ARE FOREIGNERS WORKING UNDER INDEFINITE-TERM CONTRACTS IN VIETNAM REQUIRED TO CONTRIBUTE TO SOCIAL INSURANCE?

Legal Query:

Dear Lawyer, I am a South Korean citizen working for a Vietnamese company in Hanoi. I have signed an indefinite-term labor contract and hold all necessary professional licenses. I would like to ask whether I am required to participate in social insurance (SI) like other Vietnamese employees. Additionally, what is the rate of social insurance contribution for me? Thank you.

Response:

Thank you for trusting OTIS with your question. Based on current legal regulations, OTIS provides the following information:

Regulations on Social Insurance Contributions for Foreigners Working in Vietnam

According to Clauses 1 and 2, Article 2 of Decree No. 143/2018/ND-CP:

“Foreign employees working in Vietnam are subject to mandatory social insurance if they possess a work permit, practicing certificate, or practicing license issued by a competent Vietnamese authority and have signed an indefinite-term labor contract or a definite-term labor contract with a duration of at least 12 months with an employer in Vietnam.”

Furthermore, foreign employees working in Vietnam are exempt from mandatory social insurance contributions under Decree No. 143/2018/ND-CP if they fall under one of the following cases:

• Internal transfer within an enterprise as stipulated in Clause 1, Article 3 of Decree No. 152/2020/ND-CP, which provides detailed guidance on the Labor Code 2019 regarding foreign employees in Vietnam.
• Employees who have reached the retirement age as prescribed in Clause 1, Article 187 of the Labor Code 2019.

Based on the above regulations, since you meet all the conditions, you are required to participate in social insurance as stipulated by law.

Social Insurance Contribution Rates and Payment Methods for Foreign Employees

The rates and methods for social insurance contributions are specified in Section 2.1, Article 2 of Official Letter No. 5251/BHXH-QLT, providing temporary guidance on mandatory social insurance contributions for foreign employees under Decree No. 143/2018/ND-CP. The contributions are as follows:

• From January 1, 2022:
  • Employers must contribute monthly, based on the employee's monthly salary used for SI contributions:
    • 3% to the Sickness and Maternity Fund.
    • 0.5% to the Occupational Accident and Disease Fund.
    • 14% to the Retirement and Survivorship Fund.
  • Employees must contribute monthly:
    • 8% of their monthly salary to the Retirement and Survivorship Fund.

The monthly salary used for SI contributions includes the base salary, salary allowances, and other additional payments as prescribed by labor laws. If the monthly salary exceeds 20 times the base salary, the contribution is capped at 20 times the base salary.

Final Note

The above is OTIS's legal advice based on an analysis of current Vietnamese legal provisions. We hope this information will serve as a useful reference for you.

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