On the 15th of October 2018, the Government issued the Decree On Providing Detailed Regulations On The Law On Social Insurance And The Law On Occupational Safety And Hygiene Regarding Compulsory Social Insurance For Foreigners Working In Vietnam No. 143/2018/ND-CP (Decree 143). The decree shall be effective from the 1st of December 2018.
The regulations relating to compulsory social insurance for foreign employees in Vietnam are contained in Law on Social Insurance 2014 which was effective since 1st January 2016., From 1st January 2018, the social insurance program shall be expanded to apply to foreign employees.
One of the reasons for the expansion of the social insurance program to include foreigners is the significant increase in the number of foreign employees in Vietnam. The government also believe that Vietnamese citizens who work overseas should also be expected to receive social insurance. In order to implement the next step in this policy and expand the social insurance program, the Government has enacted the new Decree in this area.
This Decree shall clarify the subjects of the application of the policy. Employees who are foreigners working in Vietnam shall be required to participate in the compulsory social insurance program if they obtain (i) work permits, (ii) practicing certificates, or (iii) practicing licenses issued by a competent Vietnamese authority and they have indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam. However, there are two cases in which the foreign employees are exempted from participating in the compulsory social insurance program, as follows:
(i) The employees are part of an intra-company rotation as stipulated in Clause 1 Article 3 of the Government’s Decree No. 11/2016/ND-CP dated February 3, 2016, providing details of the implementation of certain articles of the Labor Code regarding foreign employees working in Vietnam; or
(ii) the foreign employees have reached the retirement age under Clause 1 Article 187 of the Labor Code (reaching 60 years of age for males, or 55 years of age for females).
Decree 143 includes 5 chapters with 18 articles.
This new Decree:
(i) Declares that foreign employees shall be entitled to the following compulsory social insurance benefits: Sickness; Maternity; Occupational accident and disease; Retirement and death insurance benefits (Article 5).
(ii) Declares the social insurance contribution rates and methods for foreign employee to contribute (Article 12). Accordingly, since 1st January 2022, expatriates shall, on a monthly basis, make a social insurance contribution accounting for 8% of his/her monthly pay to the retirement and death insurance benefit fund.
(iii) Declares that social insurance contribution rates and methods for foreign employees to contribute (Article 13). Accordingly, employers shall, on a monthly basis, make a social insurance contribution in proportion to the employee’s payroll in the social insurance payment month as follows:
- 3% of the abovementioned payroll paid into the sickness and parental insurance benefit fund;
- 0.5% of the abovementioned payroll paid into the occupational accident and disease benefit fund;
- 14% of the abovementioned payroll paid into the retirement and death insurance benefit fund, in effect from 1st January, 2022.
Therefore, there is approximately a three-year period for both foreign employees and the employer to completely apply the compulsory social insurance program.
In the near future, the General Director of Social Security of Vietnam shall be responsible for reviewing and issuing Vietnamese and English forms relating to social insurance participation and handling for foreign employees. The Minister of Health shall also be responsible for reviewing and issuing related forms (for examples: forms of hospital discharge notes, medical record extracts, …) for handling of social insurance benefits for foreign employees.
