Work contracting agreements with labour teams still give rise to compulsory social insurance obligations

Entering into a work contracting agreement with a team leader instead of signing an employment contract with each worker is a common practice in the construction sector. In a response published on 28 July 2026 on the Financial Policy Q&A Portal (Ministry of Finance), Vietnam Social Security determined that this arrangement still constitutes an employment relationship and that the contracting enterprise is required to make compulsory social insurance contributions, including retrospective contributions.

Pursuant to Clause 1, Article 13 and Clause 2, Article 18 of the 2019 Labour Code

• An employment contract is an agreement on paid work, wages, working conditions, and the rights and obligations of each party. Where the parties use a different title for their agreement but its contents set out paid work, wages, and the management, direction and supervision of one party, the agreement is deemed to be an employment contract.
• For seasonal work or a specific job lasting less than 12 months, a group of employees aged 18 or over may authorise one member of the group to enter into an employment contract. The contract must be in writing and have the same effect as if entered into with each individual employee, accompanied by a list specifying each employee's full name, date of birth, gender, place of residence and signature.

Pursuant to Point a, Clause 1 and Clause 3, Article 2 of the 2024 Law on Social Insurance

• Vietnamese employees subject to compulsory social insurance include persons working under indefinite-term employment contracts or fixed-term employment contracts of at least one month, including cases in which the parties use a different title for their agreement but its contents set out paid work, wages, and the management, direction and supervision of one party.
• Employers subject to compulsory social insurance include enterprises, cooperative groups, cooperatives, unions of cooperatives, business households, other organisations and individuals that hire and employ workers under employment contracts.

Conclusion reached by Vietnam Social Security

Vietnam Social Security compared the above provisions with the facts described by the enterprise:

• entering directly into a work contracting agreement for construction work with an individual acting as the labour team leader;
• preparing and confirming a list of each worker participating in the work based on information provided by the team leader;
• assigning the scope of work, inspecting quality, supervising progress and accepting the completed construction work under the work contracting agreement.

Conclusion: this arrangement falls within the case where the parties use a different title for their agreement but its contents set out paid work, wages, and the management, direction and supervision of one party - and is therefore deemed to be an employment contract.

Accordingly, the team leader and each worker in the team who works for at least one month, together with the Company, are subject to compulsory social insurance. The Company is responsible for coordinating with the employees to prepare the required dossiers and make both current and retrospective contributions to compulsory social insurance in accordance with law.

Vietnam Social Security further clarified that the enterprise's withholding of 10% personal income tax from each individual in the team, based on the list provided by the team leader, does not alter, exclude or affect the obligation to participate in compulsory social insurance. These are two separate obligations.

💡 Recommendations for enterprises

1. Review existing work contracting agreements entered into with individuals or groups of individuals that do not have business registration, and assess them against Clause 1, Article 13 of the 2019 Labour Code.
2. Reassess cases in which the enterprise directly prepares worker lists, supervises progress and accepts completed work - these are factors cited by the social insurance authority in determining the existence of an employment relationship.
3. Estimate potential retrospective contribution liabilities for personnel who worked for at least one month.

Note: Vietnam Social Security's response is guidance on a specific situation and is not a legal normative document. However, it reflects the social insurance authority's approach to applying the law.

This newsletter has been prepared by Crowe Vietnam for general information purposes only and does not constitute advice for any specific circumstances. Enterprises should refer to the original legal instruments and seek professional advice before applying the information to their particular situations.