Vietnam to impose compulsory insurance on foreign employees

May 24, 2017

HANOI - A Draft Decree detailing implementation of the Law on Social Insurance to apply to all foreign employees working in Vietnam from January 1, 2018 has been released by the Ministry of Labour, Invalids and Social Affairs (MOLISA) for public comment. The requirement will increase employment costs for companies doing business in Vietnam.

According to this Draft Decree, the provision will apply to foreign employees who:
• are working in Vietnam under indefinite-term labour contracts, definite-term labuor contracts, or seasonal or specific job contracts with durations of more than one full month with employers based in Vietnam; and
• have been granted either (i) a work permit (ii) practicing certificate; or (iii) practicing license.
Lawyers Baker McKenzie say the Draft Decree proposes that foreign employees will be covered for all five compulsory social insurance regimes currently applicable to Vietnamese employees.

These include: (i) illness, (ii) maternity, (iii) labour accidents and occupational diseases, (iv) retirement, and (v) survivorship allowance.

The contribution rates imposed on both employers and foreign employees will be the same as those applicable to Vietnamese employees, i.e., currently 8% from the employees and 18% from the employers, based on their actual monthly salaries capped at 20 times the applicable General Minimum Wage. www.bakermckenzie.com (ATI).