November 01, 2018

Decree No. 143 – Foreigners' Participation in Social Insurance

The Government has issued Decree 143/2018/ND-CP on statutory insurance applicable to foreign employees working in Vietnam. Decree 143 will come into effect from 1 Dec 2018. Below are the key highlights of this Decree:
 

Foreign employees subject to Vietnam’s statutory insurance: those having (i) Work Permit, Practicing License (like foreign lawyers) or Practicing Certificate and (ii) a labour contract with term of 01 year or longer for work in Vietnam, EXCEPT for those:

who are temporarily internally transferred from the parent company to work in its commercial presence in Vietnam (with at least 1 year working for the parent company before the assignment to Vietnam); or

who are at the retirement age (i.e. 60 for males and 55 for females).

Contribution rates:  Initially, commencing on 1 Dec 2018, foreign employees will only be subject to the short-term social insurance regimes which include sickness, maternity and occupational diseases and accidents.  This means that only employer-side contributions will be due, amounting to 3.5% of the employee’s salary, capped at VND 27.8 million.  This means that the capped amount of the contributions due per foreign worker will be VND 973,000 (USD 41.70) per month, or VND11,676 000 (USD 500) per year. 

However, as of 1 Jan 2022, foreign employees will be subject to all the social insurance regimes, and the same rates applicable to Vietnamese workers will be applicable to foreigners.  This means that after 1 Jan 2022, employers must contribute 17.5%, and employees must contribute 8%, subject to the capped salary of 20 times the general minimum wage (which is currently VND 27.8 million, but will likely increase by 2022). 
 
Please see the table below for an overview of the applicable contribution rates:
Lump-sum payout of retirement benefits: 
As of 1 Jan 2022, foreign employees may claim a lump-sum payout of their retirement benefits if they meet one of the following conditions:

The foreign employee’s labour contract has terminated or expired, or his/her work permit, practicing license or practicing certificate has expired;

The foreign employee has a terminal illness;

The foreign employee is eligible to receive a monthly pension payment but he/she no longer resides in Vietnam, or

The foreign employee has reached retirement age but has not contributed to social insurance for a full 20 years.

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