Under Vietnam’s Law on Social Insurance dated 20 November 2014, from 1 January 2018, foreign employees working in Vietnam with either (i) work permit, (ii) practicing license or (iii) practicing permit issued by Vietnamese authorities will be required to contribute to Vietnam’s compulsory social insurance scheme. However, due to the lack of further guiding legislation, this policy has yet to be implemented.
On 15 October 2018, the Government of Vietnam issued Decree No. 143/2018/ND-CP guiding compulsory social insurance contribution for foreign employees working in Vietnam (“Decree 143”). Decree 143 will come into effect on 1 December 2018.
Below are key highlights of Decree 143:
- Covered foreign employees
Under Decree 143, all foreign employees meeting both conditions below are required to participate in Vietnam’s compulsory social insurance scheme:
- The foreign employee has either (i) work permit, (ii) practicing license or (iii) practicing permit issued by Vietnamese authorities; and
- The foreign employee has a labour contract with indefinite term or definite term of one year or more.
Decree 143 excludes the following foreign employees from social insurance participation:
- Employees who are (i) managers, executive directors, experts and technical workers already employed for at least 12 months by a foreign enterprise which has established a commercial presence in Vietnam and (ii) temporarily transferred internally to the commercial presence in Vietnam; and
- Employees reaching retirement age under Vietnamese laws.
- Coverage and contribution rates
The compulsory social insurance scheme applicable for foreign employees will cover:
- Occupational accidents and disease;
- Pension (effective from 1 January 2022); and
- Death (effective from 1 January 2022).
The contribution rates to social insurance funds of the employers and the foreign employees from the employee’s monthly salary are as follows: