Social insurance contribution for foreign employees from 2018
As you may already be aware of, from 01 Jan, 2018, The 2014 Law on Social Insurance (The Law) adds three more groups of subjects to be covered by compulsory social insurance including foreigners working in Vietnam. According to the clause 2, Article 2 in The Law: “Employees who are foreign citizens working in Vietnam with work permits or practice certificates or practice licenses granted by competent Vietnamese agencies shall be covered by compulsory social insurance under the Government’s regulations” and the Article 124 in the Law “[…]Clause 2, Article 2, of this Law take effect on January 1, 2018”, so it means that foreigners working in Vietnam with work permits or practice certificates or practice licenses granted by competent Vietnamese agencies will be required to participate in compulsory social insurance as from January 1, 2018.
The estimated salary and contribution rate will be the same as for Vietnamese employees, in particular: paying insurance premiums based on their wage, allowances and other additional amounts stated in their labor contract with the contribution rate is 8% for employees and 17.5% for employers, making a total contribution of 25.5% to the social insurance fund. At the same time, the foreign workers will be entitled to same benefits as a Vietnamese, includes:
- Sickness allowance;
- Maternity allowance;
- Labor accident and occupational disease allowance;
- Survivorship allowance;
One thing is noteworthy that despite of validation from 01 Jan, 2018, applying of this regulation is now pending. Because of the fact that there are many complex issues need to be guided by Government. However, this is a mandatory trend and enterprises should prepare for the applying, planning budget and personnel costs appropriately and timely, especially for companies using a large quantity of foreign employees in Vietnam.
We will follow this up closely and update you on progress when the Government’s Decree is issued