The move had been previously delayed due to the lack of a concrete plan.
Vietnam’s labor ministry recently announced that a provision of the current social insurance law, which requires social insurance payments from expatriate employees, is underway and expected to be ratified in a month, VnExpress reports.
According to the draft decree, foreign employees in Vietnam with labor contracts of at least one year will be required to pay the social insurance tax.
“This group, however, excludes foreign workers who are temporarily transferred to work in Vietnam from overseas parent companies, regardless of whether they have labor contracts or not,” Deputy Head of the ministry’s Department of Social Insurance Tran Thanh Nam said.
The social insurance package will cover sickness, maternity leave, occupational accidents, retirement and death.
Foreign workers were allowed to join the social insurance scheme, according to the 2014’s Law on Social Insurance. The provision detailing compulsory participation was initially scheduled to go into effect from January 1, 2018. However, it was delayed because there weren’t clear instructions on how such provision will be implemented, until now.
In the initial phase, which will last until 2022, the social insurance package for foreign employees will only cover sickness, maternity leave, occupational disease and accidents. Employers are only required to contribute an amount equal to 3.5% of each employee's monthly salary.
If this exceeds 3.5% of the capped salary for social insurance contributions – currently VND26 million (US$1,140) – the employer will be subjected to the latter. In this phase, foreign employees don't have to pay anything yet.
From 2022, employers will be required to contribute an amount equivalent to 17.5% of each employee’s monthly salary while employee contribution will be 8% of their monthly salary.
The provision has sparked concerns among foreign employees since many have already paid for the social insurance program in their home countries. Foreign organizations have voiced their concerns too, lamenting that the change will create more financial pressures on companies and make it harder for them to hire foreign workers.
[Photo via Thanh Nien]
