2. Mandatory Insurance Schemes Applicable to Employees under Vietnamese Law

Pursuant to Clause 1, Article 168 of the 2019 Labour Code, employers and employees are required to participate in the following three mandatory insurance schemes:

• Compulsory Social Insurance: A social security scheme that provides income replacement or partial income compensation for employees when they suffer a reduction or loss of income due to sickness, maternity, occupational accidents, occupational diseases, retirement, or death, based on contributions to the social insurance fund or benefits guaranteed by the State budget.
• Health Insurance: A compulsory insurance scheme organized by the State for the purpose of providing healthcare benefits to employees on a non-profit basis.
• Unemployment Insurance: A compulsory insurance scheme administered by the State under which employers and employees contribute to the unemployment insurance fund to support employment retention, vocational training, career counselling, job placement services, and partial income replacement for employees who become unemployed.

In addition to the mandatory insurance schemes mentioned above, Vietnamese law also encourages employers and employees to voluntarily participate in other insurance schemes in order to enhance employee benefits and strengthen social security protection throughout the course of employment.

3.2. Compulsory Social Insurance for Foreign Employees Working in Vietnam

Eligibility

Foreign employees working in Vietnam are subject to compulsory social insurance if they work under a fixed-term employment contract with a term of at least 12 months with an employer in Vietnam, except in the following cases:

• Intra-corporate transferees in accordance with the laws governing foreign employees working in Vietnam;
• Individuals who, at the time of entering into the employment contract, have reached the retirement age prescribed in Clause 2, Article 169 of the Labour Code;
• Cases where an international treaty to which the Socialist Republic of Vietnam is a party provides otherwise.

(Pursuant to Clause 2, Article 2 of the 2024 Law on Social Insurance)

Contribution Rates and Contribution Obligations

The compulsory social insurance contribution rates applicable to foreign employees working in Vietnam are currently calculated based on the monthly salary and comprise the following:

• Sickness and Maternity Fund: 3%, contributed by the employer;
• Retirement and Survivorship Fund: 22%, of which:
  • The employer contributes 14%; and
  • The foreign employee working in Vietnam contributes 8%;
• Occupational Accident and Occupational Disease Insurance Fund: 0.5%, contributed by the employer.

Accordingly, under Vietnamese law, the employer bears the greater portion of the compulsory social insurance contribution obligations for foreign employees.

(Pursuant to Articles 32, 33, and 34 of the 2024 Law on Social Insurance)

Upon participating in compulsory social insurance, foreign employees working in Vietnam are entitled to sickness, maternity, retirement, and survivorship benefits. The duration of entitlement, benefit levels, and required dossiers and procedures are provided in Chapter V of the 2024 Law on Social Insurance.

3.3. Unemployment Insurance for Foreign Employees Working in Vietnam

Currently, the unemployment insurance scheme for employees is governed by the 2025 Employment Law. This Law only regulates and applies to employees who are Vietnamese citizens aged 15 years or older, have the capacity to work, and have a demand for employment.

Accordingly, foreign employees working in Vietnam are currently not subject to compulsory unemployment insurance under Vietnamese law.

At present, Vietnamese law imposes very strict requirements regarding compulsory insurance obligations for employees. Employers who violate the regulations on compulsory insurance may be subject to administrative penalties of up to VND 150 million. Furthermore, for serious violations, employers may also be subject to criminal liability in accordance with the law.

Phong & Partners provides comprehensive advisory services on employee insurance, particularly for foreign employees working in Vietnam, to ensure that corporate clients comply with applicable legal requirements, minimise labour law risks in their operations, and safeguard the lawful rights and interests of foreign employees working in Vietnam.

If you have any questions regarding the relevant legal regulations, please do not hesitate to contact Phong & Partners at (+84) 236 3822 678 or our hotline (+84) 905 503 678 for timely and accurate assistance.

For more information about the legal services provided by Phong & Partners, please visit: www.phong-partners.com.