Question: In the context of international economic integration, an increasing number of foreign enterprises and contractors are participating in construction activities in Vietnam. One of the important legal issues related to this activity is the obligation to pay social insurance (SI) for foreign workers employed in Vietnam. Therefore, when a foreign contractor (granted a Construction Operation Permit for a foreign enterprise by the Ministry of Construction) signs a labor contract with a foreign worker working in Vietnam, are they required to pay social insurance according to Vietnamese law?
Answer:
1. Cases Where Foreign Workers Are Required to Participate in Mandatory Social Insurance
According to Clause 1, Article 2 of Decree No. 143/2018/NĐ-CP, foreign nationals working in Vietnam are subject to mandatory social insurance (SI) if they meet the following conditions:
- Possess a work permit, a practicing certificate, or a practicing licenseissued by a competent Vietnamese authority;
- Sign a labor contract with a term of at least one year or an indefinite-term labor contractwith an employer in Vietnam.
Thus, if a foreign contractor signs a labor contract of at least one year with a foreign worker and the worker has a valid work permit in Vietnam, both parties are obligated to participate in mandatory social insurance under Vietnamese law.
Additionally, pursuant to Article 168 of the 2019 Labor Code, the employer (including foreign contractors) is responsible for participating in social insurance (SI).
2. Cases Where Foreign Workers Are Not Subject to Mandatory Social Insurance
According to Clause 2, Article 2 of Decree No. 143/2018/NĐ-CP, foreign workers are not required to participate in mandatory social insurance if they fall into one of the following categories:
- Intra-company transferees, including managers, executive directors, experts, and technical workers of a foreign enterprise that has established a commercial presence in Vietnam, provided that they were employed by the foreign enterprise for at least 12 months prior to their transfer(Clause 1, Article 3 of Decree No. 11/2016/NĐ-CP).
- Workers who have reached the retirement ageas stipulated in Clause 2 Article 169 of the 2019 Labor Code.
If a foreign worker in Vietnam falls under one of the above categories, they are not required to participate in mandatory social insurance.
3. Are Foreign Contractors Required to Pay Social Insurance?
Clause 3, Article 2 of Decree No. 143/2018/NĐ-CP stipulates that employers subject to mandatory social insurance contributions include:
- Foreign agencies, organizations, and international organizations operating within Vietnamese territory;
- Enterprises, cooperatives, household businesses, partnerships, other organizations, and individuals that hire employees under labor contracts.
Thus, if a foreign contractor is granted a Construction Operation Permit in Vietnam and signs a labor contract with a foreign worker who is subject to mandatory social insurance, the contractor is responsible for paying social insurance contributions in accordance with Vietnamese regulations.
Conclusion
The obligation to pay social insurance when signing labor contracts with foreign workers depends on the contract duration and the worker’s work permit status. If the labor contract is at least one year and the worker holds a valid work permit in Vietnam, the foreign contractor is required to contribute to social insurance in accordance with Vietnamese regulations. Conversely, if the contract duration is less than one year or the worker qualifies for an exemption, social insurance participation is not required.
Therefore, foreign enterprises and contractors should carefully review Vietnamese legal regulations to ensure full compliance with social insurance obligations when hiring foreign workers in Vietnam.
See more: Foreign Investment
