When it comes to payroll, the calculation should be followed meticulously, to ensure that there are no errors in the amount of net pay to your offshore software developers or taxes paid to the government.
There are 2 kinds of salary calculation:
- Net Salary
- Gross Salary
Gross salary: the total amount which included all the insurances and taxes.
Net salary: net takes home – the amount that employees can bring to their pocket.
SI/HI/UI: There are three types of mandatory Insurance in Vietnam that must be covered by companies
- Social Insurance
- Health Insurance
- Unemployment Insurance
These insurances will be claimed for sickness, maternity, child allowance, invalidity, unemployment, old age pension, death.
PIT: Personal income tax which the Employee must cover.
Trade Union: if Employees join TU, they need to submit a 1% TU fee based on their gross salary (maximum is 149,000 VND), to cover employee benefits such as team building, birthday, hospital visits.
Salary Calculation For Offshore Software Developers In Vietnam
Salary Calculation For Expatriate
- The Maximum Cap is the maximum monthly salary at which insurance is calculated. For employees with a salary above the Maximum Cap, the balance will not include in insurance calculations.
- The Maximum Caps change from time-to-time, together with mandated minimum salaries change by the government.
- The Employee’s salary for calculation of social insurance, labor accident, and occupational disease insurance, and health insurance is capped at 20 x 1,490,000 VND (in 2020) = 29,800,000 VND
- The Employee’s salary for calculation of unemployment insurance is capped at 20 x 4,420,000 VND (in 2021 depending on specific region) = 88.400.000 VND
- These minimum salaries are subject to change during a year.
How To Calculate The Overtime Bonus
Overtime pay is legally required. To prevent uncontrolled OT resulting in increased labor costs to the company, it is often put into HR policy that OT must be approved by the Employee’s line manager before it can be done and claimed.
When To Apply OT
- Obtaining the Employee’s consent
- Not exceed 50% of the normal working hours per day
- In case of applying regulations on weekly work, the total of normal working hours and overtime working hours must:
- not exceed 12 hours per day
- not exceed 30 hours per month
- not exceed 200 hours per year (in some sectors 300 hours/year with permission from local Department of Labor, War Invalids and Social Affairs (DoLISA)
OT Time Slot
- Day time: 6:00 to 22:00
- Nighttime: 22:00 to 6:00
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If you would like to find out more about IT salaries and recruitment trends in Vietnam, please download our employer handbook digital version. It contains full details and important insights on how to hire offshore tech talent in Vietnam.
Our report is based on the analysis of permanent, interim, and contract placements made across each of our clients and recruitment disciplines during 2020, and our predictions for the year ahead.