The Government has recently issued the Decree No. 143/2018/ND-CP elaborating on the Law on Social Security and the Law on Occupational Safety and Hygiene regarding the compulsory SI program in which foreign employees who are foreign nationals are required to participate whilst working in Vietnam.

The Decree has provided detailed instructions for the following specific matters:

– Regarding subjects of the compulsory social insurance (SI) program, foreign nationals working in Vietnam are required to participate in this program when they obtain the work permit, the practicing certificate, the practicing license issued in Vietnam, the indefinite-term employment contract or the employment contract valid for at least 1 year with employers in Vietnam.

– The compulsory SI program in which employees are required to participate is composed of sickness, maternity and paternity, occupational accident, occupational disease, retirement and death insurance programs.

– Regarding the contribution rates:

* From January 1, 2022, a foreign employee must make a monthly contribution accounting for 8% of his/her monthly salary into the retirement and death benefit fund.

* An employer must make monthly contributions which are the percentages of the payroll for the employee’s SI contributions

+ 3% paid into the sickness, maternity and paternity insurance fund;

+ 0.5% paid into the occupational accident – occupational disease insurance fund;

+ 14% paid into the retirement and death insurance fund from January 1, 2022.

The Decree No. 143/2018/ND-CP is going to be in force on December 1, 2018.

The Government has officially issued a decree stipulating the details of compulsory social insurance for foreign employees in Việt Nam, which will take effect on December 1 this year.
The Government has officially issued a decree stipulating the details of compulsory social insurance for foreign employees in Việt Nam, which will take effect on December 1 this year.

Those temporarily transferred from their mother companies abroad to subsidiary firms in Việt Nam or reaching retirement age shall not be subject to the compulsory social insurance scheme.

This exclusion is to ease the concern of foreign companies having to shell out duplicate premiums for their employees.

Those eligible to receive a one-time benefit pay-out include those reaching retirement age but whose premium payment period is less than 20 years; people with terminal illnesses; those eligible to receive retirement insurance but no longer living in Việt Nam, or those whose practice licences and work permits are expired and not extended.

The decree also states that when there is difference in regulations between it and other international agreements that Việt Nam is a signatory, regulations in the international agreements will prevail.

Foreign workers on the rise

According to vice chairman of the National Assembly’s Social Affairs Committee Bùi Sỹ Lợi, the compulsory social insurance for foreign workers is necessary to ensure fairness between Vietnamese and foreigners and between enterprises which only use domestic employees and those that employ staff from overseas.

According to statistics by the Ministry of Labour, Invalids and Social Affairs (MoLISA), the number of foreign employees in the country increased from 63,557 in 2011 to 83,046 in 2016. They mostly came from Asian countries like China, the Republic of Korea and Japan, accounting for 73 per cent of the total, followed by European nations (21.6 per cent), American countries (2.4 per cent).

Those with less than one-year employment only made up 4.4 per cent, which manifests the local demand and sustainability of foreign workers in the country.

Meanwhile, the number of Vietnamese employees sent to work abroad is on a rise. The MoLISA estimated that nearly 479,600 guest workers left to work overseas during 2011 –15 period.

Based on regulations in some nations, the fact that Việt Nam covers foreign employees with social insurance will create opportunities for Vietnamese workers abroad to get access to social insurance schemes of the nations they are working in through portable schemes.