Decree issued on compulsory social insurance for foreign workers

The Government has officially issued a decree stipulating the details of compulsory social insurance for foreign employees in Việt Nam, which will take effect on December 1 this year.

The Decree 143/2018/NĐ-CP also outlines a guide as to how to enforce the Law on Social Insurance.

Under the decree, foreigners working in the country with a work permit, practice certificate, or practice licence granted by Vietnamese authorities and under non-fixed-term labour contracts or contracts with a term of one full year and above shall be subject to compulsory social insurance.

They will be entitled to the following social insurance regimes – sickness, maternity, workplace accident, occupational disease, retirement, and survivor benefits.

The employers are obliged to contribute amounts equal to 3 per cent of the employee’s monthly salary to the sickness and maternity funds and 0.5 per cent into the occupational accidents and hazards starting in December 2018, and 14 per cent into the retirement and survivor benefits fund starting from 2022.

The employee’s contribution to the latter two schemes is set at 8 per cent of their monthly salary.

Those temporarily transferred from their mother companies abroad to subsidiary firms in Việt Nam or reaching retirement age shall not be subject to the compulsory social insurance scheme.

This exclusion is to ease the concern of foreign companies having to shell out duplicate premiums for their employees.

Those eligible to receive a one-time benefit pay-out include those reaching retirement age but whose premium payment period is less than 20 years; people with terminal illnesses; those eligible to receive retirement insurance but no longer living in Việt Nam, or those whose practice licences and work permits are expired and not extended.

The decree also states that when there is difference in regulations between it and other international agreements that Việt Nam is a signatory, regulations in the international agreements will prevail.

Foreign workers on the rise

According to vice chairman of the National Assembly’s Social Affairs Committee Bùi Sỹ Lợi, the compulsory social insurance for foreign workers is necessary to ensure fairness between Vietnamese and foreigners and between enterprises which only use domestic employees and those that employ staff from overseas.

According to statistics by the Ministry of Labour, Invalids and Social Affairs (MoLISA), the number of foreign employees in the country increased from 63,557 in 2011 to 83,046 in 2016. They mostly came from Asian countries like China, the Republic of Korea and Japan, accounting for 73 per cent of the total, followed by European nations (21.6 per cent), American countries (2.4 per cent).

Those with less than one-year employment only made up 4.4 per cent, which manifests the local demand and sustainability of foreign workers in the country.

Meanwhile, the number of Vietnamese employees sent to work abroad is on a rise. The MoLISA estimated that nearly 479,600 guest workers left to work overseas during 2011 –15 period.

Based on regulations in some nations, the fact that Việt Nam covers foreign employees with social insurance will create opportunities for Vietnamese workers abroad to get access to social insurance schemes of the nations they are working in through portable schemes.


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