Notable issues when recruiting foreign elderly workers

Along with the integration into the international economy, Vietnam’s labor market is also increasingly expanding and diversifying day by day, foreign workers coming to Vietnam to work are also becoming more and more popular. Vietnamese laws have had many provisions to regulate the recruitment and management of foreign workers working in Vietnam in an effort to ensure the rights of foreign workers working in Vietnam while still protecting domestic production resources.

As Vietnam transitions from a “golden population” structure to an “aging population” structure, the recruitment and employment of elderly workers, including foreign workers, is becoming increasingly common. However, many employers still struggle to navigate the relevant regulations when hiring elderly workers. This series of articles aims to clarify the issues employers need to comply with, as well as highlight some ambiguities in the relevant legal regulations for readers to be aware of when recruiting elderly foreign workers.

1. Can Vietnamese enterprises employ elderly foreign workers?

Each country has different regulations on retirement age. For instance, the normal retirement age in the US is 66 years for both men and women, while in Australia it is 65 years for men and 60 years for women. (1) In Vietnam, the retirement age in 2024 is 56 years and 4 months for female employees and 61 years for male employees. (2) Elderly Foreign employees working in Vietnam are governed by the Labour Code 2019 (Labor Code 2019, Article 2.3), and thus, are subject to the retirement age regulations specified in Article 169 of the Labor Code 2019.

According to the provisions of Vietnamese labor law, labor contracts are signed based on the principles of voluntariness, equality, goodwill, cooperation, and honesty. The parties are free to enter into labor contracts as long as they do not contravene the law, the collective labor agreement, or social morals. The Vietnamese government encourages the employment of elderly employees (those above the retirement age) in jobs suitable to their health. The current labor law does not restrict entering into labor contracts with foreign employees over the retirement age to work in Vietnam. Therefore, employers can enter into labor contracts with employees above retirement age, provided that these employees fully meet the general working conditions prescribed by law.

2. Work Permit

Foreign workers in Vietnam must obtain a Work Permit (3), except in cases exempted by regulations. According to Article 154 of the Labor Code and Article 7 of Decree 152/2020/ND-CP, there are no provisions exempting elderly individuals from the requirement for a Work Permit. Therefore, unless they fall under other exempted categories, elderly foreign workers must still meet the conditions for obtaining a Work Permit before commencing work.

Please note that while there are no regulations prohibiting or restricting the recruitment of elderly laborers, the current Labor Code stipulates that enterprises, agencies, organizations, individuals, and contractors are only allowed to recruit foreign workers for managerial, executive, expert, and technical positions that cannot be filled by Vietnamese workers according to production and business needs. Additionally, employers must justify the demand for foreign labor and obtain written approval from the competent state agency before recruitment. (4) Therefore, it is possible that elderly foreign employees may be denied the granting of the Work Permit if they do not meet the health, expertise, and experience requirements as prescribed by Vietnamese law.

3. Insurance premiums for elderly foreign employees working in Vietnam

For compulsory social insurance: According to Clause 1, Article 2 of Decree 143/2018/ND-CP, foreign citizens working in Vietnam are subject to compulsory social insurance if they possess a work permit, practice certificate, or practice license issued by a competent authority in Vietnam, and have an indefinite-term labor contract or a definite-term labor contract of at least one year with an employer in Vietnam.

Exception: Foreign employees working in Vietnam are not eligible for compulsory social insurance if they fall into the following categories:(5)

• Temporary intra-enterprise transfer;

• The employee has reached the retirement age as prescribed in Clause 1, Article 187 of the Labor Code 2012.

However, the determination of the full retirement age under the Civil Code poses challenges for businesses due to lack of clarity, hindering practical application:

• Initially, Decree 143, concerning exceptions in social insurance participation, refers to the Labour Code of 2012, which has already expired.

• Secondly, when comparing the corresponding provisions in the Labor Code 2019, Article 187 of the Labor Code 2012 and Article 169 of the Labor Code 2019 contain identical content, both stipulating two conditions for eligibility for pension benefits: (i) reaching the full retirement age, and (ii) having sufficient contributions to the social insurance fund. However, the provisions of Decree 143/2018/ND-CP lack clarity regarding whether elderly foreign employees are only required to meet the conditions related to retirement age, or both of the aforementioned conditions. If the Decree solely refers to retirement age criteria, it could directly cite Clause 2, Article 187 of the Civil Code 2012 or Clause 2, Article 169 of the Labor Code 2019, which directly address retirement age. Instead, it refers to Article 1 concerning the conditions for pension eligibility, as mentioned above.

Based on discussions with some social insurance agencies (under conditions of anonymity), it is evident that there is inconsistency in the interpretation and application of this regulation. Therefore, it is advisable for enterprises hiring elderly foreign employees to exercise caution and consider seeking clarification from the relevant social insurance agency through formal correspondence for appropriate guidance.

For health insurance: Foreign employees working in Vietnam who have surpassed the retirement age are entitled to enroll in compulsory health insurance(6). Currently, there are no specific regulations stating that foreign employees above retirement age are exempt from health insurance participation. Therefore, employers should ensure that this group of employees participates in health insurance, similar to Vietnamese employees.

For unemployment insurance: In accordance with Articles 43.1 and 3.1 of the 2013 Employment Law, only Vietnamese citizens are eligible to participate in unemployment insurance. Consequently, foreign employees, especially elderly foreign employees who have reached retirement age, are ineligible to participate in unemployment insurance while working in Vietnam.

4. Other notes when using elderly foreign employers

In the course of executing employment contracts with elderly foreign employers, in addition to adhering to labor law requirements, employers should take heed of the following considerations(7):

• Elderly employees have the right to negotiate with employers to reduce their daily working hours or to adopt part-time work schedules.

• The State promotes the employment of elderly workers, ensuring their labor rights and the efficient utilization of human resources, in accordance with their health conditions.

• When hiring elderly employees, the two parties may agree to enter into multiple fixed-term employment contracts.

• When an elderly employee who is receiving a pension according to the Law on Social Insurance enters into a new labor contract, they are entitled, in addition to the benefits currently enjoyed under the pension scheme, to a salary and other benefits as stipulated by law and the employment contract.

• It is prohibited to engage elderly employees in strenuous, hazardous, or particularly strenuous, hazardous, or dangerous occupations or positions that could have adverse effects on their health, except when safe working conditions are guaranteed.

• Employers are obligated to ensure the health and well-being of elderly employees in the workplace.

• Please note that concerning salary payments to foreign employees, as this group is not covered by unemployment insurance, the employer is required to pay an additional amount to the employee simultaneously with the regular salary payments, equivalent to the amount stipulated by law that the employer would have contributed to unemployment insurance on behalf of the employee(8).

(1)SeeCurrent retirement ages | Pensions at a Glance 2023 : OECD and G20 Indicators | OECD iLibrary (oecd-ilibrary.org)

(2)Article 4.2 of Decree 135/2020/ND-CP

(3)Article 151.a.d of the Labor Code 2019

(4) Articles 152.1, 152.2 Civil Code 2019

(5) Article 2.2.b Decree 143/2018/ND-CP

(6)Article 168.1 of the Labor Code 2019, Article 12.1.a of the Law on Health Insurance 2008

(7)Article 148 and 149 of the Labor Code 2019

(8) Article 168.3 of the Labor Code 2019

Share: