Many FDI enterprises diligently pay social insurance (SI) for Vietnamese staff but overlook foreign experts and managers — assuming foreigners are exempt. Since 1 July 2025, the Law on Social Insurance 2024 (41/2024/QH15) is clear: a large share of foreign workers must participate in compulsory SI in Vietnam.
1. Who must join? Three cumulative conditions
Under clause 2, Article 2 of the Law on Social Insurance 2024, foreign citizens working in Vietnam must join compulsory SI when meeting all three conditions:
- A definite-term labor contract of 12 months or more with a Vietnamese employer;
- Not an intra-corporate transferee (posted by a foreign parent to a branch or representative office in Vietnam);
- Below retirement age at the time of signing the contract (clause 2, Article 169 of the Labor Code 2019).
Where an international treaty to which Vietnam is a party provides otherwise, the treaty applies.
2. Who is exempt?
- Intra-corporate transferees;
- Those already at retirement age when signing;
- Contracts shorter than 12 months;
- Cases covered differently by international treaties.
3. What changed from the old rules
Under Decree 143/2018/ND-CP (guiding the 2014 SI Law), coverage included indefinite-term contracts. The 2024 Law narrows this to definite-term contracts of 12 months or more — consistent with the Labor Code 2019, since foreign workers cannot sign indefinite-term contracts anyway (contract terms are capped by work permit validity).
4. Work permit exemption does not mean SI exemption
The most common corporate misunderstanding: a foreign investor exempt from work permits (e.g., owners contributing VND 3 billion or more under Decree 219/2025/ND-CP) who holds a definite-term contract of 12 months or more, and falls into no exemption category, must still join compulsory SI. Work permit exemption and SI exemption are entirely separate regimes.
5. On departure: lump-sum SI benefits
Under clause 2, Article 70 of the Law on Social Insurance 2024, after SI participation ends and upon request, foreign workers receive a lump-sum payment if they:
- Reach retirement age but have contributed for less than 15 years;
- Suffer a critical illness, at least 81% loss of working capacity, or particularly severe disability;
- Qualify for pension but no longer reside in Vietnam;
- Terminate the labor contract, or their work permit/practice certificate expires without renewal.
Employers should fully inform departing foreign workers of this entitlement.
6. FDI enterprise checklist
- Audit all foreign workers: contracts of 12 months or more?
- Exclude intra-corporate transferees, retirement-age workers, treaty cases;
- Register compulsory SI promptly — regardless of work permit status;
- On termination: close SI books and guide the lump-sum claim procedure.
Prepared by the FLAW AI Legal Council. This content is pending QA Council review before submission for approval.