Vietnam Labour Law Update (June 2015)
June 17, 2015
Recently, there have been many inquiries related to SHUI contributions from Business enterprises. ...
I. GUIDANCE FROM HCMC INSURANCE DEPARTMENT ABOUT SOCIAL, HEALTH AND UNEMPLOYMENT INSURANCE (SHUI)
Recently, there have been many inquiries related to SHUI contributions from Business enterprises. The inquiries are about:
- Which foreign employees are required to contribute compulsory Health insurance,
- Which region-based minimum salary is applied for Unemployment insurance contribution, for employees who work in one area but their head office is located in another area, and
- SHUI contributions for Vietnamese employees working abroad.
- Recognizing the concerns from companies, Talentnet inquired about these issues and received the following replies from HCMC Social Insurance Department
1. Compulsory Health Insurance contribution by foreign employees:
According to guidance in Letter No. 1511/BHXH-THU from HCMC Insurance Department, dated May 14, 2015, foreigners who are employed in Vietnam under an indefinite term contract, or under a 3-month and above term contract, or are at enterprise management level entitling them to a salary in Vietnam, are those who are required to pay compulsory Health Insurance.
Therefore, it is understood that expatriates who are assigned to hold a management level post in a Viet Nam office (without an employment contract with the Company in Viet Nam), and receive salaries paid by the company in Viet Nam, will have to contribute compulsory Health Insurance.
2. Region-based minimum salary for Unemployment Insurance (UI) contribution:
According to guidance in Letter No. 733/BHXH-THU from HCMC Insurance Department, dated March 11, 2015, in cases where employees have employment contracts signed in a Head Office in HCMC (area I), but work in other areas (areas II, III, or IV), the company can apply the minimum wage for the working area that is mentioned in the employment contract to determine the UI contribution for those employees.
Therefore, business enterprises with an HQ located in HCMC, but which sign employment contracts with and assign their employees to other areas to work should pay attention to the relevant region-based minimum salary for UI contributions.
3. Health Insurance contributions for Vietnamese employees working or studying abroad:
Also according to guidance in Letter No. 733/BHXH-THU, business enterprises should pay attention to some points about Health Insurance for Vietnamese employees working or studying abroad:
- Employees assigned to work and study abroad and receiving a salary in Viet Nam are not liable to contribute Health Insurance, but to contribute Social and Unemployment Insurance.
- Monthly contribution rate is 28% of monthly salary, in which SI is 26% (employer: 18%, employee: 8%), UI is 2% (employer: 1%, employee: 1%).
- Vietnamese employees working abroad and not receiving a salary in Viet Nam are not liable to pay SHUI. If this is the case, the employees can join SI on a voluntary basis, with the contribution rate of 22% of monthly salary. In this situation, salary is monthly salary for compulsory SI before their work abroad, and the full contribution is paid by the employees.
- On completion of the work abroad, for employment contracts with a term of 3 months and above (the contract in Viet Nam before their work abroad), it is compulsory for both employee and employer to join SHUI contribution. Within 60 days from their repatriation date, if the employees contribute HI, their HI contribution is recorded as continuous since the overseas contracts started.
II. GUIDANCE FROM MINISTRY OF LABOUR – INVALIDS AND SOCIAL AFFAIRS (MOLISA)
1. Annual Leave Pay:
In our E-News Letter of Feb 2015, we mentioned about regulations and implementation guidance for some parts of the Labor Code of Decree No.05/2015 (Decree 05), effective March 1, 2015.
On April 13, 2015, MOLISA issued Letter no. 1287/LĐTBXH-LĐTL (Letter 1287), responding to a question from a business enterprise, clarifying some articles in Decree 05 related to annual leave pay calculation as follows:
- If employers request employees to work overtime on employees’ regulated annual leave, the employees are eligible to receive a minimum 300% of their actual salaries, excluding paid leave salaries for daily wage employees (Article 25, Decree No. 05/2015/NĐ-CP)
- In cases where employees have not yet taken their annual leave entitlement due to resignation, involuntary separation, or other reasons, their untaken annual leave will be paid at rate of 100% of their contractual salaries (Part 4, Article 26, Decree No. 05/2015/NĐ-CP)
- Annual leave of employees covers their probation periods. On completion of probation, if an employment contract is signed, an employee’s annual leave entitlement will include annual leave for the probation period. However, if a contract is not signed, the employee’s annual leave will be paid on a pro-rata basis.
2. Working hours and Rest breaks at work:
On April 13, 2015, MOLISA issued Letter no. 1290/LĐTBXH-LĐTL (Letter 1290), responding to a question from a business enterprise about working hours and rest breaks at work, with some points to note as follows:
- “Continuous 8 working hours”: should be understood as 8 consecutive hours of time (including rest breaks at work as working hours).
- Current regulations don’t require enterprises to include lunch time in working time. Instead, they require a minimum of 30 minutes for a rest break at work for a daytime shift, and 45 minutes for a night shift. This rest break at work is included in working time.
- Current regulations specify limitation of working hours, not the start of working shifts. The start of working shifts should be regulated in enterprise company labour rules.
3. Service time subject to severance allowance calculation for part-time employees:
According to guidance in Letter No. 924/LĐTBXH-LĐTL from MOLISA, dated March 18, 2015, service time subject to severance allowance calculation for half-day employees (working 4 hours/day) is the same as for full time employees (working 8 hours/day).
This regulation is based on Part 3, Article 34, Labor Code 2012, which clearly states that part-time employees are entitled to the same salaries, rights and benefits as full time employees, having equal right opportunities, no discrimination at work, and to employment safety and hygiene.