Vietnam requires social insurance for foreign workers with 12-month contracts

It applies to foreign citizens hired by Vietnamese employers.

Foreign workers in Vietnam working under labour contracts of at least 12 months are now covered by compulsory social insurance (SI) under the 2024 Law on Social Insurance.

The policy applies to foreign citizens employed by Vietnamese employers under definite-term labour contracts lasting 12 months or longer, according to Clause 2, Article 2 of the law, according to Vietnam Social Security.

The move comes as foreign direct investment continues to grow, with foreign workers taking on a larger role in industries ranging from manufacturing to high-quality services.

The expansion of compulsory SI coverage is part of Vietnam’s efforts to align its labour policies with international standards. 

The International Labour Organization (ILO) has recommended that social security systems provide protection regardless of nationality to reduce employment-related risks.

The policy also supports Vietnam’s commitments under trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU–Vietnam Free Trade Agreement (EVFTA), which place greater focus on labour standards and worker protection.

Businesses may face higher costs from compulsory SI contributions, but experts say the policy could reduce legal and operational risks over time. 

Companies that fail to comply with contribution requirements may face penalties, back payments, and possible disruptions to operations as enforcement becomes stricter.

The policy may also help firms attract and retain foreign professionals, particularly experts, engineers, and managers who consider social protection and benefits when choosing where to work.

At the same time, challenges remain in implementing the policy. Many foreign workers already contribute to social insurance systems in their home countries, raising concerns over double contributions without receiving equivalent benefits.

Short- and medium-term employment arrangements may also reduce interest in long-term benefits such as pensions. 

Employers have also reported difficulties in identifying eligible workers, calculating contribution levels, and managing administrative procedures.

Some firms have reportedly used flexible contract arrangements to avoid contribution obligations, raising concerns over worker protection and fair competition.

Countries such as Japan and South Korea already require foreign workers to participate in compulsory social security systems. 

These countries have also introduced bilateral social security agreements to prevent double contributions and protect workers’ benefit entitlements.

In the long term, the policy is expected to create more equal treatment between domestic and foreign workers, increase revenue for the SI fund, and support the sustainability of the social protection system as the population ages.

Authorities are expected to continue refining the legal framework, simplify administrative procedures, and improve communication so employers and foreign workers better understand their obligations and entitlements.