Benefits of social insurance for foreign employees

For several years now, more precisely since December 1, 2018, foreigners are subject to the Vietnamese social insurance regime. Only foreign employees obtaining a work permit for a temporary assignment to a subsidiary in Vietnam shall not be required to participate. In practice, however, authorities tend to decline work permit applications for temporary assignments but rather grant approvals for local employments (which are subject to the social insurance scheme).

Prior to outlining the potential benefits, let’s take a quick glance at the insurance contributions:

Contribution rates amounting to 17.5% for the employer and 8% for the employee. The basis of assessment for the contribution is the contractual base salary as well as regular and consistent allowance payments, however currently capped at 36,000,000 VND which is equivalent to approximately 1,390 EUR.

The costs:

Employer: up to 6,300,000 VND (approx. 243 EUR)

Employee: up to 2,880,000 VND (approx. 111 EUR)

The benefits:

The following benefits shall be applicable to a foreign employee in Vietnam:

Sick Pay

Will be paid in case of the employee’s or his/her under 7 years old child’s sickness provided a medical certificate confirms the incapacity to work. In this case, 75% of the latest monthly salary preceding the sick leave shall be temporary paid by the social insurance fund. In case of the employee’s sickness, who is working under ‘normal’ conditions, payment shall be made for up to 60 days (depending on the years of contributions) or up to 20 working days in case of the employee’s child sickness. Please note: the 75% are referring to the employee’s wage declared to the social insurance which is currently capped at 36,000,000 VND (approx. 1,390 EUR)!

Maternity/Paternity Allowance

The social insurance fund will grant allowances in case of maternity and paternity leave. The monthly allowance is generally (one child, natural childbirth) limited to 6 months for the mother and 5 working days for the father. Please note that the monthly allowance level is currently limited to 36,000,000 VND (approx. 1,390 EUR) per month.

In addition, for each newborn a lump-sum allowance of currently 3,600,000 VND (ca. 139 EUR) shall be granted.

Labour Accident and Occupational Disease Allowance

Financial compensation for an employee who loses at least 5% of his or her ability to work as a result of an accident at work, on the route to or from work, or a work-related sickness. The amount of compensation depends on the severity of impairment of the ability to work.

Survivor Allowance

One-off payments and/or monthly allowances for survivors may be granted.

Pension

Retirement pensions ranging between 45% and 75% (depending on the years of contributions) of the average monthly salary on which social insurance premiums have been based (max. 36,000,000 VND (approx. 1,390 EUR). In addition to reaching retirement age (gradually raising; up to 62 years for men by 2028 and 60 years for women by 2035), social insurance contributions must have been paid for at least 20 years.

Apart from monthly payouts, one-off payments may be requested. A foreign employee may apply for such in the following cases:

• Reaching retirement age even without 20 years of contribution payments;
• Departure from Vietnam, provided that the retirement age has been reached and 20 years of contributions have been paid;
• In case of a serious illness;
• Termination or expiry of employment contract or work permit.

The amount of the one-off payment depends on the number of years contributions have been paid multiplied by twice the average monthly salary on which social insurance contributions have been based (max. 36,000,000 VND (approx. 1,390 EUR). Within 5 working days upon submission of a valid application set, the authority shall issue its decision. The first application in this regard that we have been engaged with, is currently smoothly processed by the Social Insurance Agency. However, we have noticed that the presence of the applicant may be required, thus, we recommend to submit the application prior to leaving Vietnam.

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Your point of contact in Vietnam: Christian Brendel

Brendel & Associates Law Co., Ltd.

D&D Tower, 10th Floor
458 Nguyen Thi Minh Khai Ward 2, District 3
Ho-Chi-Minh-Stadt, Vietnam

CELL     +84 98 978 4791
TEL       +84 28 3911 2008
FAX       +84 28 3911 2010

www.brendel-associates.com
info@brendel-associates.com