26 April, 2019
After three months of implementing the compulsory social insurance scheme for foreign employees in Vietnam, local authorities and enterprises are still encountering difficulties in identifying the scope of the scheme's application. On 18 March 2019, the Ministry of Labor, Invalids and Social Affairs ("MOLISA") issued Official Letter No. 1064/LDTBXH-BHXH ("Official Letter No. 1064") to further clarify and address a number of issues with this scheme
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 No. 143") on 15 October 2018 to formalize the implementation of the scheme from 1 December 2018.
On 18 March 2019, the MOLISA issued Official Letter No. 1064 to clarify further 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:
- have indefinite-term labor contracts, or definite-term labor contracts of at least one year with employers based in Vietnam;
- possess either a work permit (giấy phép lao động), practicing certificate (chứng chỉ hành nghề), or practicing license (giấy phép hành nghề), granted by the competent state authority of Vietnam;
- have not yet reached 60 years old for males and 55 years old for females; and
- have not been an intra-corporate transferee, as defined in Article 3.1 of Decree No. 11/2016/ND-CP detailing regulations of Labor Code for foreign employees working in Vietnam
The last bullet requirement essentially confirms the understanding that was provided in Decree No. 143, being that intra-corporate transferees are not subject to compulsory social insurance contribution in Vietnam. A foreign employee is qualified as an “intra-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 in Vietnam.
For further information, please contact:
Thuy Hang Nguyen, Partner, Baker & McKenzie
thuyhang.nguyen@bakermckenzie.com
