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NEW REGULATIONS FROM 2022 ON COMPULSORY SOCIAL INSURANCE
FOR FOREIGN EMPLOYEES WHO ARE WORKING IN VIETNAM

NEW REGULATIONS FROM 2022 ON COMPULSORY SOCIAL INSURANCE
FOR FOREIGN EMPLOYEES WHO ARE WORKING IN VIETNAM

VIVA BUSINESS CONSULTING là công ty tư vấn doanh nghiệp được tín nhiệm bởi hằng ngàn khách hàng danh tiếng từ năm 2006. VIVA cung cấp nền tảng quản lý toàn diện và nguồn lực thực thi theo cách kết hợp đồng thời của: Luật pháp và thủ tục hành chính trong kinh doanh – Quản lý thuế và kế toán – Quản trị quan hệ lao động – Quản trị tài chính doanh nghiệp – Quản trị và kiểm soát nội bộ. Năng lực của chúng tôi giúp khách hàng lường trước các rủi ro, tối ưu chi phí, kiến tạo lợi thế kinh doanh.

VIVA is a business consulting company, specializes in business compliance procedures according to local business laws and regulations since 2006. VIVA has been continuously trusted by thousands of well-known clients since 2006. We are creating added value for clients by offering one-stop business platform with exclusive and tailored-made services related to market entry and mandatory business compliances. We keep our client’s good standing in lawful and optimal manners whenever they are working and doing business in Vietnam.

Compulsory social insurance for foreign empolyee

The 2014 Law on Social Insurance adds three more groups of subjects to be covered by compulsory social insurance, among them, inclusive of foreigners working in Vietnam and possessing work permits, practice certificates, or licenses issued by competent Vietnamese authorities. It means that foreigners working in Vietnam with work permits or practice certificates or practice licenses granted by competent Vietnamese agencies will be covered by compulsory social insurance from January 1, 2018.

Specifically, the foreign employee will have to pay 8% of his/her monthly wage while his/her employer will have to pay 18% of the employee’s full pensionable wage, making a total contribution of 26% to the social insurance fund, based on their wage, allowances and other additional amounts stated in their labor contract.

Under Vietnamese law, the employees are also provided by their employer with information on the annual payment of social insurance premiums once every six months, and have their annual social insurance premium payment certified by the social insurance agency annually.

According to Decree No. 143/2018/ND-CP October 15, 2018, compulsory social insurances (SI) for foreigners who are working in Vietnam include the following benefits: sickness, maternity, occupational accident, disease, retirement and death insurance benefits. The main contribution and rates  shall enter into force from January 1, 2022 as follow:

THE FOREIGNERS WHO ARE REQUIRED TO PARTICIPATE IN THE COMPULSORY INSURANCES

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.

2. The foreign employees referred above shall be excluded from participation in the compulsory social insurance as provided herein if:

  • They are intra-company transferees as stipulated in the Labor Code regarding foreign employees working in Vietnam.
  • They reach retirement age under the Labor Code.

WHAT ARE THE COMPULSORY INSURANCE RATES

Total compulsory social insurances contribution rates are 30%, consist of:

  1. The employee side shall, on a monthly basis, make a total SI contribution accounting for 9,5% of monthly pay (8% into the retirement and death benefit fund and 1,5%  into the sickness and parental insurance benefit fund)
  2. The employer side shall, on a monthly basis, make a SI contribution accounting for 20,5% in proportion to the employee’s payroll in the SI payment month (14% into the  retirement and death insurance benefit fund, 3% into the sickness and parental insurance benefit fund, 0.5% into the occupational accident and disease benefit fund, 3% into the health medical fund). The employer is entitled to apply the 0% contribution rate to the labour accident and occupational disease fund from July 1st, 2021 to June 30th, 2022, reducing contributions by 0.5% during this period.

The employer shall not be required to pay SI contributions for their employees as the employees who neither work 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.

*Please find our standard calculation sheet under lines.

MONTHLY SALARY ON WHICH COMPULSORY SOCIAL INSURANCE PREMIUMS ARE BASED

  1. 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.
  2. 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 on which compulsory social insurance premiums are based exceeds 20 times the basic salary, the monthly salary on which social insurance premiums are based must equal 20 times the basic salary. Since July 1, 2019 the applied basic salary in Vietnam is still at 1.490.000 VND,  accordingly the cap salary for compulsory social insurance premiums is 29.800.000 VND

*Standard calculation sheet for social insurances contribution

Compulsory social insurance 2022

CASES OF THE ONE-OFF SOCIAL INSURANCE REFUND

Cases of the one-off Social Insurance benefit entitlement for foreign workers in Vietnam: Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory Social Insurance and if those employees wishes to receive the one-off payment, he/she shall be entitled to the one-off benefit entitlement provided that:

  • He/she reaches the retirement pension entitlement requirements age, but has not yet reached the period of 20 years of SI contribution;
  • He/she is currently suffering from one of the deadly diseases regulated by the Ministry of Health
  • He/she has fully satisfied retirement pension entitlement requirements, but has discontinued residing in Vietnam; His/her employment contract is terminated,
  • His/her labor permit, practicing certificate or practicing license expires without being permitted for renewal.
the one-off social insurance refund

Cases of the one-off Social Insurance refund for Foreign Employees in Viet Nam: Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory Social Insurance and if those employees wishes to receive the one-off payment, he/she shall be entitled to the one-off benefit entitlement provided that: 

  1. He/she reaches the retirement pension entitlement requirements age, but has not yet reached the period of 20 years of SI contribution;
  2. He/she is currently suffering from one of the deadly diseases regulated by the Ministry of Health;
  3. He/she has fully satisfied retirement pension entitlement requirements but has discontinued residing in Vietnam; His/her employment contract is terminated, or his/her labor permit, practicing certificate or practicing license expires without being permitted for renewal. 

Please contact our expertise for practice required procedures and solutions in optimizing the payable amount, cases of the one-off SI benefit entitlement for foreigners…

ABOUT VIVA BUSINESS CONSULTING

VIVA is the local expertise for local business compliance procedures, has been trusted by thousands of foreign investors, multinational companies from Europe, Japan, Singapore, India, Korea, USA… for the required business compliance procedures by local laws and regulations since 2006.

Thanks for consistent of practice expertise in Business laws - Employment relations – Tax and accounting – Corporate finance – Corporate services,  VIVA has been successfully providing service for thousands of leading companies in such industries: Garment, energy, pharma, advertising, agricultural…

VIVA keeps its signature by offering one-stop business platform with regard to market entry and the mandatory business compliances. We ensure for our client’s good standing, in lawful and optimal manners whenever they are working and doing business in Vietnam.

 

VIVA not only manage business required procedures by laws but firstly places client’s compliance and good standing, in the optimal methods when offering any solution, and integrated with our intensive resources that allow us to prevent most of the risks in advance, create more benefits, advantages and business inspiration for entrepreneurs.

The insights and consistent backgrounds in Business Laws – Accounting and Corporate Finance – Tax Management – Labor Relations and Payroll – Serectarial and consistent with our exclusive standard operation processes, consisting of consultation – implementation – pratice operation help us fully protect client interests as one-stop solution.

YOU WILL RECEIVE

“If you ask any successful businessperson, they will always have had a great mentor at some point along the road.”

 

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