Types of Employee Benefits: Mandatory and Supplemental Guide

With a workforce that is increasingly discerning about their employment conditions, employees are not only looking for competitive salaries but also for comprehensive types of employee benefits that address their diverse needs. Recognizing these pain points is crucial for designing effective compensation strategies that resonate with potential hires.

Mandatory benefits in Vietnam

Vietnamese law establishes clear requirements for different types of employee benefits that all employers must provide. These mandatory benefits create a foundation for employee security and form the basis of any compensation package in the country.

Social insurance

Social insurance represents the most substantial mandatory contribution in Vietnam’s employee benefits system. Employers must contribute 17.5% of an employee’s monthly salary, while employees contribute 8%. This comprehensive coverage extends to sickness benefits, maternity leave, occupational diseases, workplace accidents, retirement pensions, and survivor benefits. Both Vietnamese employees and foreign workers under eligible labor contracts are subject to these requirements.

Health insurance

The national health insurance system requires precise contribution levels from both parties. Employers contribute 3% while employees add 1.5% of their monthly salary. This basic coverage ensures employees can access medical care through authorized facilities throughout Vietnam. The system covers essential medical examinations, both inpatient and outpatient treatments, and emergency medical services when needed.

Unemployment insurance

Unemployment insurance in Vietnam follows a straightforward structure with equal contributions from both sides. Employers and employees each contribute 1% toward this benefit, which applies to employment contracts exceeding three months. This modern system replaces traditional severance pay, providing employees with 60% of their average salary for up to 12 months during unemployment periods.

Paid leave

Vietnamese labor law mandates specific paid leave entitlements for employees. The standard annual leave allocation starts at 12 working days for employees in normal working conditions. Additional leave days apply based on years of service and specific working conditions.

Annual leave entitlements increase according to the following structure:

• One additional day for every five years of service
• 14 working days for employees in heavy, hazardous, or dangerous working conditions
• 16 working days for employees under 18 years of age

Public holidays and sick leave remain separate from annual leave entitlements. Maternity leave provides six months of paid leave for female employees, with specific provisions for male employees regarding paternity leave.

Supplemental benefits to attract talent

Beyond mandatory requirements, organizations in Vietnam implement different types of employee benefits to strengthen their position in the labor market, particularly in urban centers like Hanoi and Ho Chi Minh City.

13th-month salary

The 13th-month salary has become a standard practice in Vietnam’s business environment. This additional payment, typically equaling one month’s base salary, is traditionally disbursed before Lunar New Year (Tet). Many companies now tie this benefit to performance metrics, making it a powerful tool for both motivation and retention.

Health and life insurance

While basic health insurance provides essential coverage, many companies in Vietnam now offer comprehensive health benefit packages. These enhanced plans typically include higher coverage limits and more extensive medical services. Most notably, Benefits Trend Survey data shows that 71% of employers view enhanced health benefits as crucial to their benefits strategy.

The most effective enhanced health packages include:

• Premium medical insurance with expanded coverage
• Family medical coverage options
• Annual health screenings
• Specialized care services

Housing and transportation allowances

In response to rising living costs, particularly in urban centers like Hanoi and Ho Chi Minh City, practical support allowances have gained significance. Companies provide housing and transportation assistance to help employees manage daily expenses. These allowances directly address cost-of-living challenges while demonstrating an employer’s commitment to employee welfare.

Flexible work arrangements

Benefits Trends Survey by WTW shows that 35% of employers now consider flexible work arrangements essential for talent retention. Modern organizations implement various working models to accommodate employee needs while maintaining operational efficiency. These arrangements typically combine remote work options with flexible scheduling, supported by clear performance measurement criteria.

Implementation of flexible arrangements requires comprehensive policy documentation. Organizations must establish eligibility criteria, approval processes, and performance standards. Communication protocols and technology infrastructure requirements need regular updates to support evolving work patterns. Regular policy reviews ensure these arrangements continue to meet both organizational and employee needs.

Professional development opportunities

Under Vietnamese labor regulations, employers are not required to provide professional development benefits. However, market research indicates that development opportunities significantly influence talent acquisition and retention rates.

Training programs

Companies in Vietnam implement structured training programs to build employee capabilities. These programs often combine technical skills development with leadership training. A well-designed training framework includes regular assessments, certification opportunities, and industry-specific skill development. Organizations that invest in employee development report higher engagement rates and improved talent retention.

Clear career pathways

Clear career progression paths demonstrate an organization’s commitment to employee growth. Effective career frameworks in Vietnamese companies typically outline specific promotion criteria, required competencies, and expected timelines. This systematic approach allows employees to understand their growth trajectory and the steps needed to advance within the organization.

Work environment enhancements

Work environment benefits extend beyond physical workspace considerations to include organizational culture and team dynamics. These elements directly impact employee satisfaction and productivity metrics.

Engaging workplace culture

An engaging workplace culture requires systematic implementation of employee recognition programs and clear communication channels. Organizations must establish specific metrics for measuring employee engagement levels and satisfaction rates. Regular workplace satisfaction surveys help companies identify areas for improvement and track the effectiveness of cultural initiatives.

Team building activities

Team building programs strengthen organizational cohesion through structured group activities. These initiatives require dedicated budget allocation and careful scheduling to ensure maximum participation. Effective team building activities align with company objectives while promoting cross-departmental collaboration and professional networking opportunities.

A strategic employee benefits framework serves as a fundamental tool for talent acquisition and retention in Vietnam’s competitive labor market. Organizations must balance mandatory requirements with supplementary benefits that address evolving workforce expectations. From essential social insurance provisions to professional development opportunities and workplace culture enhancements, each benefit component plays a specific role in creating an attractive employment package.

By structuring these various benefits effectively, organizations position themselves as employers of choice in Vietnam. Talentnet’s benefit scheme design & review service provides expertise in developing compliant and competitive benefits strategies aligned with market standards.