Foreign workers in Vietnam for 1 year are required to pay social insurance

The Government has just issued a decree detailing the Law on Social Insurance and the Law on Occupational Safety and Hygiene regarding compulsory social insurance for foreign employees working in Vietnam. This decree takes effect from December 1, 2018.

The subject of application is foreign employees working in Vietnam who are subject to compulsory social insurance when they have a work permit, practice certificate or practice license issued by a competent authority of Vietnam and have an indefinite-term labor contract or a fixed-term labor contract of one year or more with an employer in Vietnam.

Accordingly, foreign employees working in Vietnam are subject to compulsory social insurance regimes including sickness, maternity, occupational accident and disease insurance, retirement and death benefits.

Specifically, from January 1, 2022, foreign workers working in Vietnam must contribute 8% of their monthly salary to the pension and death fund every month.

Employees who do not work and do not receive salary for 14 working days or more in a month do not have to pay social insurance for that month. This period is not counted for social insurance benefits, except in the case of maternity leave.

Employers shall contribute monthly on the monthly salary fund of employees to social insurance, including: 3% to the sickness and maternity fund; 0.5% to the occupational accident and disease insurance fund; 14% to the retirement and death fund from January 1, 2022.

Regarding one-time social insurance settlement, within 10 days from the date of termination of the labor contract or the date of expiration of the work permit, practice certificate, or practice license (whichever comes first), if the employee does not continue to work under the contract or does not renew the license, the employee has the right to request one-time social insurance and submit the application to the social insurance agency.

Accordingly, within five working days from the date of receiving complete documents as prescribed, the Social Insurance agency is responsible for resolving and organizing payment to the employee. In case of failure to resolve, a written response will be issued.

In case a foreign employee who is receiving monthly pension or social insurance benefits and is no longer residing in Vietnam and wishes to receive a one-time benefit, he/she must submit an application to the Social Insurance Agency. Within five working days from the date of receipt of the application, the Social Insurance Agency is responsible for resolving the request for the employee. In case of failure to resolve the request, a written response stating the reason must be provided.