In the past, the application of social insurance (SI) for foreign workers in Vietnam has been challenging and unclear. However, with the development of the economy and expanding international relations, the Vietnamese government has recognized the importance of building a working environment that ensures fairness and equality between domestic and foreign workers.
According to the statistical data from the Ministry of Labor, Invalids, and Social Affairs, as of 2022, there are currently 35,454 foreign workers in the country, and this number is rapidly increasing as foreign workers are returning to Vietnam to work after the COVID-19 pandemic, with the majority having obtained labor permits. Therefore, the implementation of social insurance policies for foreign workers in Vietnam is essential.
Since December 1, 2018, foreign workers in Vietnam have been obligated to participate in social insurance when meeting the following conditions:
(i) Holding a work permit, a professional practice certificate, or a vocational license issued by the competent authority of Vietnam, and
(ii) having an indefinite-term labor contract or a definite-term labor contract with a duration of one year or more with the employer in Vietnam.
The contribution rates for social insurance are as follows
- For employers: Based on Decree 143/2018/ND-CP, employers are required to contribute the following percentages:
- 3% to the sickness and maternity fund;
- 14% to the retirement and death benefits fund from January 1, 2022.
Employers are not required to contribute social insurance for employees who do not work and do not receive wages for more than 14 working days in a month, except for cases of maternity leave.
- For employees:
Starting from January 1, 2022, employees are required to contribute 8% of their monthly salary to the retirement and death benefits fund.
Employees who do not work and do not receive wages for more than 14 working days in a month are not required to contribute to social insurance for that month.
Exemption from mandatory social insurance contributions
Employees who fall into one of the two following cases will be exempt from mandatory social insurance contributions:
- Employees who are part of the internal movement within the enterprise: This includes managers, executive directors, experts, and technical workers of a foreign enterprise that has established a commercial presence on Vietnamese territory. They temporarily move within the enterprise’s commercial presence on Vietnamese territory and have been employed by the foreign enterprise for at least 12 months before the transfer.
- Employees who reach the retirement age as stipulated in the Labor Code.
Other related regimes
Starting from January 1, 2022, in addition to social insurance, employees are entitled to the following regimes: Retirement and death benefits as regulated by the Social Insurance Law; One-time social insurance benefits in specific cases; Conversion of social insurance benefits for those who are receiving pensions, monthly social insurance allowances but no longer reside in Vietnam. The recipients of pensions or monthly social insurance allowances who no longer reside in Vietnam can authorize another person to receive the pension or allowance on their behalf. Employees may receive one-time allowances if they wish to do so.
Inadequacies for foreign workers
There are still some limitations and challenges in the implementation of mandatory social insurance policies for foreign workers in Vietnam. For instance, many foreign workers coming to Vietnam for employment may already have participated in social insurance schemes in their home countries or have been covered by insurance packages negotiated by their parent companies in the employment contracts when being sent to work in Vietnam. Therefore, it is difficult to enforce mandatory social insurance participation for these workers under Vietnam’s regulations.
In summary, the enforcement of mandatory social insurance for foreign workers in Vietnam is a commitment of the government to ensure the rights and create a fair working environment for all employees. Moreover, it contributes to enhancing the attractiveness and motivation for foreign investment in Vietnam. However, to ensure effectiveness and transparency, clear legal policies, strong enforcement procedures, and close cooperation between relevant agencies, including the government, businesses, and foreign workers, are necessary.