Starting July 1, 2025, enterprise managers, even if they don’t receive a salary, will be required to pay compulsory social insurance according to the 2024 Social Insurance Law.
This article will help you understand this specific group, their contribution levels, the concrete impacts on businesses and the managers themselves, as well as the risks to avoid.
I. Enterprise Managers: New Subjects of Compulsory Social Insurance
Previously, the obligation to pay compulsory social insurance typically applied clearly only to employees with contracts who received salaries. However, the 2024 Social Insurance Law has officially closed this loophole, expanding coverage, especially to important management positions.
Specifically, Clause 1, Article 2 of the 2024 Social Insurance Law stipulates that the subjects of compulsory social insurance include:
“…n) Enterprise managers, controllers, representatives of state capital, representatives of enterprise capital as prescribed by law; members of the Board of Directors, General Director, Director, members of the Supervisory Board or controllers, and other elected management positions of cooperatives, cooperative unions as prescribed by the Law on Cooperatives who do not receive salaries.”
Therefore, from July 1, 2025, even if managers holding the aforementioned positions do not receive any salary, they will still be required to pay compulsory social insurance. The specific contribution rate is 25% of the salary used as the basis for social insurance contributions.6
Managers can pay directly to the social insurance agency or through their enterprise. The latest payment deadline is the last day of the following month immediately after the contribution cycle.
Regarding the contribution level, managers can choose the salary used as the basis for compulsory social insurance contributions, but it must ensure:7
- At least equal to the reference level at the time of contribution.
- At most 20 times the reference level at the time of contribution.
After at least 12 months of social insurance contributions based on the chosen salary, managers have the right to re-select the salary used as the basis for contributions. Currently, the reference level is equal to the base salary decided by the Government, specifically VND 2,340,000 from July 1, 2024.8
For example: If a manager chooses to contribute at the minimum level, which is equal to the reference level, the monthly social insurance amount they must pay is 25% × VND 2,340,000 = VND 585,000.
II. Impact on Businesses and Managers
This change presents both opportunities and challenges:
II.1. Increased Compliance Responsibilities for Businesses
II.1.1. Businesses need to review their entire management structure to accurately identify all individuals required to pay social insurance according to the new regulations.
II.1.2. It’s crucial to ensure managers fulfill their social insurance contribution obligations, including declaration and submission of required documents, to avoid potential risks for the business itself.
II.2. Impact on Business Costs and Finances
Although the 25% contribution is paid directly by the individual, businesses still need to review previous remuneration and operating expenses to ensure transparency and compliance with the new regulations. This could indirectly affect financial planning and operating costs.
II.3. Impact on Foreign Individuals in Management Roles
Foreign individuals holding unpaid management positions in Vietnam are also subject to this regulation. They will face:
II.3.1. New administrative procedures and financial obligations in Vietnam.
II.3.2. Risk of dual social insurance contributions: The biggest concern is having to pay social insurance in both Vietnam and their home country. However, Clause 3, Article 2 of the 2024 Social Insurance Law states: “International treaties to which the Socialist Republic of Vietnam is a member shall apply if they contain different provisions.” If a bilateral social security agreement exists between Vietnam and their country, the issue of dual contributions may be resolved according to that agreement. Thoroughly understanding these agreements is extremely necessary.
II.2.3. The selection of foreign managers in Vietnam will become more challenging, and this is also one of the potential barriers that could affect investment in Vietnam.
III. Risks of Non-Compliance with New Regulations: Businesses Need to Be Aware
With the new regulations, failure to comply with the obligation to pay social insurance for enterprise managers will lead to serious legal consequences.
The 2024 Social Insurance Law has moved provisions on handling violations to other specialized legal documents. Therefore, violations will be strictly dealt with according to regulations on administrative penalties, and potentially criminal prosecution:
III.1. Administrative Fines
Businesses can be fined up to VND 150,000,000 and employees can be fined VND 75,000,000 for evading social insurance contributions.9
III.2. Back Payments of Social Insurance and Late Payment Interest
Businesses/individuals will be compelled to pay the full amount of outstanding or late social insurance, unemployment insurance, and health insurance contributions. Additionally, they must pay late payment interest at a high rate (equal to twice the average investment interest rate of the social insurance fund from the immediately preceding year).10
III.3. Criminal Prosecution
For cases of social insurance evasion involving large sums and repeat offenses, employers may face criminal prosecution under Article 216 of the 2015 Penal Code (amended and supplemented in 2017).
The 2024 Social Insurance Law marks a significant step forward in perfecting social security policies in Vietnam. The inclusion of enterprise managers under compulsory social insurance is a major change that businesses and individuals need to clearly understand to ensure compliance.
To ensure full compliance and avoid potential legal risks, businesses need to proactively review their management personnel structure, thoroughly grasp the regulations on contribution levels and related obligations. These regulations are quite detailed and can be complex to apply in practice for specific cases.
(6) Article 33.3 of the 2024 Social Insurance Law
(7) Article 31.1.d of the 2024 Social Insurance Law
(8) Article 3.2 of Decree 73/2024/ND-CP
(9) Article 39.7 of Decree 12/2022/ND-CP
(10) Article 39.10 of Decree 12/2022/ND-CP
Date Written: 20/07/2025
Disclaimers:
This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.
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