NEW GUIDANCE ON COMPULSORY SOCIAL INSURANCE

FOR FOREIGN EMPLOYEES

Law on Social Insurance No. 58/2014/QH13 dated 20 November 2014 issued by the National
Assembly of Vietnam (“Law on Insurance”) provides a compulsory obligation for foreign
employees to participate in social insurance from 1 January 2018. However, after over a year of
implementing the compulsory social insurance scheme for foreign employees in Vietnam, it is
likely that local authorities and enterprises are still encountering difficulties in identifying the
scope of the scheme’s application by submitting several documents to the Ministry of Labour,
Invalids and Social Affairs (“MOLISA”) for its further clarification.
As a result, on 18 March 2019, the MOLISA issued Official Letter No. 1064/LDTBXH-BHXH
(“Official Letter 1064”) to further clarify and address a number of issues with this scheme.
1. Overview
By way of background, the Law on Social Insurance extends the implementation of
compulsory insurance to foreign employees from 1 January 2018. However, the
Government only later issued Decree No. 143/2018/ND-CP (“Decree 143”) on 15 October
2018 to formalise the implementation of the scheme from 1 December 2018.
2. Guidance
Official Letter 1064 provides further clarification to the scope of the scheme's application.
Accordingly, a foreign employee must satisfy all of the below requirements in order to be
subject to the social insurance scheme:
(a) have indefinite-term labour contracts, or definite-term labour contracts of at least
one (1) year with employers based in Vietnam;
(b) possess either a work permit, practicing certificate, or practicing license, granted
by the competent state authority of Vietnam;
(c) have not yet reached sixty (60) years old for males and fifty-five (55) years old for
females; and
(d) have not been an intra-corporate transferee, as defined in Article 3.1 of Decree No.
11/2016/ND-CP detailing regulations of Labour Code for foreign employees
working in Vietnam.
The last bullet requirement essentially somehow confirms the understanding provided in
Decree No. 143, being that internal-corporate transferees are not subject to compulsory
social insurance contribution in Vietnam. A foreign employee is qualified as an “internal-
corporate transferee” if he/she is a manager, executive director, specialist or technician
working at an offshore entity, having been employed by the offshore entity for at least 12
months prior to the transfer and is seconded to the offshore entity's commercial presence
with Vietnam’s territory.
Official Letter 1064 issued by the MOLISA is expected to clear up the confusions and
facilitate the application as well as implementation of Law on Insurance.
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This alert is for general information only and is not a substitute for legal advice.