1. Statutory Social Insurance (“SI”) for Expatriate Employees
In accordance with the Draft Decree on the statutory Social Insurance (SI) for expatriate employees, with effect from 1 January 2018, expatriate employees who sign a labor contract for one month or more and have a work permit, practice certificate or practice license in Vietnam; will be subject to the SI contribution in Vietnam.
Similar to Vietnamese employees, the contribution rate for the employer is 17.5% and the rate for the expatriate employee is 8%. The salary for the purpose of calculating the SI contribution is capped at 20 times the General Minimum Wage which is currently VND1,300,000 per month.
There are five regimes of SI in Vietnam: i) sickness, ii) maternity, iii) work accidents, iv) pension and v) death. Expatriate employees are entitled to enjoy the same benefits as Vietnamese employees under each regime. When they repatriate from Vietnam, they may lodge an application to the SI authority to claim a one-off social insurance allowance.
2. Trade Union
From 1 January 2018, the contribution to SI of expatriate employees also results in the company’s obligation for the Trade Union fund which is at 2% on the salary subject to SI contribution. There is no employee’s obligation for the Trade Union and for expatriate employees under the current laws.
3. Conclusion
From 1 January 2018, a company has to contribute to the statutory Social Insurance and Trade Union fund for their expatriate employees who are under a local labor contract in Vietnam. This results in additional employment costs for the company. The table below summarise the rate of contribution for both employers and expatriate employees from 1 January 2018:
Source: EY Vietnam, January 2018
For more information on this update, please contact EY Vietnam:
Ernst & Young Vietnam Limited
Bitexco Financial Tower, 28th Floor, 2 Hai Trieu street, District 1, Ho Chi Minh City, S.R. of Vietnam
Office: +84 28 3824 5252 | Website: http://www.ey.com
