Employees and employers in Vietnam must pay compulsory social insurance premiums - a type of social insurance organized by the State. So, which entities are required to pay compulsory social insurance premiums in 2021?
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Vietnam: Which entities are required to pay compulsory social insurance premiums in 2021? (Illustration)
According to Article 2 of the Law on Social Insurance 2014, entities required to pay compulsory social insurance premiums in Vietnam include:
- Persons working under indefinite-term employment contracts, definite-term employment contracts, seasonal employment contracts or contracts for given jobs with a term of between full 3 months and under 12 months, including also employment contracts signed between employers and at-law representatives of persons aged under 15 years in accordance with the labor law;
- Persons working under employment contracts with a term of between full 1 month and under 3 months;
- Cadres, civil servants and public employees;
- Defense workers, public security workers and persons doing other jobs in cipher organizations;
- Officers and professional army men of the people's army; officers and professional non-commissioned officers and officers and technical non- commissioned officers of the people's public security; and persons engaged in cipher work and enjoying salaries like army men;
- Non-commissioned officers and soldiers of the people’s army; non- commissioned officers and soldiers on definite-term service in the people’s public security; army, public security and cipher cadets who are entitled to cost- of-living allowance;
- Vietnamese guest workers defined in the Law on Vietnamese Guest Workers;
- Salaried managers of enterprises and cooperatives;
- Part-time employees in communes, wards and townships.
From 2021, the Labor Code 2019 will take effect, replacing the Labor Code 2012. Therefore, there will only be 2 types of contracts: indefinite-term employment contracts and definite-term employment contracts. Thus, the entities required to pay compulsory social insurance premiums in 2021 will also change. Specifically, entities required to pay compulsory social insurance premiums in Vietnam only include those working under indefinite-term employment contracts and definite-term employment contracts, not those working under seasonal employment contracts or contracts for given jobs with a term of between full 3 months and under 12 months.
Exceptionally, according to Clause 3, Article 85 of the Law on Social Insurance 2014, employees who neither work nor receive salary for 14 working days or more in a month are not required to pay social insurance premiums in that month. This period shall not be counted for enjoyment of social insurance benefits, except cases of maternity leave. According to Clause 2, Article 39 of the Law on Social Insurance 2014, the maternity leave period of 14 working days or more in a month shall be regarded as a period of social insurance premium payment. During this period, employees and employers are not required to pay social insurance premiums.
- Employees who are foreign citizens working in Vietnam with work permits or practice certificates or practice licences granted by competent Vietnamese agencies shall be covered by compulsory social insurance under the Government’s regulations.
Specifically, according to Clause 1, Article 2 of Decree 143/2018/ND-CP, 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.
However, foreign employees are not required to pay compulsory social insurance premiums in Vietnam if they fall into the following cases:
- Foreign employees 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 as specified as Clause 1, Article 3 of Decree 11/2016/ND-CP;
- Foreign employees who have reached the retirement age as stipulated in Clause 1, Article 187 of the Labor Code. According to current regulations, employees who have reached the retirement age as stipulated in Clause 1, Article 187 of the Labor Code 2012 are not required to pay compulsory social insurance premiums in Vietnam. However, the Labor Code 2019 will shortly come into force, and the statutory retirement age will follow Clause 1, Article 169 of the Labor Code 2019. Specifically, in 2021, the retirement age is 60 years and 03 months for male employees and 55 years and 04 months for female employees.
- Employers who hire and employ employees under employment contracts include:
State agencies, public service providers,and people's armed forces units; political organizations, socio-political organizations, socio-politico-professional organizations, socio-professional organizations and other social organizations; foreign agencies and organizations, and international organizations operating in the Vietnamese territory; enterprises, cooperatives, individual business households, cooperative groups, and other organizations and individuals that hire or employ employees under labor contracts
Above are all entities required to pay compulsory social insurance premiums in 2021 and exceptions stipulated by law. There will be changes to entities required to pay compulsory social insurance premiums when the Labor Code 2019 comes into force.
Thuy Tram
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