As the open economy in Vietnam expands, there is an increase in the employment of foreign workers. As a result, it is mandatory for enterprises to provide social insurance for them. To aid businesses in navigating this process, here are a few crucial notes to keep in mind.
Regulations on Social Insurance for Foreigners
On October 15, 2018, the Government issued Decree 143/2018/ND-CP and the Law on Occupational Safety and Hygiene, which set regulations for the social insurance regime for foreigners working in Vietnam. The most noteworthy aspect of the regulation is the right of foreign employees to receive insurance payments and other benefits while working in Vietnam.
The Decree specifies the subjects, payment rates, and procedures for applying to participate in the social insurance program for foreigners.
Article 2 of Decree No. 143/2018/ND-CP stipulates that the Law on Compulsory Social Insurance for Employees applies to all foreign nationals employed in Vietnam. To pay their social insurance premiums, foreign citizen employees working in Vietnam must satisfy the following conditions, as per the regulation:
– Have a work permit, practice certificate, or practice license issued by a competent authority of Vietnam.
– Have an indefinite-term labor contract or a definite-term labor contract of at least one year with an employer in Vietnam.
However, if an employee is a foreign national meeting the above-specified requirements but falls into any of the following situations, they will be exempted from mandatory social insurance contributions:
1. Clause 1 Article 3 of Decree No. 11/2016/ND-CP issued on February 3, 2016, defines the scope of employee transfers within the enterprise.
The provisions are as follows:
– The movement of foreign workers within an enterprise includes managers, executives, experts, and technical workers of a foreign enterprise that has a business establishment in Vietnam.
– For at least 12 months, the foreign enterprise has employed the employee who is temporarily relocating to a business establishment in Vietnam.
2. The employee has attained the age of retirement, as the law prescribes.
Foreign employees who enroll in mandatory insurance are eligible for the same benefits as Vietnamese employees, such as sickness, maternity, occupational accident and disease, retirement, and death insurance benefits.
Social insurance premium for foreigners
Foreigners are subject to the same social insurance contribution regulations as Vietnamese employees. As per these regulations, the employer and employee will make contributions towards social insurance premiums together.
Employee’s social insurance premium
From January 1, 2022, Clause 1 Article 12 of Decree 143/2018/ND-CP requires foreign workers obligated to participate in this insurance contribute 8% of their monthly salary towards the fund for retirement and survivorship benefits.
Moreover, Article 18, Decision 595/QD-BHXH, mandates foreign employees working in Vietnam to participate in health and unemployment insurance programs. Therefore, foreign workers must contribute to both the health insurance (HI) and unemployment insurance (UI) funds at rates of 1.5% and 1%, respectively, of the monthly salary that is considered for social insurance contributions.
According to Article 30 of Circular 59/2015/TT-BLDTBXH, the salary used to calculate social insurance premiums for foreigners encompasses basic salary, allowances and any other supplementary payments. The maximum salary amount used for social insurance payment purposes is 20 times the base salary. Additionally, the payment computations do not include benefits and bonuses in line with labor laws as part of the salary
Social insurance contributions of enterprises employing employees
Article 13 of Decree 143/2018/ND-CP mandates that the employer must make monthly deductions from the employee’s salary, which form the basis of insurance contributions. Employer must make the deductions in the following manner:
– 14% towards the retirement and survivorship fund (HT-TT), effective from January 1, 2022;
– 3% towards the sickness and maternity fund (OD-TS);
– 0.5% towards the occupational accident and occupational disease insurance fund (TNLD-BNN).
Enterprises operating in high-risk industries for occupational accidents and diseases can request a reduction in payment rates, subject to the approval of the Ministry of Labor, Invalids and Social Affairs. In such cases, paying only 0.3% of the prescribed amount will be required from the employer.
If an employee does not work or receive a salary for 14 working days or more in a given month, they are not obligated to make payments for that month. Furthermore, the Vietnamese government stipulates that this time period will not count towards the employee’s social insurance entitlement. However, employees on maternity leave represent an exception to this rule, as their entitlement will still take into account the absent days. It is important to keep in mind that these regulations apply to employees who are paying social insurance in Vietnam, and the specific details may vary depending on the individual’s situation. In any case, staying informed about the Vietnamese government’s social insurance policies will ensure that employees are able to maximize their entitlements while living and working in the country.
Procedures for participation in Social Insurance for foreigners
The process of paying insurance contributions for foreign nationals employed in Vietnam generally involves the use of forms similar to those used for domestic workers. However, both the employers and the employees must comply with certain special regulations specific to foreign nationals.
Procedures for employers
The employer must prepare the following documents when requiring a foreign worker to make social insurance payments:
– Form TK3-TS: Declaration of participation or information adjustment, as issued under Decision No. 595/QD-BHXH.
– Form D02-TS: List of declarations for the increase of foreign workers participating in social insurance.
Procedures for employees
When foreign employees participate in social insurance contributions, they need to use the TK1-TS declaration form and should only use it when they do not have a social insurance code. It is important to note that when filling in the information, the full name, country, and gender fields must be recorded in international phonetic transcription. Additionally, the attached personal profile should be a copy that has been translated into Vietnamese and adequately certified in accordance with Vietnamese law.
Conclusion
In conclusion, the social insurance regime for foreigners in Vietnam is an essential aspect that both employers and employees should understand in 2023. The Vietnamese government has taken significant steps to improve insurance coverage for foreign workers in the country. As a result, all eligible expats must enroll in the system. It is crucial that employers and employees comply with the necessary regulations to avoid any potential penalties. With the information provided in this guide, foreign employees in Vietnam can better understand their social insurance contributions, rights and obligations, and how to access social benefits when working in Vietnam.
HMLF is proud to be a law firm operating in many legal fields. With a team of professional, dedicated and experienced legal experts in specified fields, HMLF is confident to help business solve legal problems in the labor field.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
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