Types of Employee Allowances Workers Can Receive

Key takeaways

• Employee allowances aren’t mandatory but serve as strategic tools to retain talent and boost productivity during labor shortages.
• Key allowance types: hazardous work allowances, responsibility or performance-based allowances, meal subsidies, and travel or uniform support.
• Certain allowances, if paid regularly and consistently in each payroll cycle, are included in the salary base for social insurance contributions.
• The law allows employers and employees to agree on allowance levels, providing flexibility in designing compensation and benefits policies.

These are supplemental payments companies provide to workers to compensate for specific job conditions, work complexity, or living circumstances that base salaries don’t fully address. For manufacturing companies, understanding and properly implementing current allowance types isn’t just about legal compliance—it’s the key to building a loyal, high-performing workforce. 

Understanding the mandatory nature of employee allowances

Current labor laws do not require businesses to apply all types of allowances to employees.

According to Article 21 of the Labor Code 2019, salary in an employment contract includes:

• Salary based on job or position
• Salary allowances
• Other additional payments

Allowances are applied based on agreements between the employer and employee or in accordance with the company’s internal policies.

However, once allowances are agreed upon and become part of the compensation policy, businesses should clearly document them in the employment contract or compensation regulations to ensure transparency and minimize potential disputes.

Notably, allowance agreements give companies complete autonomy in designing compensation packages that fit their financial conditions and HR strategies. This flexibility helps CEOs balance costs with effectiveness in attracting and retaining talent.

Key allowance types for workers in manufacturing environments

With skilled labor shortages and fierce competition for quality workers, selecting the right current allowance types becomes a critical factor determining company competitiveness. This is especially important since wages for factory workers in Vietnam face intense competitive pressure, requiring smart allowance strategies.

Hazardous, toxic, and dangerous work allowances

This represents the most important allowance type in manufacturing, playing a crucial role in attracting and retaining workers in health-hazardous conditions.

The primary purpose is compensating for risks and hardships workers face daily. According to Circular 59/2015/TT-BLĐTBXH, this allowance compensates for factors that base salaries don’t account for or don’t adequately cover.

Applicable positions include:

• Machine operators in high-noise environments
• Workers in extreme temperature conditions
• Staff exposed to toxic chemicals
• Equipment operators with high safety risks

Providing these allowances not only demonstrates company concern for worker health but also creates competitive advantages in recruiting hard-to-fill positions. This benefit helps business by reducing turnover rates and strengthening loyalty, thereby reducing recruitment and retraining costs.

Responsibility and job performance allowances

This is the most powerful tool for directly linking income to performance—something every CEO cares about when optimizing labor productivity.

Purpose is recognizing responsibilities of positions like team leaders, line supervisors, or encouraging workers to meet and exceed production targets. Performance allowances create direct motivation for workers to improve work quality and quantity.

Importantly, companies need transparent evaluation systems with clear criteria for work quantity and quality to avoid disputes and create positive motivation.

Lunch allowances (meal breaks)

This basic benefit has significant psychological impact, demonstrating company care for worker health and wellbeing.

The primary purpose is ensuring workers have sufficient energy for effective work, especially important for physically demanding manufacturing jobs. Lunch allowances also help minimize unnecessary break time and increase employee satisfaction.

Reference rates: Lunch allowance (mid-shift meal) typically ranges from 30,000 to 40,000 VND/meal (equivalent to approximately 700,000 to 1,000,000 VND/month).

Material support (uniforms, work tools)

In addition to salary and allowances, many businesses also provide in-kind benefits such as:

• Work uniforms
• Personal protective equipment (PPE)
• Work-related tools and equipment

These supports help ensure workplace safety, enhance a professional image, and reduce employees’ living expenses.

Position-specific allowances (fuel, business trip expenses)

In addition to allowances applied across the workforce, some manufacturing companies also provide lump-sum allowances for specific roles, particularly those requiring frequent travel, such as maintenance staff, field technicians, factory managers, procurement personnel, or employees overseeing multiple production sites.

These supports are designed to compensate for job-related expenses while ensuring that production and operational activities are maintained consistently and efficiently.

In practice, the level of support is typically structured flexibly depending on job nature, travel scope, and each company’s benefits policy. Common reference ranges may include:

1. Fuel allowances:

This allowance is typically applied to roles that require frequent travel between factories, warehouses, or different work locations.

Market reference levels generally range from:

• 200,000 to 800,000 VND/employee/month, depending on travel frequency and actual distance.

2. Business trip allowances:

For business trips related to production activities or operational management, companies typically structure support levels based on geographic areas. Common market references include:

• Nearby provinces: approximately 400,000 to 600,000 VND/day
• Long-distance travel (based on defined distance thresholds): approximately 1,500,000 to 2,000,000 VND/day
• Same-day trips: approximately 100,000 to 200,000 VND/day

These figures are for general reference only. In practice, businesses may adjust them depending on operational scale, travel scope, and internal policies.

Do allowances require social insurance contributions?

Allowances subject to social insurance contributions are those that are fixed and regularly paid, typically associated with job title or working conditions, and not dependent on specific performance outcomes. For example, if the employment contract specifies a “responsibility allowance of 2,000,000 VND/month” paid consistently regardless of performance, this allowance must be included in the basis for social insurance contributions.

In contrast, income classified as welfare benefits or irregular bonuses is not subject to social insurance contributions. However, these items must be clearly stated as separate components in the employment contract.

How are allowance payment rates determined?

Current laws don’t specify fixed payment rates for any allowance types. According to Circular 10/2020/TT-BLĐTBXH, payment rates are entirely negotiated between companies and workers and must be clearly recorded in salary regulations or employment contracts.

This flexibility allows companies to adjust allowance rates according to financial conditions, HR strategies, and labor market conditions. To ensure competitiveness, many companies reference comprehensive salary survey reports to determine market-appropriate allowance rates.

In increasingly fierce competition for skilled labor, smart allowance systems have become critical competitive weapons. Current allowance types aren’t just expenses but high-ROI investments through talent retention and productivity enhancement.

Wise leaders should immediately review and optimize salary regulations, potentially consulting professional payroll services to ensure compliance with key payroll compliance principles while maintaining competitive power to attract core workers who create tangible value for the business.