Social insurance required for foreign workers from 2018

Social insurance for foreign workers was made compulsory in the Social Insurance Law 2014, “both to protect the foreign workers’ rights in Vietnam and to serve as a basis for bilateral and multilateral agreements in which workers’ rights, either Vietnamese or foreigners, are treated equally”, Tran Dinh Lieu, deputy director of Vietnam Social Insurance (VSI), said at a recent conference held in Hai Phong to discuss a draft decree on the issue.
“However, the development of the decree is facing numerous issues, such as a consensus on the insurance premiums and pay-out rates, a mutually accessible and synchronised database between countries, as well as currency conversion and tax issues,” he said.
Tran Hai Nam, deputy head of the Social Insurance Department under the Ministry of Labour, Invalids and Social Affairs (MoLISA), cited the increasing number of foreign workers in Vietnam as justification for detailed legislation on obligatory social insurance.
Nam said the number of foreign workers in Vietnam had jumped nearly sevenfold in just over a decade, from 12,600 in 2004 to the current figure of 84,000, most of whom are highly qualified and fully registered.
The 2014 Law on Social Insurance stipulates that employees who are foreign citizens working in Vietnam with work permits or practice certificates/licences granted by a Vietnamese agency are entitled to compulsory social insurance.
Hiroshi Karashima, chairman of the Japan Business Association in Vietnam, said a distinction must be made clear between foreign workers who are obliged to join the social-insurance system and those who can opt out. 
He also called for bilateral agreements on social insurance between Vietnam and other countries so foreign workers won’t have to pay for insurance in two countries.

Short-term workers 
According to many businesses, most of their labourers are on short-term employment or project-based contracts, so they would like to be able to opt for short-term coverage, such as for illness, maternity, and occupational accidents.
Labourers also want to know if they will receive insurance pay-outs quickly enough or in the currency of their choosing when their contract ends and they return home. 
Labourers have also complained about confusing terminology and language of the draft decree.
Pham Thanh Du, director of VSI’s finance and accounting department, said the nature of social insurance for foreign workers would require social-insurance staff to have a good command of foreign languages, information-technology knowledge, and familiarity with international practices, all of which would require government investment.
Former MoLISA minister Pham Minh Huan said social insurance for foreign workers was necessary but would “not be easy to implement”, as it involved other countries’ laws. Bilateral agreements are a must, he said, otherwise, foreign workers would not be interested in the insurance, and the implementation would be met with resistance.
The decree making social insurance mandatory for foreign workers in Vietnam is expected to take effect from the beginning of next year.
Those subject to the decree include foreign workers with employment contracts longer than one month, or those who have obtained work permits from Vietnamese authorities. 
These workers are required to participate in all five social-insurance regimes according to the Law on Social Insurance, which would include sickness, maternity/paternity, occupational accidents or occupational hazards, retirement, and death.
Foreign workers are also eligible for lump-sum pay-outs.
According to the draft decree, the monthly premium would be 8 per cent of the participant’s monthly salary.
Employers are to pay 18 per cent of their employees’ monthly salary, 3 per cent into sickness and maternity/paternity insurance, 14 per cent into the retirement and death insurance, and 1 per cent into the occupational-accidents insurance.