Are foreign employees required to pay compulsory social insurance premiums in Vietnam?

Are foreign employees required to pay compulsory social insurance premiums in Vietnam?(Illustrative image)

Regarding this matter, LawNet would like to answer as follows: 

According to Clause 1, Article 2 of the Social Insurance Law 2014, employees who are Vietnamese citizens are subject to compulsory social insurance participation under the following circumstances:

- Employees working under an indefinite-term labor contract, a definite-term labor contract, a seasonal or certain job-specific labor contract with a term from 3 months to under 12 months, including a labor contract signed between the employer and the legal representative of a person under 15 years old in accordance with labor law;

- Employees working under a labor contract with a term from 1 month to under 3 months;

- Officials and public employees;

- Defense workers, police workers, and others working in cipher organizations;

- Officers, professional soldiers of the People's Army; officers, non-commissioned officers in professional services, officers, and non-commissioned officers of technical expertise in the People’s Police; cipher employees who receive wages similar to military personnel;

- Non-commissioned officers, soldiers of the People's Army; non-commissioned officers, soldiers of the People’s Police serving under limited terms; military, police, and cipher students enjoying living allowances;

- Workers going abroad for work under the Vietnamese Workers Abroad Law;

- Enterprise managers, cooperative managers who receive a salary;

- Non-specialized individuals working at commune, ward, and commune-level towns.

Note: From January 1, 2020, upon the Labor Code 2019 coming into effect, there will no longer be a category for seasonal labor contracts or work-specific labor contracts with a term from 3 months to under 12 months.

In addition to Vietnamese employees, foreign employees working in Vietnam who have a labor permit, a practicing certificate, or a practicing license issued by a competent authority of Vietnam are subject to compulsory social insurance according to the Government of Vietnam regulations.

This regulation is detailed in Decree 143/2018/ND-CP as follows:

Foreign employees working in Vietnam are subject to compulsory social insurance when they have a labor permit, a practicing certificate, or a practicing license issued by a competent authority of Vietnam and have an indefinite-term labor contract or a definite-term labor contract of at least 1 year with a Vietnamese employer.

Foreign employees working in Vietnam are subject to compulsory social insurance participation if they meet the following conditions:

- Have a labor permit, a practicing certificate, or a practicing license issued by a competent authority of Vietnam;

- Have an indefinite-term labor contract or a definite-term labor contract of at least 1 year with a Vietnamese employer.

However, not all foreign employees working in Vietnam are required to participate in compulsory social insurance; there are 4 exemptions, including:

(1) No labor permit, practicing certificate, or practicing license issued by a competent authority of Vietnam;

(2) Labor contracts with a term under 1 year with a Vietnamese employer;

(3) Internal transfer within an enterprise;

To be specific, according to Clause 1, Article 3 of Decree 11/2016/ND-CP, foreign employees transferring within an enterprise are managers, executives, experts, and technical workers of a foreign enterprise that has established a commercial presence in Vietnam and have been recruited by that foreign enterprise for at least 12 months before temporary transfer to the commercial presence in Vietnam, are not subject to compulsory social insurance participation.

(4) Employees of retirement age.

To be specific, according to Clause 1, Article 187 of the Labor Code 2012, employees who meet the conditions for social insurance contribution according to social insurance law and are eligible for retirement pension when males reach 60 years old and females reach 55 years old are not subject to compulsory social insurance participation.

Note: From January 1, 2021, when the Labor Code 2019 takes effect, the retirement age for employees in normal working conditions will be 60 years and 3 months for males and 55 years and 4 months for females.

In summary, foreign employees working in Vietnam who meet the conditions are still subject to compulsory social insurance participation, except for the 4 cases mentioned above.

Thuy Tram

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