COMPULSORY SOCIAL INSURANCES FROM 2022

FOR FOREIGN EMPLOYEES WHO ARE WORKING IN VIETNAM

The 2014 Law on Social Insurance adds three more groups of subjects to be covered by compulsory social insurance, among of 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 as 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 labour contract.

Under the Vietnamese law, the employees are also be 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

Read more:

• One-off social insurance refund for foreign employees
• Expats working in Vietnam – What you shall keep in mind
• Labor laws and regulations in Vietnam – 100 popular questions you need to know
• Type of labor contracts in Vietnam – How to terminate by the employer?
• Managing labor relations for expats in Vietnam
• Penalties for administrative violations against regulations on compulsory social insurance in Vietnam
• Compulsory insurance in Vietnam – What you need to know
• Compulsory social insurance for foreign employees – New regulations from 2022
• Payroll service and manage employment relations
• Personal income tax for foreign investors – managers – experts in Vietnam
• Personal income tax in Vietnam – Comprehensive guide to finalization procedures