Decision No 959/QD-BHXH promulgated on September 9, 2015, provides detailed regulations concerning the subjects, pay rate and salary paid for insurance policies of employees of enterprises in Viet Nam.
Accordingly, enterprises may find the following changes noteworthy:
1. Obligatory social insurance
a. Participating subjects
According to the new Decision No 959/QD-BHXH ("Decision No 959"), employees who are Vietnamese citizens subject to obligatory social insurance in enterprises consist of:
– Those working under indefinite contracts, fixed-term contracts, seasonal contracts, or in certain jobs with terms ranging from three full months to under 12 months, including employment contracts signed between an enterprise and the legal representative of an individual under 15 years of age;
– Those working under fixed-term contracts ranging from one full month to under three months (commencing from January 1, 2018);
– Enterprise managers.
From January 1, 2018, employees who are foreign nationals and hold a work permit/ practice certificate/ practice licence shall be subject to obligatory social insurance.
b. Pay rates and payment responsibility
In lieu of setting different pay rates based on stages such as previous regulations, clause 1, article 5 of Decision No 959 gives specific monthly payment rates, particularly for those who work under indefinite term contracts, fixed – term contracts, seasonal contracts, or in certain jobs with terms ranging from three full months to under 12 months. Enterprise managers shall contribute to the retirement and survivorship funds an amount equal to eight per cent of a monthly salary.
In addition, clause 2.1, article 5 of Decision No 959 clarifies the monthly pay rates of enterprises based on the salary fund, subject to the social insurance of employees:
– Three per cent to the sickness and maternity funds;
– One per cent to occupational accident and illness funds;
– 14 per cent to retirement and survivorship funds.
c. Salary subject to obligatory social insurance
According to clause 2.1, article 6, the monthly salary subject to social insurance of employees is the one written in the labour contract. In relation to allowances, Decision No 959 specifies as follows:
– From January 1, 2016, the monthly salary subject to social insurance is the salary and salary allowance provided for by the labour law.
– From January 1, 2018 onwards, the monthly salary subject to social insurance is the salary, salary allowance and other additional amounts provided for by the labour law.
In the event where the monthly salary subject to obligatory social insurance specified in this article is higher than 20 months of base salary, the monthly salary subject to obligatory social insurance shall be equal to 20 months of the base salary.
2. Unemployment insurance
a. Participating subjects
Those who work under employment contracts or work contracts listed below are subject to unemployment insurance:
– Indefinite employment contracts or work contracts
– Fixed-term labour contracts or work contracts
– Seasonal contracts or certain jobs with a term ranging from three full months to under 12 months.
Enterprises should note that individuals enjoying retirement pension or monthly labour incapacity allowances, and family maids who enter into labour contracts with enterprises are not subject to unemployment insurance.
b. Pay rates and payment obligations
The pay rate still remains at one per cent for employees and one per cent for enterprises in Decision No 959. The maximum support rate of the government, according to the new regulations, is one per cent of the monthly salary fund subject to unemployment insurance.
c. Monthly salary subject to unemployment insurance
The monthly salary subject to unemployment insurance of employees in enterprises is the salary used as the basis for the payment of obligatory social insurance mentioned in section 1.c of this article.
In case an employee's monthly salary is higher than the regional 20-month minimum wage, the monthly salary subject to unemployment insurance will be equal to the regional 20-month minimum wage.
3. Medical insurance
Employees and enterprises shall participate in medical insurance in cases of indefinite contract, fixed-term contracts of three full months or more, and employees being enterprise managers.
Decision No. 959 has taken effect from December 1, 2015, replacing Decision No 1111/QD-BHXH.
PLF – LAW FIRM