Compulsory social insurance for employees who are foreign nationals.

There are several foreign employees working for my company. I would like to know if we are responsible for paying compulsory social insurance for them and the insurance premium rate (if any).

FDVN’s opinion:

Sincerely thank you for your concerning our legal consulting service. We are glad to give you our advice for your question. 

 [1] From December 1, 2018, employees who are foreign nationals working in Vietnam have to participate in compulsory social insurance.

Being different from the previous regulations, it is regulated in Decree No. 143/2018/NĐ-CP dated on October 15, 2018 that from December 1, 2018, employees who are foreign nationals working in Vietnam have to participate in short-term compulsory social insurance such as sickness, maternity, occupational accident, disease insurance benefits and long-term compulsory social insurance such as retirement and death insurance benefits from January 1, 2022.

Conditions for employees who are foreign nationals to participate in the compulsory social insurance: (Clause 1 Article 2 of Decree No. 143/2018/NĐ-CP)

- Obtaining work permits, practicing certificates, practicing licenses issued in Vietnam; and

- Obtaining indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam.

- Being excluded from participation in the compulsory social insurance as provided in Clause 2 Article 2 this Decree:

+ Foreign workers internally reassigned in the company are the managers, chief executive officers, experts and technicians of a foreign enterprise which has established a commercial presence in Vietnam, are temporarily reassigned within the same enterprise to its commercial presence in Vietnam and have been employed by the foreign enterprise for at least 12 months.

+ Foreign workers reach retirement age under occupation regulations.

[2]. Compulsory social insurance contribution rates and methods (Article 12, Article 13 of Decree No. 143/2018/NĐ-CP)

a. At the employee side:

- From January 1, 2022, the employee shall, on a monthly basis, make a social insurance contribution accounting for 8% of his/her monthly pay to the retirement and death benefit fund.

- The employee who neither works nor receives salaries or wages for a period of at least 14 working days in each month shall not be bound to pay the social insurance contribution in that month. This month shall not be taken into account to determine entitlement to social insurance benefits, except for parental leaves.

b. At the employer side:

- The employer specified in Clause 3 Article 2 hereof shall, on a monthly basis, make a social insurance contribution in proportion to the employee’s payroll in the SI payment month as follows:

a) 3% paid into the sickness and parental insurance benefit fund;

b) 0.5% paid into the occupational accident and disease benefit fund;

c) 14% paid into the retirement and death insurance benefit fund, in effect from January 1, 2022.

 - The employee who neither works nor receives salaries or wages for a period of at least 14 working days in each month shall not be bound to pay the social insurance contribution in that month.  This month shall not be taken into account to determine entitlement to social insurance benefits, except for parental leaves.

-  The employee who enters into multiple employment contracts with more than one employer and is required to participate in the compulsory social insurance program, both the employee and the employer shall only have to pay social insurance contributions as agreed upon in the first employment contract.  If wishing to participate in the occupational accident and disease insurance fund, the employee shall be required to pay social insurance contributions per each employment contract.

Above are the advice of FDVN Limited Law Firm base on studying law provisions and theories. We hope that our opinions would be useful.

Legal Expert: Nguyen Thi Suong

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