Compulsory social insurance has been expanded to cover non-salaried enterprise managers effective July 1, 2025 - a legal change that directly affects the personnel structure and finances of thousands of enterprises in Vietnam. This regulation applies regardless of whether the enterprise manager receives any remuneration, as stipulated in the Law on Social Insurance 2024, specifically as follows.
The Law on Social Insurance 2024 (Law No. 41/2024/QH15) officially takes effect from July 1, 2025, expanding the scope of compulsory social insurance participation compared to the Law on Social Insurance 2014. This is a systemic change that requires enterprises to review their entire list of senior management personnel.
Clause n, Point 1, Article 2 of the Law on Social Insurance 2024 clearly stipulates that non-salaried enterprise managers must participate in compulsory social insurance. This provision closes the legal loophole that existed in the Law on Social Insurance 2014, which only applied compulsory social insurance to salaried enterprise managers or employees working under labor contracts. As a result, the absence of a labor contract or non-receipt of salary can no longer be used as grounds to exempt the obligation to make social insurance contributions.
To clarify this issue, the Law on Enterprises 2020 (as amended and supplemented in 2025) explicitly defines enterprise managers as managers of private enterprises and company managers, including the following positions: owner of a private enterprise, general partner, Chairperson of the Members’ Council, member of the Members’ Council, Chairperson of the company, Chairperson of the Board of Directors, member of the Board of Directors, Director or General Director[1], and any individual holding another managerial position as prescribed in the company’s Charter. An individual holding a managerial position triggers the obligation to contribute to the state social insurance fund, regardless of whether any payment is made by the enterprise.
This demonstrates the synchronization between the Law on Social Insurance and the Law on Enterprises - a key legal solution to broaden the social safety net, completely prevent circumvention and evasion of social insurance contributions, and help enterprises avoid risks of retrospective collection or administrative sanctions during inspections and audits.
The compulsory social insurance contribution rate for non-salaried enterprise managers is determined under a separate mechanism from that applicable to salaried employees. The Law on Social Insurance 2024 stipulates that both employers and employees are responsible for making contributions; however, when the enterprise manager is also the enterprise owner, the contribution structure must be clearly defined in the participation dossier.
Instead of imposing a fixed income level, the new regulation allows the enterprise and the non-salaried enterprise manager to mutually agree on the income level used as the basis for compulsory social insurance contributions. This mechanism grants enterprises financial autonomy by establishing an agreed reference level for compulsory social insurance contributions.
The flexible aspect of the new regulation is that the law does not impose a rigid contribution level. Nevertheless, the chosen level must still comply with state limits: the minimum must equal the reference salary level, and the maximum must not exceed 20 times the reference level as prescribed in Point d, Clause 1, Article 31 of the Law on Social Insurance 2024. Applying the floor at the reference salary level enables organizations to optimize cash flow and minimize monthly operating costs. Setting the income level close to the ceiling of 20 times the reference salary increases the enterprise’s financial burden but maximizes retirement benefits for executive personnel.
Pursuant to Decree No. 73/2024/ND-CP, specifically Clause 2, Article 3, the base salary is VND 2,340,000 per month. Under Article 7 of the Law on Social Insurance 2024, the reference level is the amount decided by the Government; therefore, the current reference level equals the base salary of VND 2,340,000 per month. However, this reference salary level may change, as on March 9, 2026, at the voter meeting with candidates for the 16th National Assembly, Deputy Prime Minister Pham Thi Thanh Tra stated that the base salary is expected to increase by 8% from July 1, 2026. Based on the current level of VND 2,340,000 per month, an 8% increase would bring it to VND 2,527,200 per month.
Pursuant to current regulations in Clause 4, Article 33 of the Law on Social Insurance 2024, the compulsory social insurance contribution rates for non-salaried enterprise managers are as follows:
2.2.1. 3% of the salary used as the basis for compulsory social insurance contributions to the sickness and maternity fund;
2.2.2. 22% of the salary used as the basis for compulsory social insurance contributions to the retirement and survivorship fund.
The party obligated to make social insurance contributions shall pay directly to the social insurance agency or through a household business, enterprise, cooperative, or union of cooperatives involved in management. Contributions for non-salaried enterprise managers shall be made monthly, every 3 months, or every 6 months; the latest payment deadline is the last day of the month immediately following the contribution period.
Example:
If a manager chooses the minimum contribution level equal to the reference salary of VND 2,340,000 per month, the total social insurance contribution is: 2,340,000 × 25% = VND 585,000 per month.
If a manager chooses the maximum contribution level equal to 20 times the reference salary of VND 2,340,000 per month, the total social insurance contribution is: (2,340,000 × 20) × 25% = VND 11,700,000 per month.
The new compulsory social insurance regulation directly affects operating costs, personnel structure, and reporting obligations of enterprises. Enterprises that have non-salaried managers - especially family-owned enterprises, startups, or foreign-invested enterprises - must review all senior management personnel dossiers.
The application of a 25% compulsory social insurance contribution rate for non-salaried enterprise managers requires the legal entity to revise its financial projections accordingly. Advance planning for this monthly contribution cash flow ensures the enterprise maintains liquidity and avoids the risk of incurring debts to the national social insurance fund.
From an accounting perspective, enterprises must transparently document all previous remuneration or non-monetary benefits as the basis for agreeing on the reference salary level. If the legal entity decides to use company funds to cover this 25% contribution, the mandatory support cash flow must be accurately recorded as welfare expenses through an internal resolution. Establishing a transparent contribution process not only legitimizes the expenses for tax deduction purposes but also completely eliminates the risk of state management agencies imposing late-payment interest penalties at 0.03% per day.
The new social safety net adjustment establishes a strict system of financial obligations and administrative procedures for foreign citizens holding non-salaried managerial positions in Vietnam. The additional compulsory social insurance contribution creates a significant technical barrier to foreign direct investment (FDI) inflows. This regulation not only increases enterprises’ compliance costs but also reduces competitive advantages in attracting and recruiting senior management talent from the global market.
The greatest legal challenge for international executive personnel is the risk of double social insurance contributions in both Vietnam and their country of nationality. To resolve this financial conflict, the new law permits the application of the priority principle under international law. Enterprises must urgently review the bilateral social security agreements that Vietnam has signed with the relevant countries. Accurate reference to and application of these international treaties is the only technical solution that enables the legal entity to activate the exemption mechanism for contributions in Vietnam[2], thereby optimizing costs and protecting the legitimate interests of foreign executives.
Read more: Foreign Investment Legal Advisory in Vietnam
4. Risks of Late or Non-Payment of Social Insurance Failure to register and make compulsory social insurance contributions for non-salaried enterprise managers constitutes a legal violation that may result in administrative, civil, and criminal liability. The severity of sanctions depends on the duration of late payment, the amount evaded, and the nature of the violation.
Under Articles 40 and 41 of the Law on Social Insurance 2024, any party obligated to make compulsory social insurance contributions who delays or evades payment must pay the full amount of the delayed or evaded contributions plus interest at 0.03% per day on the delayed or evaded social insurance amount for the number of days of delay or evasion into the social insurance fund.
In addition, any party obligated to make social insurance contributions who violates regulations related to compulsory social insurance may also face administrative penalties under Chapter III of Decree No. 12/2022/ND-CP, with a minimum fine of VND 500,000 or more, plus supplementary penalties and remedial measures such as payment of late-payment interest at twice the average investment interest rate of the social insurance fund for the preceding year.
The primary purpose of these penalty provisions is to completely deter enterprises from deliberately delaying or evading compulsory social insurance contributions in order to misuse funds for other investments. The state agencies’ requirement that enterprises pay the full principal amount plus late-payment interest is intended to compensate for the financial losses to the social insurance fund.
For the offense of evading social insurance contributions, the obligated party may face criminal liability under Article 216 of the Penal Code 2015 (as amended and supplemented in 2017 and 2025). Specifically, any person who uses deceit or other tricks to avoid paying or fully paying contributions for 6 months or more, after having already been administratively sanctioned for the same act and continuing to violate, may be subject to:
4.2.1. A fine of at least VND 50,000,000;
4.2.2. Non-custodial reform for up to 1 year;
4.2.3. Imprisonment for up to 7 years;
4.2.4. Prohibition from holding certain positions, practicing certain professions, or performing certain jobs for up to 5 years;
4.2.5. For commercial legal entities, a fine of up to VND 3,000,000,000.
The effective date of the new law requires enterprises to complete a review of their internal governance systems. This inspection process covers the restructuring of financial regulations and the standardization of dossiers for senior management personnel. Clients are advised to urgently implement the following compliance procedures to prevent legal risks and allocate operating budgets appropriately:
5.1. Conduct an audit of the Company's Charter and internal regulations to accurately identify individuals holding managerial position who do not receive remuneration.
5.2. Organize a meeting of the Board of Directors or Members' Council to issue a resolution and establish a written agreement setting the income level as the basis for compulsory social insurance contributions according to the principle of cash-flow optimization.
5.3. Prepare cost estimates and establish a contribution process to safeguard the enterprise's liquidity margin.
5.4. Require the human resources department to complete the preparation of dossiers, report labor changes, and register social insurace participation codes for the executive board.
5.5. Make full, accurate, and timely compulsory social insurance contributions for the correct subjects.
Read more: Corporate Law consulting – Legal handbook for small and medium-sized enterprises
The new regulation on compulsory social insurance for non-salaried enterprise managers imposes strict compliance requirements effective July 1, 2025. Clients should review their leadership structure immediately to eliminate the risk of penalties. Please contact the Lexsol team directly for legal consultation support.
Lexsol is a team of young, dynamic lawyers with over 10 years of experience in advising and resolving legal matters for both domestic and international businesses.
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