A workplace accident can happen in seconds on a construction site or in a manufacturing plant, but the financial obligations it imposes on a business can last for months and amount to dozens of months' salary for an employee. Many employers believe that having paid into the occupational accident insurance fund, the fund will cover everything. However, the law compels employers to compensate employees directly and independently of the fund's payouts. Misunderstanding this liability causes many businesses to lose money, face administrative penalties, or even confront criminal liability.
If an employee is injured on their commute to work, does the company have to pay compensation, or is it a personal matter? Is the company exempted from liability when the accident is partly due to the employee's own negligence? And if the company has fully participated in occupational accident and disease insurance for its employees, why might it still have to pay out of pocket? These are the dilemmas that many businesses, especially small enterprises and foreign companies unfamiliar with Vietnamese procedures, only truly face when an accident has occurred and the liability clock starts ticking. This article analyzes the current legal framework, compensation calculation methods, compliant processing procedures, and common mistakes that cost businesses more than necessary.
When is an incident legally considered a workplace accident?
Corporate liability only arises when an incident is legally determined to be a workplace accident, not for every health risk an employee faces. The law defines this concept quite broadly.
The scope of 'attached to the performance of jobs' is not confined within the four walls of a factory. According to Article 45 of the law, an employee is deemed to have suffered a workplace accident if it occurs at the workplace during working hours (including breaks, mid-shift meals, and restroom use), while performing tasks requested by the employer outside the workplace, and even on the route between their residence and workplace within a reasonable timeframe and route. This means a delivery worker involved in a traffic accident on a reasonable route, or a worker slipping in the cafeteria, could trigger corporate liability. Understanding this boundary helps businesses avoid carelessly ignoring cases that seem outside their purview.
Four groups of financial responsibilities businesses must bear
When a workplace accident is established, the employer simultaneously shoulders multiple obligations, not just a single compensation payment. These responsibilities can be grouped into four parts:
- First aid and medical costs: providing timely first aid, emergency care, and advancing expenses; covering co-payments and costs outside the health insurance list for cardholders, or all medical costs for uninsured employees.
- Salary during treatment: paying full salary to employees who must take leave for treatment and rehabilitation, even though they are not working during this period.
- Compensation or allowance: a sum calculated based on the level of working capacity decline, discussed thoroughly in the next section.
- Procedures for fund benefits: referring the employee for medical examination and preparing dossiers so they can claim benefits from the Occupational Accident and Disease Insurance Fund.
The crucial point that many businesses misunderstand: the third and fourth responsibility groups are two separate cash flows. The compensation or allowance is paid directly from the company's budget; whereas the benefit from the Occupational Accident and Disease Insurance Fund is an additional support source the employee receives from the social insurance agency. Having paid insurance premiums fully does not erase the employer's direct compensation obligation; it merely provides the employee with a parallel source of support.
Compensation vs. Allowance: The numbers depend on the fault factor
This section directly answers how much the business must pay. The law strictly distinguishes two categories depending on the accident's cause: compensation applies when the accident is not entirely the employee's fault, while an allowance (a lower amount) applies when the accident is entirely due to the injured employee's own fault.
The allowance rate, when the fault is entirely the employee's, is calculated at 40% of the aforementioned compensation rate, which means at least 12 months' salary for cases of 81% decline or death. The table below summarizes the differences:
| Criteria | Compensation | Allowance |
|---|---|---|
| Applied when | Accident is not entirely the employee's fault | Accident is entirely the employee's fault |
| Decline of 5% to 10% | At least 1.5 months salary | At least 0.6 month salary |
| Decline of 11% to 80% | Plus 0.4 month for every 1% | 40% of the corresponding compensation rate |
| Decline of 81% or death | At least 30 months salary | At least 12 months salary |
There are two details businesses often overlook. First, the 'salary' used as the basis is not the symbolic basic wage, but the average of the 6 consecutive months prior to the accident, including salary, salary allowances, and other supplements (Article 5, Circular 28/2021). Second, even if the accident occurs outside company premises due to someone else's fault, or on the commute, the business must still pay compensation or an allowance under Article 39 of the Law on Occupational Safety and Health. Businesses are exempted from liability in only three narrow scenarios: the victim's personal conflicts unrelated to work, intentional self-harm by the employee, or the unlawful use of drugs and addictive substances.
Processing procedures and mandatory timelines
Following a workplace accident, businesses enter a chain of procedures with clear deadlines. Making a mistake or being late at any stage can lead to penalties, even if the business is willing to pay compensation.
- Quick declaration: For fatal accidents or severe injuries to two or more people, the business must immediately declare by the fastest means to the competent authority; fatal cases must concurrently be reported to the police (Article 10, Decree 39/2016).
- Establishing an investigation team and making minutes: For minor accidents and some other cases, the business establishes a grassroots-level investigation team; for fatal accidents, the provincial-level investigation team presides.
- Assessing the working capacity decline: The business refers the employee to the Medical Examination Council to determine the injury percentage as a basis for calculating compensation.
- Issuing decisions and making payments: The business finalizes the compensation or allowance decision and pays the employee or their relatives.
The timeline in the final step is a point many businesses violate unknowingly.
A 2025 update businesses must note: Following administrative restructuring, the focal point for receiving workplace accident declarations and reports is no longer the Department of Labor, Invalids and Social Affairs. According to Decree 129/2025, declarations are now received by the Department of Home Affairs and commune-level police, while the commune-level People's Committee compiles statistics and reports to the provincial state management agency for home affairs. In addition to handling individual cases, businesses must still submit semi-annual and annual statistical reports on workplace accidents (Article 36, Law on Occupational Safety and Health). Sending reports to the old agency is an easy mistake to make during this transition period.
Mistakes that cost businesses dearly
Most businesses run into trouble regarding workplace accident compensation not out of intentional evasion, but due to the lack of a standard procedure and misunderstanding key points. Below are recurring mistakes.
Assuming the insurance fund covers everything. As analyzed, the business's compensation and the fund's benefits are two independent cash flows. More dangerously, if the business fails to pay occupational accident and disease insurance for eligible employees, it must not only pay its mandatory compensation but also an amount equivalent to the total benefits the fund would have paid.
Arbitrarily concluding 'employee fault' to refuse payment. Whether the accident is entirely the employee's fault must be based on the investigation minutes, not the business's subjective judgment. Even if it truly is the employee's fault, the business must still pay an allowance equal to at least 40% of the compensation rate, not nothing at all.
Underpaying, late payment, or non-payment. These are direct penalized behaviors.
For organizations, this fine is doubled compared to individuals, and the business is forced to pay the full compensation or allowance plus interest. More severely, when violating occupational safety regulations causing death or serious injury, the responsible person can face criminal prosecution under Article 295 of the Penal Code, with aggravated penalties if they are the person in charge of occupational safety and health. The risks here have clear legal grounds and are not empty threats, which is why handling it correctly from the start is so critical.
DEDICA accompanies businesses before and after a workplace accident
For most small businesses, foreign enterprises, and startups, maintaining a dedicated legal department just to monitor occupational safety is cost-prohibitive, yet the risks are real. This is the gap that DEDICA's regular legal advisory service—an outsourced legal department model—is designed to fill. We review occupational safety and health compliance, build response protocols alongside declaration and investigation dossiers so businesses are not caught off guard when an incident occurs, accurately calculate compensation and allowances based on capacity decline levels, and represent the business before authorities during investigations. Our team combines experienced legal executives and lawyers, with all advice vetted by a lawyer before delivery, offering bilingual support in English and Chinese for foreign businesses.
Placed side by side, the cost of a regular advisory package is often far less than a single compensation payment amounting to dozens of months' salary plus fines for a mishandled incident. In this field, prevention is much cheaper than a cure.
Conclusion
When a workplace accident occurs, corporate liability entails four parallel groups: first aid and medical costs, salary during the employee's treatment leave, compensation or allowance based on the working capacity decline, and procedures for the employee to claim insurance fund benefits. Payout amounts depend on the fault factor: compensation of at least 1.5 months salary for a 5% to 10% decline and at least 30 months salary for an 81% decline or death; if entirely the employee's fault, an allowance equal to 40% of those rates applies. The three most costly errors are: assuming the insurance fund covers everything thus paying no direct compensation, arbitrarily concluding employee fault to deny payment, and missing the 05-day deadline for decisions and the subsequent 05-day deadline for payment. The most practical action step is to immediately review your accident processing protocols and insurance compliance before an incident occurs, rather than scrambling when the liability clock has already started.
Each business has a different personnel structure, industry, and occupational safety risk level, meaning prevention and response must be custom-tailored. DEDICA Law Firm is ready to support you with workplace accident protocols. Contact DEDICA for in-depth legal consultation tailored to your company's specific situation.
The content of this article is for reference purposes based on legal regulations at the time of drafting. Each case has unique circumstances; businesses should consult DEDICA lawyers for precise advice regarding their specific situation.
