CHANGES IN INSURANCE REGULATIONS

1.The salary-based for calculating compulsory insurance are not lower than the region-based minimum wages

Region-based minimum wages according to Decree 90/2019/ND-CP from January 01^st 2020 as followings:

2.The highest salary-based for compulsory Insurance

Increase the base salary from July 1st 2020 as followings:

3.Foreign employees working in Vietnam

3.1.Social Insurance Participants:

Decree No. 143/2018/NĐ-CP dated on 15/10/2018:
From 01/12/2018, employees who are foreigners working in Vietnam are subject to compulsory Insurance when: Having a work permit or a practicing certificate or a practice license issued by the agency authorized by Vietnam and having an indefinite term labor contract, or labor contract with duration from 01 year or more with employers in Vietnam.

Details according to Official Letter No. 1064/LĐTBXH-BHXH dated 19/03/2019 as following:

Foreign workers are subject to Compulsory Insurance when all the following conditions are met:

• Possessing a Work Permit, a Practicing Certificate or a Practicing License issued by a Vietnamese Competent Authority;
• Having an indefinite-term Labor Contract or a definite-term labor contract with duration from one year or more with employers in Vietnam;
• Under 60 years old for men and under 55 years old for women;
• Not subject to intra-corporate transferees, including employees who are managers, executives, experts and technical workers working in foreign enterprises, which have been employed by foreign enterprises recruited at least 12 months earlier and assigned to work in a commercial presence in Vietnam.

The employee is not subject to social insurance

These cases are specified in the Labor Code 2012 and detailed guidance in Article 7 of Decree No. 11/2016 / ND-CP and Article 2 of Decree No. 143/2018 / ND-CP as followings:

1. The employees are not subject to apply Work Permit.
2. Having the Labor Contract of less than one year with a Vietnamese employer
3. Moving internally within the enterprise
   Applied for managers, executives, experts and technical workers of foreign enterprises that have established a commercial presence in Vietnam, moving temporarily within the enterprise to a commercial presence and have been recruited by a foreign enterprise at least 12 months earlier.

4. Retired workers: From 60 years old for men and from 55 years for women.

3.2. Health Insurance participants

According to Article 17 of Decision No. 595/QD-BHXH on procedures for collection of social insurance contributions and premiums of health insurance, unemployment insurance, occupational accident and occupational disease insurance:

• Employees who work under labor contracts without definite term, labor contracts whose term is at least 3 months;
• Directors of enterprises and cooperatives whose salaries are paid by employers.
  => Regardless of whether the employee is a Vietnamese or a foreigner, health insurance participation is obligatory if these above criteria are met.

3.3. Rate for foreign employees

=> The monthly salary for social insurance payment is included salary, salary allowance and other additional amounts in accordance with the labor laws. In case the monthly salary is 20 times higher than the base salary, the maximum monthly salary of social insurance is 20 times of the statutory pay rate.

3.4 Notes on Social Insurance, Health Insurance, Unemployment Insurance

• In case of internally moving foreign employee:
  Health insurance: An employee, who is not a manager (salaried or unpaid), moving internally within an enterprise is not mentioned in the above-mentioned subjects to payment of health insurance, but currently there is also no written regulation or clear instruction that this case is not subject to obligatory health insurance participation, so in practice, some insurance officers have threatened to impose penalties and demand explanation from enterprises about not paying health insurance for these employees.

• Employees who are receiving a pension do not have to pay social insurance but must still participate in health insurance (Article 17 of Decision 595/QD-BHXH April 14, 2017)
• An employee who signs at least 2 labor contracts with different employers shall pay social insurance contributions and unemployment insurance premiums according to the first labor contract, pay health insurance premiums according to the labor contract with highest salary and pay premiums of occupational accident and occupational disease according to each labor contract (Clause 1, Article 42 of Decision 595/QD-BHXH April 14, 2017)
  => Therefore, if an employee has two or more labor contracts, the second place of work must participate in occupational accident and disease insurance.
• Up to now, most of the sickness and maternity regimes of foreign workers are similar to Vietnamese workers, except for the one-time maternity regime for male employees whose wives give birth but not participate in insurance. In that case, foreign workers are not entitled to benefits (According to Article 7, Decree 143/2018 / ND-CP October 15, 2018) although the rate of contribution to sickness and maternity fund is the same as Vietnamese workers.