In 2025, the wage system will continue to be a key area of focus for state management agencies in inspection and auditing. Even a small error in wage payment, deductions, or insurance contributions can lead to penalties and damage to a company's reputation. Therefore, employers need to review compliance throughout their entire wage system to ensure transparent and lawful wage payments and avoid unnecessary risks.
This article provides Payroll compliance checklist This allows businesses to review and implement policies correctly, even if you're not an expert in HR or payroll.
I. Adherence to the minimum wage
Ensure that wages are not paid below the regional minimum wage set by the Government:
- Identify the business that belongs to Region I, II, III, or IV According to government regulations.
- Review your salary scale and compare the lowest base salary you are currently paying with the regional minimum wage for 2025.
- If the basic salary is lower → an increase is mandatory.
💡 For example: If your company is located in Ho Chi Minh City (Region I), the minimum salary you must pay in 2025 must not be lower than the Region I minimum wage of 4,960,000 VND/month.
Many businesses agree with employees on a specific salary but then record a lower amount in the labor contract to reduce social insurance contributions. When inspected, the social insurance agency uses the actual payroll records to collect back taxes, leading to significant debt and potential penalties. Ensure your contract and payroll records match to avoid these risks.
👉 See more: General guidelines for building a salary scale for businesses.
II. Compliance with mandatory social insurance contribution based on salary.
Identify salary used as the basis for social insurance contributions This must include: Salary based on job title, salary allowances, and other supplementary payments with specific amounts, paid regularly.
Exclude items Social insurance contributions are not included.: Performance-based bonuses, incentives for innovative ideas, and other benefits are stipulated separately in the employment contract: meal allowance, transportation allowance, telephone allowance, housing allowance, childcare allowance, etc.
Check your employment contract and payroll records to ensure that all components are clearly separated. If "salary + allowances" are combined without differentiation, the Social Insurance agency will calculate the total amount for contribution.
💡 Example: If the employment contract stipulates a basic salary of 7 million VND, a responsibility allowance of 1 million VND, and a meal allowance of 800,000 VND, then the salary used for calculating social insurance contributions is... 8,8 million, not 7 million.
During inspections, the Social Insurance agency usually requests a comparison of labor contracts, payroll records, and payment documents. If allowances are paid regularly every month but are not subject to social insurance contributions, it is almost certain that they will be subject to retroactive collection. Ideally, the terms and conditions for entitlement and benefit levels should be clearly stipulated in the contract or salary and bonus regulations to ensure transparency.
III. Compliance with wage and working hour regulations
Ensure that standard daily and weekly working hours and wage components are calculated correctly according to regulations. Labor Code 2019 and current legal documents:
- Standard working hours should not exceed 8 hours per day and 48 hours per week. Alternatively, working hours per week should not exceed 48 hours per week and 10 hours per day.
- If employees work overtime, they must comply with the maximum overtime limit. Labor Code 2019 Overtime hours shall not exceed 50% of normal working hours per day, the total number of normal working hours and overtime shall not exceed 12 hours/day, and not exceed 40 hours/month, not exceed 200 hours/year, and salary shall be calculated proportionally:
- Overtime on weekdays: at least 150% hourly wage.
- Working overtime on weekends: at least 200% hourly wage.
- Overtime work on holidays and Tet (Lunar New Year): at least 300% Hourly wage, not including holiday pay.
- Working at night: pay extra at least 30% of the hourly wage.
💡 In addition, if employees work overtime at night, then besides... In addition to paying wages according to the above rates, employees are also entitled to an extra 20% of their salary calculated based on the hourly wage rate or the salary for work performed during the daytime on a normal workday, a weekly rest day, or a public holiday.
- Create time sheets and keep records of overtime work for transparency.
Many businesses only calculate overtime pay based on the basic salary divided by 26 working days, whereas legally, they should use the actual salary paid for the work performed (including salary, salary allowances, and fixed supplementary payments).
During inspections, labor authorities will require businesses to explain why they omitted responsibility allowances, position allowances, seniority allowances, etc., from the unit price. If the justification is found to be unreasonable, the business must pay the additional amount and will be fined.
IV. Allowed Deductions
Only eligible deductions as stipulated in the Laws (Social Insurance, Health Insurance, Unemployment Insurance, Personal Income Tax, Union Dues, etc.) are allowed.
It is not permitted to deduct amounts such as fines for violating regulations, uniform costs, compensation, etc., without a legally binding written agreement.
⚠️ Some businesses have regulations imposing fines for lateness or deducting uniform costs from wages, leading to employee complaints to the Labor Inspectorate.
As a result, businesses are both fined administratively and forced to return the deducted money. Instead of "deducting from salaries," a clear reward and penalty system should be implemented, and a reward (additional) mechanism should be applied instead of deduction.
V. Ensure correct payment of Social Insurance, Health Insurance, Unemployment Insurance, and Trade Union fees.
Check the list of employees eligible for social insurance (contracts of 01 month or more).
Calculate the social insurance contribution based on salary + allowances + fixed supplementary payments.
Compared to the contribution rate in 2025:
- Businesses contribute: 17.5% to social insurance, 3% to health insurance, 1% to unemployment insurance, and 2% to trade union fees.
- Employees contribute: 8% to social insurance, 1.5% to health insurance, and 1% to unemployment insurance.
⚠️ Some businesses only pay social insurance contributions based on the "basic salary" while neglecting regular allowances (lunch, responsibility allowance, etc.).
During inspections, businesses are subject to back taxes, late payment interest, heavy fines, and the risk of criminal prosecution if their actions constitute evasion of mandatory social insurance contributions.
VI. Checking personal income tax deductions
Check whether the employee already had a personal tax identification number at the time the income was generated.
Determine the tax-exempt income, taxable income, taxable income, and personal deductions for each employee who earned income during the month.
A progressive tax rate will be applied to calculate monthly personal income tax for employees with employment contracts of 03 months or more.
Provide tax deduction certificates to employees upon request.
⚠️ Many businesses often misdetermine taxable income, for example, incorrectly calculating meal allowances or failing to separate tax-exempt amounts → leading to incorrect deductions.
Some businesses forget to register dependents for employees even though the deductions are recorded in the payroll. At the end of the year, when employees settle their personal income tax, they are not entitled to the family allowance deduction, resulting in higher tax payments, causing frustration and complaints.
VII. Meeting payroll reporting requirements
Prepare and submit payroll-related reports on time:
- Periodic labor utilization report every 06 months/01 year;
- Reports related to social insurance: labor force increases and decreases, ad hoc reports;
- Monthly/quarterly/annual personal income tax report.
Maintain payroll records, contracts, time sheets, social insurance contribution documents, tax documents, etc., in accordance with regulations.
Many businesses focus solely on financial reporting, neglecting periodic labor reports related to labor and social insurance. When inspection teams arrive, "failure to submit on time" almost certainly results in penalties or the need for explanations, wasting time, resources, and costs for the business.
👉 See more: Guidelines for businesses when Social Insurance Inspectors are present.
Managing payroll compliance is not just about adhering to legal regulations, but also about demonstrating professionalism and credibility to employees. With years of experience advising and handling real-world situations for businesses during audits, we are ready to partner with you to help build a transparent, cost-effective payroll system that allows for peace of mind and growth.