Currently, it is necessary for my company to recruit some foreign workers. So I want to ask if I hire the foreign workers, what the insurance they have to pay through my company is, and what the premium rate is.
Thank you.
FDVN’s opinions:
Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:
[1]. Foreigners who are the subjects to participate in compulsory insurance:
It is stipulated in Clause 1, Article 2 of Decree No. 143/2018/NĐ-CP elaborating on Law on Social insurance and Law on Occupational Safety and hygiene that compulsory social insurance for employees who are foreign nationals working in Vietnam is as follows:
“1. Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory SI program if they obtain work permits, practicing certificates, practicing licenses issued in Vietnam, indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam.”
According to Clause 2, Article 2 of Decree No. 143/2018/NĐ-CP, employees referred to in Clause 1 of this Article shall be excluded from participation in the compulsory social insurance as provided herein if:
“a) they are intra-company transferees as stipulated in clause 1 Article 3 of the Government’s Decree No. 11/2016/NĐ-CP dated February 3, 2016, providing details of the implementation of certain articles of the Labor Code regarding foreign employees working in Vietnam.
b) they reach retirement age under clause 1 Article 187 of the Labor Code.”
According to Clause 1, Article 3 of Decree No. 11/2016/NĐ-CP: “1. 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.”
Besides, it is also stipulated in Clause 1, Article 187 of Labor Code 2012 that “An employee who meets the conditions on the period of payment of social insurance stipulated by the law on social insurance is entitled to a pension when reaching full 60 years of age, for males, or full 55 years of age, for females.”
In Clauses 3 and 4 of this Article, there are provisions on the insurance liability of employers and other agencies, organizations, and individuals:
“3. An employee who has high professional and technical qualifications or who performs management work and some other special cases may retire at an age not over 5 years older than the age specified in Clause 1 of this Article.
4. The Government shall detail Clauses 2 and 3 of this Article.”
Thus, according to the regulations mentioned above, in the case where your company needs to recruit foreign workers working in Vietnam, they must participate in social insurance.
[2]. Compulsory social insurance for foreigners
Pursuant to Article 12 and Article 13 of Decree No. 143/2018/NĐ-CP, the social insurance premium rate is specified as follows:
“Article 12. SI contribution rates and methods at the employee side
1. From January 1, 2022, the employee prescribed in clause 1 Article 2 hereof shall, on a monthly basis, make a SI contribution accounting for 8% of his/her monthly pay to the retirement and death benefit fund.
2. 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 SI contribution in that month. This month shall not be taken into account to determine entitlement to SI benefits, except for parental leaves.
Article 13. SI contribution rates and methods at the employer side
1. The employer specified in clause 3 Article 2 hereof shall, on a monthly basis, make a SI contribution in proportion to the employee’s payroll in the SI payment month as follows:
a) 3% of the abovementioned payroll paid into the sickness and parental insurance benefit fund;
b) 0.5% of the abovementioned payroll paid into the occupational accident and disease benefit fund;
c) 14% of the abovementioned payroll paid into the retirement and death insurance benefit fund, in effect from January 1, 2022.
2. The employer shall not be required to pay SI contributions for their employees as provided in clause 2 Article 12 hereof.
3. Based on the capability of state budget balances for the occupational accident and disease insurance benefit fund, the Government shall consider adjusting the contribution rate as provided in point b clause 1 of this Article from January 1, 2020.
4. The employee who enters into multiple employment contracts with more than one employer and is required to participate in the compulsory SI program, both the employee and the employer shall only have to pay SI 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 SI contributions per each employment contract.”
Pursuant to Article 14 of Decree No. 143/2018/NĐ-CP, the monthly salary paid in the SI contribution month is as follows:
“Salary paid in the SI contribution month as provided in clause 1 Article 12 and clause 1 Article 13 hereof shall be subject to clause 2 and clause 3 Article 89 of the Law on Social Insurance, and clause 2 and clause 3 Article 17 of the Decree No. 115/2015/NĐ-CP.”
Accordingly, Clause 2 and Clause 3 Article 89 stipulate that:
“2. For employees who pay social insurance premiums according to the employer-decided salary regime, their monthly salary on which social insurance premiums are based is their salary plus salary-based allowance as prescribed in the labor law.
Since January 1, 2018, the monthly salary on which social insurance premiums are based will be the salary plus salary-based allowance and other amounts as prescribed in the labor law.
3. In case the monthly salary specified in Clause 1 or 2 of this Article exceeds 20 times the basic salary, the monthly salary on which social insurance premiums are based must equal 20 times the basic salary.”
Besides, Clause 2 and Clause 3 of Article 17 of Decree No. 115/2015/NĐ-CP specify:
“2. From January 1, 2016 to December 31, 2017, the monthly salary as the basis for social insurance payment will be the salary plus salary-based benefit mentioned in the labor contract as prescribed in the labor law.
3. The monthly salary as the basis for social insurance payment applied to each enterprise management receiving salary prescribed in Point dd Clause 1 Article 2 of this Decree will be the salary decided by the enterprise, other than managers in state-owned single-member limited companies.
The monthly salary as the basis for social insurance payment applied to each manager of cooperatives receiving salary prescribed in dd Clause 1 Article 2 of this Decree will be the salary decided by the member’s meeting.”
Note:
Pursuant to Clause 5, Article 4 of Decree No. 05/2015/NĐ-CP defining and providing guidance on the implementation of a number of contents of the Labor Code, amended and supplemented by Circular No. 47/2015/TT-BLĐTBXH:
“Article 4. Salaries and other benefits in labor contracts
Salary, allowances and other extra payments determined in the labor contract prescribed in Point a Clause 5 Article 4 of the Decree No. 05/2015/NĐ-CP include:
1. The time-based salary or position-based salary shall be the salary rate in salary scale and salary table defined by the employer under law on labor. Employees paid product-based salary or piecework salary, the time-based salary rates shall be used to determine the product unit price or the piecework salary.
2. Allowances, specifying contractual allowances, in particular:
a) The allowances that are amounts offset against the working conditions, the complexity of jobs, the living conditions, and the employee attraction level which is not included or incompletely included in the contractual salary.
b) The allowances concerning the working progress and output of the employee.
3. Other extra payments, specifying other contractual extra payments, in particular:
a) Measured extra payments and the contractual salary mentioned in the labor contract that are be paid regularly in each period of salary payment.
b) Unmeasured extra payments and the contractual salary mentioned in the labor contract that is paid regularly or irregularly in each period of salary payment concerning the working progress and output of the employee.
The following benefits shall be specified in a separate item in the labor contract prescribed in Clause 11 Article 4 of the Decree No. 05/2015/ND-CP: bonuses prescribed in Article 103 of the Labor Code, initiative bonuses; food expenses between shifts; subsidies on petrol, telephone, transportation, housing, child care, raising children; allowances for employees having a dead relative(s), employees having relatives married relatives, employees’ birthday, benefits for employees facing difficulties due to their labor accidents and occupational diseases and other allowances and benefits.”
Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.
Legal advisor: Dinh Thi Thong
FDVN Law Firm
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