HCMC – Identifying those foreign laborers who are subject to compulsory social insurance, as per a new decree effective today, December 1, can be quite difficult, said participants at a roundtable meeting between the HCMC government and business executives held yesterday.

By Le Hoang

Though Decree 143/2018/ND-CP mentions foreign subjects obliged to have social insurance policy, there exists foreign individuals who do not fit into the category of subjects stipulated in the decree.

Under the 2014 social insurance law, foreigners working in Vietnam are subject to compulsory social insurance, health insurance, unemployment insurance, occupational accident insurance and occupational disease insurance. The rule became effective January 1, 2018.

The Government’s Decree 143/2018/ND-CP dated October 15, 2018, which provides details of the laws on social insurance and occupational safety and health concerning compulsory social insurance for foreigners, came into force on December 1, 2018.

According to the decree, as of December foreign workers in Vietnam have to buy social insurance, except labor mobility within a business (employees assigned to work in Vietnam by the parent companies) or employees reaching retirement age, as stipulated in the labor code.

In particular, foreign workers apply for compulsory social insurance if they have work permits, trade certificates or licenses issued by Vietnamese authorities, and indefinite-term employment contracts or definite-term contracts of over one year with employers in Vietnam.

According to many business representatives attending the meeting, there are foreign workers who have work permits, but do not have employment contracts, do not receive wages in Vietnam, but have allowances from their companies in Vietnam. So the question being asked is whether they must buy social insurance.

As businesses explained, most of those employees are assigned to work in Vietnam by the parent companies, which also request allowances for such employees.

However, with what is actually happening in businesses, authority representatives failed to provide a satisfactory answer, saying the problem would be ironed out later.

Talking to the press after the meeting, Nguyen Thi Thu, deputy director of the HCMC Social Insurance Agency, said that a complete answer was not available for now, as those people receive wage allowances for enterprises in Vietnam, but do not sign labor contracts. Meanwhile, foreign citizens are not obliged to apply for social insurance if they no longer have employment contracts.

According to Thu, once an employer pays an employee, the employer must have an employment contract with that person.

Starting from December 1, the effective date of Decree 143, businesses are only required to pay 3% of wages to the sickness and maternity fund, and 0.5% to the occupational accident and disease fund. Also, as of January 1, 2022, businesses and foreign workers will begin to pay 14% and 8% to the mortality and retirement funds, respectively.

In case there are differences between regulations in the decree and international conventions which Vietnam has joined, international conventions will prevail.

The Ministry of Labor, Invalids and Social Affairs’ data on foreign workers in Vietnam showed that the number of foreign workers soared from over 12,600 people in 2004 to roughly 83,500 in 2015, and might continue rising. Of these, licensed workers make up more than 93% of total foreign workers in the country. HCMC, Binh Duong, Hanoi and Dong Nai are among the localities that have attracted the highest numbers of foreign workers.