For Japanese companies employing foreign workers in Vietnam, the handling of social insurance (SI / HI / UI) is one of the most complex and frequently misunderstood areas.
In this article, we provide a practical explanation of social insurance obligations, exemption conditions, and contribution calculation methods for foreign employees.
Are foreign employees required to enroll in Vietnam’s social insurance system?
In conclusion, foreign employees who meet certain conditions are required to enroll in Vietnam’s social insurance system.
However, not all foreign employees are subject to enrollment, as eligibility depends on specific conditions.
Eligibility criteria for social insurance enrollment for foreign employees
If all of the following conditions are met, the employee is required to enroll in social insurance.
※ For general eligibility criteria and overall rules of Vietnam’s social insurance system, please refer to “Social Insurance Eligibility and Contribution Calculation”.
| Condition | Description |
|---|---|
| Labor contract | A labor contract of one year or longer with a Vietnamese entity |
| Work authorization | Possession of a valid work permit |
| Age | Below the statutory retirement age in Vietnam |
| Employment type | Full-time employee (temporary or short-term contracts may be excluded) |
👉 Short-term contract workers, secondees, or director-only contracts may fall outside the scope of mandatory enrollment.
Types of social insurance applicable to foreign employees
Foreign employees are subject to the following types of insurance:
| Insurance type | Coverage for foreigners | Description |
|---|---|---|
| Social Insurance (SI) | Applicable | Pension, sickness, occupational injury, etc. |
| Health Insurance (HI) | Applicable | Medical insurance |
| Unemployment Insurance (UI) | Not applicable | Foreigners are excluded |
※ UI (Unemployment Insurance) applies only to Vietnamese nationals.
Social insurance contribution rates for foreign employees (employee & employer)
Employee contribution rates
| Insurance | Rate |
|---|---|
| Social Insurance (SI) | 8% |
| Health Insurance (HI) | 1.5% |
| Unemployment Insurance (UI) | 0% |
| Total | 9.5% |
Employer contribution rates
| Insurance | Rate |
|---|---|
| Social Insurance (SI) | 17.5% |
| Health Insurance (HI) | 3% |
| Unemployment Insurance (UI) | 0% |
| Occupational Accident Insurance | 0.5% |
| Total | 21% |
Salary components subject to social insurance contributions
Social insurance contributions are not calculated on all types of compensation.
Wages included in social insurance calculations
- Base salary
- Position and responsibility allowances
- Job title allowances
- Regular and fixed allowances
Examples of wages not included
- Meal allowance (under certain conditions)
- Transportation allowance
- Irregular bonuses
- Tet bonus (annual bonus)
👉 The key criterion is whether the payment is fixed and regular.
Contribution caps for social insurance
Social insurance contributions are subject to statutory contribution caps.
| Item | Cap |
|---|---|
| Social Insurance (SI) | Up to 20 times the base salary |
| Health Insurance (HI) | Up to 20 times the base salary |
※ Please note that contribution caps may change annually due to minimum wage revisions.
Cases where foreign employees are not required to enroll in social insurance
In the following cases, social insurance enrollment is not mandatory.
- Short-term contracts of less than one year
- Individuals exempt from work permit requirements
- Employees above the statutory retirement age
- Secondees contracted only with an overseas parent company
⚠️ However, enrollment obligations may arise depending on the contract structure, so prior confirmation is essential.
Social insurance registration and application process for foreign employees
- Execution of a labor contract
- Obtaining a work permit
- Issuance of a social insurance number
- Registration with the social insurance authority
- Monthly declaration and payment of contributions
👉 Because this process is fully integrated with payroll calculations, manual management is prone to errors.
Frequently Asked Questions (FAQ)
Q. Are expatriates also required to enroll in social insurance?
A. If the expatriate is directly employed by a Vietnamese entity, enrollment may be required.
Q. Can foreign employees receive pension benefits?
A. If certain conditions are met, benefits may be paid as a lump-sum payment or refunded upon withdrawal.
Q. Why are foreign employees excluded from unemployment insurance (UI)?
A. UI is designed specifically for Vietnamese nationals under the domestic labor system.
Managing payroll and social insurance accurately
Social insurance for foreign employees is closely linked to:
- Payroll calculations
- Contract structures
- Legal and regulatory updates
As these elements are deeply interconnected, managing them solely with Excel has clear limitations.
With est, you can centralize HR and labor management in compliance with Vietnam’s payroll and social insurance regulations.
👉 For more details, please also refer to “Basic Rules of Payroll Calculation in Vietnam”.
