CONSULTATION ON THE ISSUANCE OF WORK PERMITS, SOCIAL INSURANCE AND HEATH INSURANCE CONTRIBUTIONS FOR FOREIGN WORKERS

Matter in Brief:

GP Vietnam Company (hereinafter referred to as “GP Vietnam”) is a retail distributor of health supplements originating from South Korea. GP Vietnam is wholly owned by GP Korea Company (hereinafter referred to as “GP Korea”). Mr. J.K (aged 45) has been the legal representative of GP Korea since October 1, 2018. According to GP Korea’s plan, Mr. J.K will also serve as the legal representative of GP Vietnam and work directly in Vietnam.

Client’s Request:

To ensure compliance with Vietnamese law and protect the rights of its employees, GP Vietnam has consulted with TAPHALAW and seeks legal advice on the following matters: (i) Is Mr. J.K required to obtain a work permit? (ii) Is Mr. J.K eligible to participate in social insurance and health insurance in accordance with Vietnamese law?

Attorney’s Work Performed:

TAPHALAW’s attorney has compared the requirements set forth by GP Vietnam with the provisions of current law and has prepared and issued an advisory letter to GP Vietnam. The advisory letter addresses the following primary issues:

1. Regarding the Application for a Work Permit:

TAPHALAW’s attorney, based on the provisions of Vietnamese law, has determined that:

• As of the date of receipt of the advisory request, Mr. J.K had served as the legal representative of GP Korea for five years and was subsequently assigned to be the legal representative of GP Vietnam. Therefore, pursuant to Article 2 and Clause 1 of Article 3 of Decree No. 152/2020/ND-CP dated December 30, 2020, which governs foreign workers working in Vietnam and the recruitment and management of Vietnamese workers working for foreign organizations and individuals in Vietnam, Mr. J.K is considered a foreign worker transferring within an enterprise.
• Clause 3 of Article 7 of Decree No. 152/2020/ND-CP stipulates that foreign workers transferring within an enterprise that falls within the scope of the 11 service sectors in Vietnam’s commitment schedule with the World Trade Organization (including: business, information, construction, distribution, education, environment, finance, health, tourism, culture and entertainment, and transportation) are exempt from the requirement to obtain a work permit. Considering that GP Vietnam’s business activities involve wholesale and retail distribution, Mr. J.K is deemed to be a foreign worker transferring within an enterprise that falls within the scope of the 11 service sectors in Vietnam’s commitment schedule with the WTO, and therefore, is not required to apply for a work permit.

2. Regarding Social Insurance and Health Insurance for Mr. J.K.

Social Insurance: The attorney has provided GP Vietnam with a legal analysis of the eligibility criteria and contribution rates for both compulsory and voluntary social insurance schemes. Upon review of Mr. J.K.’s specific circumstance, TAPHALAW has determined that, as a foreign worker transferring within an enterprise and not holding a work permit, he does not be covered by mandatory social insurance coverage (Clause 1, Point a Clause 2 Article 2 Decree 143/2018/ND-CP). Furthermore, as a foreign national, Mr. J.K. is not eligible to participate in voluntary social insurance under Vietnamese law.

Health Insurance: Clause 2 Article 1 of the Health Insurance Law stipulates that this law applies to foreign organizations and individuals in Vietnam related to health insurance; however, Article 12 of this law does not explicitly define whether foreign workers transferring within an enterprise are eligible for health insurance. Decree 146/2018/ND-CP (detailing and guiding the implementation of certain provisions of the Health Insurance Law) also lacks specific provisions for this group.

To address this ambiguity, the Ministry of Health issued Official Letter No. 389/BYT-BH dated January 31, 2020, clarifying that foreign workers transferring within an enterprise are not eligible for health insurance.

Based on the foregoing analysis, and in order to better protect Mr. J.K.’s interests as requested by GP Vietnam, TAPHALAW’s Attorney has consulted the provisions of the Insurance Business Law of 2022 and Circular No. 67/2023/TT-BTC. As such, the attorney advises GP Vietnam to enter into a Health Insurance Contract for its employees with an insurance company; paying particular attention to general provisions regarding eligibility, the rights and obligations of the parties, claims and insurance payments. This type of insurance is relatively simple to obtain and is widely used by businesses in Vietnam.

Consulting Outcome: Following legal counsel from the attorney, GP Vietnam has reviewed various health insurance packages. The attorney was provided with information regarding the insurance packages and a draft contract for legal review. Based on the attorney’s advice, GP Vietnam has decided to enter into a comprehensive health insurance contract with Insurance Company P to ensure the medical benefits of Mr. J.K. during his employment in Vietnam. Under this insurance package, Mr. J.K. is entitled to medical examinations and treatment throughout Vietnam, and is eligible for reimbursement of medical expenses incurred during examinations and treatment at affiliated hospitals and clinics (subject to the fee schedule set by the Insurance Company corresponding to the type of examination/treatment).