Vietnam’s official guidance on compulsory social insurance for foreigners started on 1 December 2018.
The long-awaited decree No. 143 (2018) providing detailed guidance on compulsory social insurance applicable to foreign employees working in Vietnam was finally issued on 15 October 2018, and took effect on 1 December 2018. Contribution and entitlement of each benefit regime will come into effect on different dates as summarized below.
Related topic: Work Permit Services in Vietnam
Scope of application
Foreign employees who satisfy both following conditions will be subject to compulsory social insurance:
- Working in Vietnam under indefinite term labour contracts, or definite term labour contracts with a term of at least one full year with employers based in Vietnam; and
- Having been granted either (i) a work permit, (ii) practising certificate, or (iii) practising licence.
- Notwithstanding the above, the following foreign employees are not subject to compulsory social insurance:
- Intra-corporate transferees in accordance with article 3.1 of decree No. 11 (2016) detailing regulations of the Labour Code for foreign employees working in Vietnam; and
- Employees who have reached the statutory retirement age, as prescribed under article 187.1 of the Labour Code, which is 60 for males and 55 for females.
Applicable benefit regimes
Decree No. 143 stipulates that foreign employees will be covered for all five compulsory social insurance regimes that are applicable to Vietnamese employees. These include benefit regimes for: (i) illness, (ii) maternity, (iii) labour accidents and occupational diseases, (iv) retirement, and (v) survivorship. However, the application of the five regimes to foreign employees will be introduced in stages as follows:
- The short-term benefit regimes for (i) illness, (ii) maternity, and (iii) labour accidents and occupational diseases will apply from 1 December 2018; and
- The long-term benefit regimes for (iv) retirement and (v) survivorship will apply from 1 January 2022.
Contribution rates
The contribution rates imposed on both employers and foreign employees will be the same as those applicable to Vietnamese employees, that is, 8% from employees and 17.5% from employers, based on the salary used to contribute compulsory social insurance, which is capped at 20 times the applicable general minimum salary as provided by the government.
The contribution is implemented as below.
From 1 December 2018 to 31 December 2021: employer 3.5%, including 3% for the fund of illness and maternity; 0.5% for the fund of labour accidents and occupational diseases; employee not applicable.
From 1 January 2022:
employer 17.5%, including 3% for the fund of illness and maternity; 0.5% for the fund of labour accidents and occupational diseases; 14% for the fund of retirement and survivorship; and employee 8% for the fund of retirement and survivorship.
Work permit amendments
Amendments to the Regulations Related to Work Permit/Certificate of Work Permit Exemption for Foreigners Working In Vietnam.
On 8 October 2018, the government issued decree No. 140 (2018) amending decrees related to investment and business conditions, and administrative procedures within the scope of management of the Ministry of Labour, Invalids and Social Affairs, which took effect on the same date.
Among the amendments, decree No. 140 revised some of the provisions applicable to work permits and certificates of work permit exemption for foreigners working in Vietnam. Notable changes are as follows.
Regarding the foreign labour usage plan:
- The written request for approval of foreign labour usage plan must be submitted to the provincial-level people’s committee, instead of the president of the provincial-level people’s committee as previously prescribed by decree No. 11 (2016);
- If the foreign employee is (i) chief representative of a representative office or head of a project office of an international organization or a non-governmental organization; or (ii) a relative of members of foreign diplomatic missions in Vietnam who are permitted to work according to international treaties to which Vietnam is a signatory, the employer is not required to request the approval of a foreign labour usage plan.
With respect to a certificate of work permit exemption:
- A foreign individual in charge of establishing a commercial presence in Vietnam will be exempt from obtaining a work permit, but will still be required to apply for a certificate of work permit exemption;
- Relative(s) of members of foreign diplomatic missions in Vietnam, who are permitted to work according to international treaties to which Vietnam is a signatory, are not required to apply for a certificate of work permit exemption.
With respect to a work permit application:
- The copy of the employee’s passport or a substitute for passport, or other valid licences for international travel, is no longer required to be notarized;
- A work permit will be granted within five working days of receipt of the full application, instead of seven days as previously stipulated in decree No. 11; and
- The employer having the head office in a province and city but having representative offices or branches at another province and city is entitled to file the application at the Ministry of Labour, War Invalids and Social Affairs.
Readers should not act on this information without seeking professional legal advice
Source: Asia Business Law Journal