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Starting from January 1st, 2022, foreign employees in Vietnam are required to fully participate in the social insurance scheme of the country, which may result in significant additional costs for both employers and employees alike. Foreign employees are now required to contribute social insurance at a rate of 8% monthly, and employers must also make contributions monthly to the social insurance fund at the rate of 17.5% which is in line with the contributions made for domestic employees.
Previously, since December 1st, 2018, following the introduction of the Decree 143/2019/ND-CP, expats who have been working in Vietnam have been obliged to participate in the local social insurance scheme. However, the scheme was only effective on a partial basis. From January 1st, 2022, the scheme has fully come into effect. This Decree applies to all foreign employees in Vietnam who have a relevant Vietnamese labor contract for a duration term of one year or more, who have a valid work permit, and who are below the retirement age in Vietnam (60 years for men and 55 years for women).
The table below summarizes the key changes to the social insurance contributions rate that were made from December 1st, 2018 to January 1st, 2022 and onwards.
|
Social Insurance Fund |
Foreign Employee Contributions |
Employer Contributions |
||
|
Dec 18 – Dec 21 |
From Dec 22 |
Dec 18 – Dec 21 |
From Dec 22 |
|
|
Sickness & Maternity |
– |
– |
3% |
3% |
|
Occupational Accidents/Diseases |
– |
– |
0.5% |
0.5% |
|
Retirement & Death |
0% |
8% |
0% |
14% |
|
Total |
0% |
8% |
3.5% |
17.5% |
The salary subject to social insurance contribution must be clearly defined in the labor contract, and currently the maximum monthly salary cap is set at VND 29.8 million (USD 1,300) (which is 20 times the amount of the minimum salary) for the purposes of the calculation of the social insurance contributions. This cap is expected to remain the same in 2022.
Upon the end of the expats working period in Vietnam, they may claim a one-time payment of the contributed amount from the authorities subject to several special conditions, such as reaching the retirement age but leaving Vietnam, termination/expiration of the work permit or the suffering of a serious illness.
At PHC Advisory, together with our sister company D’Andrea & Partners Legal Counsel we are able to offer your business in Vietnam full support on relevant HR compliance matters, reviewing and preparing labor agreements and providing our consultancy on other issues your business may face in Vietnam. Please contact us at info@phcadvisory.com for more information.
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