Foreign Employees Will Be Subject Of Compulsory Social Insurance From 01 December, 2018


2018-10-31

According to clause 2, Article 2 in the Law on Social Insurance 2014, subjects of compulsory social insurance contribution was extended to foreign employees working in Vietnam. This regulation took effect from 01st Jan, 2018. However, due to complicacy of contribution and regime entitlement of foreigner, this regulation have not applied in practice until now. It was pending for the specified guidelines from government to ensure that the application is smoothly.

Recently, on 15th October, 2018, Government issued the Decree 143/2018/ND-CP elaborating on Law on Social Insurance and Law on Occupational Safety and Hygiene regarding compulsory social insurance for employees who are foreign nationals working in Vietnam. There are key notes:

  1. Subjects of application

Foreigners working in Vietnam shall be required to participate in the compulsory social insurance if they fulfill the following criteria:

  • Obtaining work permits, practicing certificates, practicing licenses issued in Vietnam.
  • Having indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam
  • Not be subjects of
  • intra-company transfer
  • Reaching retirement age under the Labor Code.
  1. Contribution rate
  • Employers,including state agencies, public service provider units, political entities, socio-political bodies, socio-political and occupational, socio-occupational and other social organizations; foreign or international bodies or organizations operating within the territory of Vietnam; enterprises, cooperatives, single-person households, cooperative associations, other organizations, and persons who are licensed to do business as per laws, shall be required to participate in the compulsory social insurance if they hire and employ personnel to work under employment contracts, on a monthly basis from  December 1, 2018, make a SI contribution based on the salary fund for SI payment as follows:

+ 3% for the sickness and parental insurance benefit fund;

+ 0.5% for the occupational accident and disease benefit fund;

+ 14% for o the retirement and death insurance benefit fund from January 1, 2022.

Note: Employers donot required to pay SI contribution for employees who neither works nor receives salaries or wages for a period of at least 14 working days in each month

  1. Regimes:

The regimes that foreign employees will be entitlement when paying compulsory social insurance include:

  • Sickness;
  • Maternity;
  • Occupational accident and occupational disease;
  • Retirement;
  • Survivor
  1. The specified regulations for foreign employees:
  • Cases of the one-off SI benefit entitlement, including:

+ Foreign employees has fully satisfied retirement pension entitlement requirements but has discontinued residing in Vietnam;

+ Their employment contract is terminated, or labor permit, practicing certificate or practicing license expires without being permitted for renewal.

  • Survivor regime: In case where foreign employeesis dead and their relative who is eligible for entitlement to monthly benefit payments does not reside in Vietnam, the one-off death benefit payment may be allowed.
  • Transfer of SI benefits for beneficiaries of monthly retirement pensions or SI benefits that no longer resides in Vietnam:If the insured employee who is currently entitled to monthly retirement pensions and SI benefits is not residing in Vietnam, they may authorize another person to receive these amounts.  The one-off benefit payment in their wish shall be approve.

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