Salary deductions according to the latest regulations 2025

Salary deductions are mandatory amounts deducted from employees' salaries and contributed by employers according to the law. These deductions play an important role in ensuring social security benefits for employees and compliance with legal regulations for businesses. In the following article, 1C Vietnam will guide you on how to properly implement salary deductions to ensure the rights of both businesses and employees.

1. Overview of salary deductions according to regulations

1.1. What are the prescribed salary deductions?

Payroll deductions are amounts of money deducted from employees' salaries and contributed by employers at prescribed rates to insurance and union funds.

The role of salary deductions is very important in the social security system. This is a financial source to pay social insurance, health insurance, unemployment insurance for employees when they face health risks, lose their jobs or reach retirement age. At the same time, these deductions are also the basis for businesses to properly fulfill their financial obligations, ensure the rights of employees and comply with the law.

1.2. Types of mandatory deductions under Vietnamese law

According to Vietnamese law, there are 4 types of mandatory deductions from salary:

• Social insurance (SI): This is a compulsory contribution to ensure benefits for employees in case of illness, maternity, work accidents, occupational diseases, retirement and death. Employees are entitled to SI benefits when meeting the prescribed conditions.
• Health insurance (HI): This contribution helps employees enjoy health care services and medical examination and treatment at medical facilities according to regulations.
• Unemployment Insurance (UI): Applies to employees working under a labor contract with a term of 3 months or more. When unemployed, employees will receive financial support and job search assistance.
• Trade union fee: This contribution applies to all enterprises that have established a grassroots trade union, to ensure the operation of the trade union organization and protect the rights of workers.

2. Legal regulations related to salary deductions

Salary deductions are regulated by various legal documents, creating a solid legal basis for implementation in enterprises.

2.1. Legal basis for salary deductions

Salary deductions are made based on the following legal bases:

• Social Insurance Law No. 58/2014/QH13 dated November 20, 2014: Detailed regulations on subjects, contribution levels, and benefits of social insurance, health insurance, and unemployment insurance.
• Law on Health Insurance No. 25/2008/QH12 and Law amending and supplementing a number of articles of the Law on Health Insurance No. 46/2014/QH13: Regulations on participants, contribution levels and benefits when participating in health insurance.
• Decree No. 115/2015/ND-CP dated November 11, 2015 of the Government: Detailing a number of articles of the Law on Social Insurance on compulsory social insurance.
• Decision 595/QD-BHXH dated April 14, 2017 of Vietnam Social Security: Promulgating the procedure for collecting social insurance, health insurance, unemployment insurance, occupational accident and disease insurance; managing social insurance books and health insurance cards.
• Trade Union Law No. 12/2012/QH13 dated June 20, 2012: Regulations on trade union funds.
• These legal documents create a complete legal corridor, helping to protect the rights of workers and ensuring that businesses properly fulfill their obligations.

2.2. Latest insurance contribution rate in 2025

The latest insurance contribution rates in 2025 are specified as follows:

Illustrative example: For an employee with a basic salary of 10,000,000 VND/month, salary deductions will be calculated as follows:

• Social insurance: 10,000,000 × 8% = 800,000 VND (paid by employee)
• Health insurance: 10,000,000 × 1.5% = 150,000 VND (paid by employee)
• Unemployment insurance: 10,000,000 × 1% = 100,000 VND (paid by employee)
• Total employee must pay: 1,050,000 VND

Employers must pay:

• Social insurance: 10,000,000 × 17.5% = 1,750,000 VND
• Health insurance: 10,000,000 × 3% = 300,000 VND
• BHTN: 10,000,000 × 1% = 100,000 VND
• Union fee: 10,000,000 × 2% = 200,000 VND
• Total employer must pay: 2,350,000 VND

3. Practical instructions for accounting for salary deductions

Accounting for payroll deductions requires accuracy and compliance with current accounting regulations. Below is a detailed guide on the process of accounting for payroll and payroll deductions.

3.1. Monthly salary accounting process

The monthly salary accounting process should be performed in the following steps:

Step 1: Collect information and data

• Collect employee timesheets
• Summary of decisions on salary increase/decrease, bonus, allowance
• Check employment contract to determine base salary

Step 2: Calculate salary

• Calculate basic salary based on actual working days
• Calculate allowances (lunch, gas, phone...)
• Calculate overtime pay (if any)
• Calculate bonus (if any)

Step 3: Calculate salary deductions

• Calculate social insurance, health insurance, unemployment insurance paid by employees
• Calculate personal income tax (if any)
• Calculate other deductions (advances, loans...)

Step 4: Accounting

• Record salary expenses into account 334 - Payable to employees
• Allocate salary costs to respective production and business departments
• Accounting for salary deductions

Step 5: Prepare payroll and payment

• Create detailed payroll for each employee
• Make salary payments via bank account or cash
• Store relevant accounting documents

3.2. How to account for social insurance, health insurance, unemployment insurance

Accounting for insurance premiums must comply with current corporate accounting regulations. Here are detailed instructions:

Step 1: Salary accounting

• Debit account 622, 627, 641, 642 (depending on the department the employee works in)
• Credit account 334 (Payable to employees)

Step 2: Accounting for deductions based on employee's salary

• Debit account 334 (Payable to employees)
• Credit account 338 (Other payables)
  • Account 3383 (Payable to Social Insurance)
  • Account 3384 (Payable to Health Insurance)
  • Account 3389 (Payable to Social Insurance)

Step 3: Accounting for deductions based on the salary paid by the enterprise

• Debit account 622, 627, 641, 642 (depending on the department the employee works in)
• Credit account 338 (Other payables)
  • Account 3383 (Payable to Social Insurance)
  • Account 3384 (Payable to Health Insurance)
  • Account 3389 (Payable to Social Insurance)
  • Account 3382 (Union funds)

Step 4: Accounting when paying insurance premiums

Debit account 338 (Other payables)

• Account 3383 (Payable to Social Insurance)
• Account 3384 (Payable to Health Insurance)
• Account 3389 (Payable to Social Insurance)
• Account 3382 (Union funds)

Credit account 111, 112 (Cash, Bank deposits)

Illustrative example: Enterprise A has a total salary fund for March 2025 of 100,000,000 VND. The accounting method is as follows:

Salary accounting:

• Debit account 642: 100,000,000
• Credit account 334: 100,000,000

Accounting for employee contribution:

• Social insurance (8%): 8,000,000
• Health insurance (1.5%): 1,500,000
• Unemployment insurance (1%): 1,000,000
• Total: 10,500,000

Entry:

Debit account 334: 10,500,000

Credit account 3383: 8,000,000

Credit account 3384: 1,500,000

Credit account 3389: 1,000,000

Accounting for the part contributed by the enterprise:

• Social insurance (17.5%): 17,500,000
• Health insurance (3%): 3,000,000
• Unemployment insurance (1%): 1,000,000
• Union fee (2%): 2,000,000
• Total: 23,500,000

Entry: Debit account 642: 23,500,000

Credit account 3383: 17,500,000

Credit account 3384: 3,000,000

Credit account 3389: 1,000,000

Credit account 3382: 2,000,000

4. Handling special situations related to salary deductions

In the process of making salary deductions, businesses may encounter many special situations that require appropriate handling according to legal regulations.

4.1. Temporarily stop paying social insurance in case of difficulty

According to Article 88 of the Law on Social Insurance 2014, enterprises can temporarily stop contributing to the pension and death fund when facing financial difficulties.

Conditions for temporary suspension of social insurance payment:

• Enterprises must temporarily suspend production and business for 01 month or more due to difficulties in changing technological structure or due to economic crisis or recession.
• Enterprises suffer losses of over 50% of total asset value due to natural disasters, fires, epidemics, and crop failures.

Procedures for temporary suspension of social insurance payments:

Step 1: Prepare documents

• Document requesting temporary suspension of contributions to pension and death fund
• Statistical table of the number of employees participating in social insurance at the time of application
• Documents proving the business's difficult situation

Step 2: Submit application

• Submit application to the Social Insurance agency where the business is participating in social insurance.

Step 3: Get results

• Within 30 days, the Social Insurance agency will have a written response.
• Maximum suspension period is not more than 12 months

Important note: During the period of temporary suspension of social insurance payments, businesses must still fully pay health insurance and unemployment insurance for employees.

4.2. Handling when employees quit or are detained

When an employee quits or is detained, the enterprise must carry out procedures related to salary deductions according to regulations.

In case of employee resignation:

Step 1: Notify the Social Insurance Agency

• Make a list of labor reduction reports (Form D02-TS)
• Submit to the Social Insurance agency within 10 days from the date the employee leaves work.

Step 2: Pay related fees

• Calculate salary and deductions based on salary up to the time of leaving work
• Complete procedures to close social insurance books for employees

Step 3: Accounting

• Reduce the number of employees in the list of social insurance contributions
• Adjust the amount of social insurance, health insurance, and unemployment insurance payable accordingly

In case of employee detention:

• During the time the employee is detained, the enterprise shall temporarily stop paying social insurance, health insurance, and unemployment insurance for that employee.
• If the employee is later allowed to return to work, the company will continue to pay insurance premiums as usual.
• If the employment contract is terminated, follow the same procedures as in the case of an employee quitting his job.

For example: Employee A is detained from April 15, 2025, the enterprise will calculate salary and deductions until April 14, 2025, then temporarily stop paying insurance for this employee.

5. Important notes when making salary deductions

To properly and fully implement salary deductions according to regulations, businesses need to pay attention to some important points to avoid errors and optimize the implementation process.

Error 1: Wrongly calculating the salary used as the basis for insurance payment

• Reason: Not updating the regional minimum wage or not including fixed allowances in the insurance contribution salary
• Solution: Regularly update regulations on minimum wages and review fixed allowances to calculate the correct salary as the basis for insurance contributions.

Error 2: Applying the wrong insurance contribution rate

• Reason: Not updating promptly the changes in insurance contribution rates according to new regulations
• Solution: Monitor newly issued legal documents and update insurance contribution rates promptly.

Error 3: Late payment of insurance premiums

• Cause: Poor management of insurance payment deadlines
• Solution: Schedule monthly insurance payments and assign someone responsible for monitoring and implementing them.

Error 4: Wrong accounting account

• Cause: Lack of accounting knowledge or not updating new accounting regime
• Solution: Train accounting staff and regularly update them on new accounting regulations.

Salary deductions as prescribed play an important role in ensuring social security benefits for employees and demonstrating the company's responsibility to comply with the law. Correct and complete implementation of salary deductions not only helps employees enjoy insurance benefits but also helps businesses avoid legal risks, creating a stable and sustainable working environment.