Vietnam Labour Law Update (December 2014)

I. HEALTH INSURANCE (“HI”) CONTRIBUTION RATE PER DECREE NO. 105/2014/ND-CP

 In our August 2014 E-Newsletter, we mentioned that the HI contribution rate will be increased by a maximum 6% from 01st January 2015 in accordance with the amended Health Insurance Law No. 46/2014/QH13 dated 13th June 2014 of the National Assembly. However, according to provisions in the Government’s Decree No. 105/2014/ND-CP (“Decree 105”) dated 15th November 2014 , the HI rate applied for 2015 still remains unchanged, that is 4.5% (of which: employer contribution: 3%; employee contribution: 1.5%, same as in the year 2014).

Also in line with Decree 105, from 01st January 2015, employees who are on sick leave period for 14 days or more in a month, and who are entitled to sick leave allowance under social insurance legislation, shall not have to contribute HI but are still entitled to HI benefits (under current regulations, employees are required to contribute HI in this situation).

II. FOR UNEMPLOYMENT INSURANCE (“UI”) CONTRIBUTION FROM 01ST JANUARY 2015

According to Article 58.2 of the Law on Employment No. 38/2013/QH13, the salary for UI contribution is the base salary for compulsory social insurance contributionunder regulations of the Social Insurance Law.

In cases where the monthly salary for UI contribution is more than 20 times higher than the minimum regional salary, the monthly salary for UI contribution will be 20 times the minimum regional salary in accordance with the regulations of the Labor code at the time of contributing UI.

Currently, the Social Insurance Departments in Ho Chi Minh City and Hanoi have not yet issued detailed guidelines on the salary for UI contribution under the Law on Employment as mentioned above. However, on 2nd December 2014, the Social Insurance Department of Binh Duong province issued official number 5193/BHXH-HCTH providing guidelines to businesses operating in Binh Duong province and requested them to follow the rules for salary for UI contribution within the Law on Employment. Here, the capped salary for UI contribution is 20 times the minimum regional salary, i.e. 62,000,000 dong for businesses in region 1 (20 times *3,100,000 dong) and the capped salary for social and health insurance contributions is still 20 times the minimum common salary (i.e. 23,000,000 dong).

The Vietnam Social Insurance Department is expected to issue detailed guidelines on the salary for UI contribution soon in order that businesses understand clearly and strictly follow the requirements. We will update you as soon as we have any new regulations issued on this case.

Talentnet Corporation