive plan is within reach.
1. Review Your Financial Resources
Without a clear understanding of your financial resources, it’s easy to overextend your business. It’s helpful to build your budget spending into your expected revenue to manage your income. If you’re starting with relatively low revenue, you’ll need to be modest with your fringe benefits.
You can also use this initial step to assess your goals and determine how benefits may fit into them. For example, if you want to compete with another company in the area, you can create a benefits package similar to its plan.
2. Research the Market
You need to understand the labor market to become competitive within it. Research the companies in your area to find out what types of benefits they offer their employees. The regular occurrences in the market will inform employees’ expectations.
Speaking directly to employees can also help you create competitive benefits plans. Distribute surveys or conduct interviews to learn more about what workers want from their employers.
3. Design a Plan
With your market information and company budget, you can start building a benefits plan. First, allocate funding to any required benefits. You can use your remaining budget to provide fringe benefits, prioritizing the most valuable ones based on your research.
Average Cost of Benefits
Many characteristics can affect the price a company pays for benefits, including location, size, and industry. With the wide variety of potential costs, an average cost isn’t a useful tool in terms of creating a plan. You should create a benefits budget unique to your revenue and expenses. You might set it as a percentage of your revenue so your spending can grow with your business.
This arrangement simplifies future budget management and makes costs evident earlier in the process. You’ll remain compliant at all times, and you can build a company that competes with other enterprises in the labor market.
How to Calculate Benefits
Benefits calculations are often straightforward. For example, you might choose to provide a 13th-month bonus for your employees. Determine the amount you’d like to spend and divide it among your workforce.
For some other benefits, like social insurance contributions, calculations are outlined in the country’s labor laws. Vietnamese law requires employers to contribute 17.5 percent of employees’ earnings on their behalves. Employees must contribute 8 percent.
How Are Employee Benefits Taxed in Vietnam?
All benefits, whether in cash or in-kind, are subject to personal income tax. Employers must determine the cash value for benefits in kind and factor the cost into employee paychecks. Companies must include these benefits in income calculations for payroll tax deductions.
Employee Health Benefits
Vietnam’s public healthcare system receives funding from the national health insurance scheme. This setup is still in the developmental stage, but it does support free care for people in the country. Employers are required to contribute to the national insurance scheme.
Private hospitals in urban centers offer more advanced care, but they come with costs. Employers are not required to provide supplemental insurance for these facilities. That said, they may choose to do so as a part of their fringe benefits.
Choose Globalization Partners for Employee Benefits Planning in Vietnam
Globalization Partners offers the resources necessary for growth in a new country. Contact us today to learn more.
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