From January 01, 2018, provisions on social insurance (the “SI”) applied to expats under the 2014 SI Law shall come into force. To guide the implementation of such provisions, MOLISA carried out a draft Decree detailing and guiding the implementation of the SI Law regarding the compulsory SI for the expats working in Vietnam (the “Draft on SI”) which is expected to come into force from January 01, 2018, i.e. at the same time the provisions on SI applied to expats under the 2014 Law on SI come into force. The first round of collecting public’s comments on the Draft on SI was completed on June 12, 2017.

According to the contents of the Draft on SI:

(1)  Those who shall be subject to SI are expats working under labor contracts with the term of full one-month or more and holding one of these documents issued by Vietnam competent authorities: (i) work permit; (ii) practice certificate or (iii) practice license. However, the Draft on SI has not mentioned the expats who are exempted from work permit.

(2)  SI premium rates of expats under the Draft on SI are currently equal to those applied to the Vietnamese employees, i.e. the premium paid by the expats is 8% of their monthly salaries, and the premium paid by the employers is 18% of the monthly salary fund used for calculating the SI premium. Although when making the Draft on SI, MOLISA means to apply “reciprocity” principle (which means that the SI regime that is applied by the government of the host country to the citizens of the guest country should be applied in kind to the host country’s citizens in such guest country). However, in the context that Vietnam is ranked as one of countries having the high SI premium rate in their region, it is not reasonable to apply the same SI premium rate to both expats and Vietnamese employees.

(3) The Draft on SI provides 05 types of SI allowances (including long-term and short-term allowances) for expats, including: (i) sickness, (ii) maternity, (iii) labor accidents – occupational diseases, (iv) pension, and (v) death. The condition on the period time of already paying SI premiums for being entitled to the SI allowances will be based on “accumulation” principle, which means the period time that the expats already pay SI premiums in both Vietnam and other countries will be counted when considering the eligibility of the expats for the SI allowances in terms of the total period time of paying SI premiums.

However, the work of expats in Vietnam is, in nature, usually short-term or project-based and limited by the maximum 02 years term of their work permit, so applying a long-term SI regime (i.e. pension) with the condition of already paying SI premiums from 15 to 20 years will be a big challenge and raise a question of that whether such application is really necessary and meets the real demand of the expats or not? The reason is that the accumulation of the period time of paying SI premiums for being entitled to the pension allowance requires both the SI authorities and the expats are required to determine and convert the period time that the expats have already paid SI premiums outside Vietnam. Meanwhile, another issue which should also be further considered is the procedural provisions in order to pay the SI allowances timely after the expats terminate their employment in Vietnam and return to their countries.

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