An Law Viet Nam Company Limited

Language:

An Law Viet Nam Company Limited
Labor Consulting

Social Insurance – Unemployment insurance

When employees work in a business, both parties are required to participate in mandatory insurance according to legal regulations, including Social Insurance (SI), Health Insurance (HI), Unemployment Insurance (UI), and Occupational Accident and Disease Insurance (OADI).

Types of insurance for employees:

  1. Social Insurance is the guarantee to replace or compensate for a portion of the income of employees when they experience a reduction or loss of income due to illness, maternity, occupational accidents, occupational diseases, reaching retirement age, or death, based on contributions to the social insurance fund.
  2. Mandatory Social Insurance is a form of social insurance organized by the state, and both employees and employers must participate.
  3. Health Insurance is a mandatory insurance form applied to specified subjects according to this Law for healthcare purposes, not for profit, organized and implemented by the state.
  4. Unemployment Insurance is a regime aimed at compensating a part of the income of employees when they lose their jobs, supporting employees in vocational training, maintaining employment, and finding new jobs.

Relevant legal Documents:

  1. Social Insurance Law 2014
  2. Health Insurance Law 2008
  3. Amended Health Insurance Law 2014
  4. Employment Law 2013
  5. Labor Safety and Hygiene Law 2015
  6. Decree 115/2015/NĐ-CP guiding compulsory social insurance under the Social Insurance Law
  7. Decree 146/2018/NĐ-CP guiding health insurance under the Health Insurance Law
  8. Decree 28/2015/NĐ-CP guiding unemployment insurance under the Employment Law
  9. Decree 88/2020/NĐ-CP guiding Labor Safety and Hygiene Law on compulsory occupational accident and disease insurance
  10. Circular 59/2015/TT-BLĐTBXH detailing and guiding the implementation of some provisions of the Social Insurance Law on compulsory social insurance
  11. Circular 06/2021/TT-BLĐTBXH effective from September 01, 2021

Eligibility in the Business:

  1. Social Insurance: Employees working under labor contracts for at least 1 month.
  2. Health Insurance: Employees working under labor contracts for at least 3 months.
  3. Unemployment Insurance: Employees working under labor contracts for at least 3 months.
  4. Occupational Accident and Disease Insurance: Employees working under labor contracts for at least 1 month.

Insurance Contribution Rates in the Business:

  1. Social Insurance: The business contributes 18%, and employees contribute 8%.
  2. Health Insurance: The business contributes 3%, and employees contribute 1.5%.
  3. Unemployment Insurance: The business contributes 1%, and employees contribute 1%.
  4. Occupational Accident and Disease Insurance: The business contributes 0.5%, and employees do not contribute.

Total Insurance Contribution Rates:

  1. The business contributes 21.5%, and employees contribute 10.5% (For OADI, OADI for occupational diseases, this can be reduced to 0.3% if the business meets the number of occupational accidents and diseases occurring during the year).
  2. Insurance contributions must be made no later than the last day of each month.

Basis for Calculating Insurance Contributions: According to regulations, the basis for calculating contributions includes:

  1. Salary level (determined according to the salary scale and the salary recorded in the labor contract).
  2. Fixed allowances (e.g., regional allowances, position allowances, etc.).
  3. Other fixed supplementary amounts.
  4. The basis for calculating contributions does not include other benefits and allowances such as meal allowances between shifts; support for fuel, phone, transportation, housing, childcare, support for employees with relatives who die, marry, have birthdays, face difficulties due to occupational accidents, occupational diseases, and other support and allowances recorded separately in the labor contract.
  5. Bonus amounts, such as those regulated in Article 104 of the Labor Code, and innovation bonuses, are not considered as salary and are not a basis for calculating insurance contributions.
  6. Businesses need to correctly identify the nature of the benefits and allowances that employees are receiving to accurately determine the basis for calculating social insurance contributions, avoiding underpayment (which may result in administrative fines of up to 75 million VND).
  7. Both businesses and employees should avoid agreeing not to contribute to mandatory types of insurance. If this behavior is detected, it will be subject to administrative fines of 1 million VND (for employees) and 75 million VND (for businesses). If a business is late in contributing to insurance for more than 30 days, in addition to administrative fines, the business will have to pay additional late payment interest according to regulations (as of 2023, the late payment interest rate for health insurance is 1.6016% per month, and for other types of insurance is 0.6984% per month).

Should you have any questions or concerns, please feel free to contact An Luật Việt Nam. Our company, with an experienced team of lawyers and consultants, will guide you in building and perfecting your business’s insurance participation plan; ensuring legal compliance and legal benefits for all your activities.