Foreign workers in Vietnam entitled to additional 1% salary payment in lieu of unemployment insurance

The Labor Code stipulates that employers must pay employees who are not covered by compulsory social insurance, health insurance or unemployment insurance an additional amount alongside their regular wages equivalent to the employers' contributions to the respective insurance schemes, as prescribed by law.

A resident of Hanoi understands that foreign workers are entitled to receive this additional payment from their employers alongside their regular salaries.

The payment should correspond to the amount the employer would otherwise contribute to compulsory social insurance, health insurance, and unemployment insurance on the employee’s behalf, according to the Vietnam Government Portal.

However, as foreign workers are excluded from unemployment insurance coverage, the resident asked what rate employers should use when calculating the additional payment in lieu of unemployment insurance.

She also raised a question whether employers could be penalized if they failed to make the payment at the same time as salary payments.

Article 31 of the Employment Law stipulates that foreign workers are not eligible to participate in unemployment insurance, according to the Ministry of Home Affairs.

As per Clause 2, Article 2 of the Law on Social Insurance, foreign nationals working in Vietnam are subject to compulsory social insurance if they work under a fixed-term employment contract lasting at least 12 months with an employer in Vietnam, except in some cases.

They are employees transferred within an enterprise in accordance with regulations governing foreign workers in Vietnam, and employees who have reached the statutory retirement age specified in Clause 2, Article 169 of the Labor Code at the time the employment contract is concluded.

Under Clause 3, Article 168 of the Labor Code, employers must pay employees who are not covered by compulsory social insurance, health insurance or unemployment insurance an additional amount alongside their regular wages.

As per Clause 2, Article 4 of the government’s Decree No. 374/2025, dated December 31, 2025, which details certain provisions of the Employment Law on unemployment insurance, employees contribute one percent of their monthly salary, while employers contribute an equivalent one percent of the monthly salary of employees covered by unemployment insurance.

Accordingly, if a foreign worker is not subject to compulsory social insurance, the employer must make an additional payment alongside the employee’s regular salary equivalent to the employer’s contributions to compulsory social insurance and unemployment insurance.

If a foreign worker is covered by compulsory social insurance, the employer must still pay an additional amount alongside the regular salary equivalent to the employer’s unemployment insurance contribution, calculated at one percent of the employee’s monthly salary.

Penalties for employers who fail to pay, or pay insufficiently, the additional amount alongside regular wages to employees who are not covered by compulsory social insurance, health insurance or unemployment insurance are stipulated Clause 4, Article 23 of Decree No. 283, which took effect on September 10.