Standard Employee Benefits Required By Law A Company Must Legally Provide

Vietnamese labor regulations establish specific legally required employee benefits under both fixed-term and indefinite contracts. The Labor Code, along with related decrees and circulars, outlines employer obligations regarding health insurance, social insurance, leave policies, and compensation standards. These requirements aim to protect worker rights while creating stable employment conditions that support Vietnam’s economic growth.

Health insurance

Health insurance enrollment stands as a fundamental benefit requirement for full time employees under Article 86 of the Labor Code. Employers must register and manage health insurance coverage for eligible employees through the social insurance agency.

• Eligibility: The health insurance mandate applies to employees working under indefinite-term labor contracts and those with fixed-term contracts exceeding three months. This requirement extends to foreign workers who hold valid work permits or practice certificates in Vietnam, ensuring equal health protection for the entire workforce.

Coverage: The Vietnamese health insurance scheme provides comprehensive medical coverage through authorized healthcare facilities across the country. Employees receive access to both inpatient and outpatient services, with coverage extending to prescribed medications from the approved list. The system encompasses basic diagnostic procedures and therapeutic treatments, ensuring workers receive necessary medical care when needed.

Mandatory insurance

Vietnamese law establishes a comprehensive social insurance framework as part of mandatory benefits for full time employees, protecting workers throughout their career and retirement. This system encompasses several key components, each designed to provide specific protections and benefits.

• Pension benefits: The retirement system in Vietnam operates on a contribution-based model, with specific age requirements that are gradually increasing. As of 2024, men qualify at age 61 years, while women qualify at 56 years and 4 months. To receive full pension benefits, employees must accumulate a minimum of 15 years of social insurance contributions. The final pension amount reflects the average monthly salary across the contributing years.
• Sick leave: During periods of illness, employees receive 75% of their contracted salary, with coverage periods varying based on their contribution history.
• Maternity leave: The law grants female employees six months of fully paid leave, funded through the social insurance system. Male employees also receive paternity leave benefits under specific conditions.
• Unemployment insurance: The unemployment insurance component offers crucial support during career transitions. The system provides monthly allowances calculated at 60% of the employee’s average salary from their final six months of employment. Support duration extends up to 12 months, with the exact period determined by the individual’s contribution history.

The following table outlines the mandatory contribution rates for social insurance components:

These contributions are calculated based on the employee’s monthly salary, with a ceiling set at 20 times the basic minimum wage for social and health insurance calculations. This structure ensures proportional contributions while maintaining system sustainability.

Minimum wage

Vietnam’s minimum wage system operates on a regional basis, reflecting the varying living costs and economic conditions across the country. The Labor Code mandates regular reviews and adjustments of these rates to ensure they remain relevant to economic conditions.

As of July 2024, the government has established new minimum wage rates across four distinct regions. Region I, covering major urban areas like Hanoi and Ho Chi Minh City, sets the highest rate at VND 4.68 million per month. Region IV, encompassing rural and less developed areas, maintains a base rate of VND 3.25 million monthly. These rates serve as the minimum threshold for employee compensation, with many employers offering higher wages to attract and retain qualified staff.

Annual leave 

The Labor Code establishes clear guidelines for annual leave allocation as part of standard benefits for full time employees. Workers who complete one year of service qualify for 12 days of paid annual leave, forming the basic leave entitlement. This baseline increases for workers in hazardous conditions or those with extended service periods. For every five years of service with the same employer, employees receive an additional day of annual leave.

Employers must facilitate the use of annual leave through proper scheduling and documentation. The law requires companies to maintain leave records and ensure employees can take their entitled days within each calendar year. When employment terminates, workers receive compensation for any unused annual leave, calculated at their current daily rate.

Public holidays

Vietnam’s official holiday calendar includes several significant observances throughout the year. These public holidays represent important cultural and historical dates, during which employees receive paid time off while maintaining their regular salary and benefits.

The official public holidays in Vietnam are:

• New Year’s Day – January 1
• Lunar New Year (Tet) – Five consecutive days
• Hung Kings’ Commemoration Day – March 10 (lunar calendar)
• Reunification Day – April 30
• International Labor Day – May 1
• National Day – September 2

During these designated holidays, employers must grant paid leave to all employees. For businesses requiring continuous operation, such as healthcare facilities or essential services, employees working on public holidays receive premium compensation at 300% of their regular wage rate, in addition to their standard holiday pay.

Special consideration applies to the Lunar New Year period, Vietnam’s most significant cultural celebration. The law mandates at least five consecutive days of paid leave, with many companies extending this period to seven days or longer. Employers must announce their specific holiday schedule at least 30 days before implementation.

Overtime compensation

Article 98 of the Labor Code establishes strict guidelines for overtime payment and limitations. The law mandates premium rates for work performed outside standard hours to ensure fair compensation while protecting employee well-being.

The overtime compensation framework operates on a progressive scale based on timing and circumstances. 

• Weekday overtime: 150% of standard hourly wages
• Weekend overtime: 200% of normal rate
• Public holiday/paid leave overtime: 300% of regular wage rate

Vietnamese law sets clear boundaries on overtime hours to prevent worker exploitation and maintain workplace safety. 

• Monthly limit: Maximum 40 hours
• Annual limit: 200 hours standard, up to 300 hours in special cases

Employers must obtain written consent from employees for overtime work and maintain detailed records of all overtime hours and compensation. These records remain subject to inspection by labor authorities and must demonstrate compliance with both payment requirements and time limitations.

Vietnam’s employee benefits framework establishes comprehensive protections through mandatory insurance schemes, leave provisions, and compensation requirements. For businesses operating in Vietnam, compliance with these regulations requires systematic implementation and ongoing monitoring of benefit programs, with particular attention to insurance contributions, leave allocation, and overtime arrangements.

The regulatory landscape continues to evolve, with periodic adjustments to full-time employee benefits required by law, including contribution rates and compliance requirements. Organizations must maintain current knowledge of these obligations while ensuring their compensation and benefits systems align with legal standards. Talentnet’s salary structure consulting and benefits package provides guidance for organizations to develop compliant compensation structures that fulfill these mandatory requirements while meeting their business objectives.