New Decree No. 28/2015/ND-CP on Unemployment Insurance coming into force

Who is required to participate in unemployment insurance?

Except the employees who are enjoying retired salary or house-keeping, the employees working under a/an indefinite or definite labor or employment contract or seasonal or job-based working contracts with a term of between at least 3 months and under 12 months are required to participate in unemployment insurance.

Employers obliged to participate in unemployment insurance include, but not exclusively: foreign agencies and organizations and international organizations operating in the Vietnamese territory; enterprises, cooperatives, house-holds, business households, cooperative groups, other organizations and individuals that hire or employ employees.

Employer must arrange unemployment insurance cover with Social Insurance Organization for its employees within thirty (30) days from the effective date of such employee’s labor contracts or employment contracts.

As of 1st January 2015, the enterprise having less than 10 employees and such employees are also required to participate in the unemployment insurance according to the Law on employment 2013 and its Decree 28/2015/ND-CP providing guideline for implementation of the law on employment (hereinafter referred to as “Decree 28/2015/ND-CP”).

How much shall the employers and employees contribute unemployment insurance premiums to the unemployment insurance fund ?

The rate and responsibility to pay unemployment insurance premiums are specified as follows:

Employees shall pay unemployment insurance premiums equal to 1% of their monthly wage;

Employers shall pay unemployment insurance premiums equal to 1% of the monthly wage fund for employees currently participating in unemployment insurance;

The State shall provide at most 1% of the monthly wage fund from the central budget as support for payment of unemployment insurance premiums of workers currently participating in unemployment insurance.

Regarding the employees paying unemployment insurance premiums under the wage regime decided by employers (for FDI Enterprises), the monthly wage on which unemployment insurance premiums are based is the monthly wage used to pay compulsory social insurance premiums in accordance to the Law on Social Insurance. In case the monthly wage used to pay unemployment insurance premiums is higher than the twenty months’ region-based minimum wage, the monthly wage used to pay unemployment insurance premiums will be equal to the twenty months’ region-based minimum wage as prescribed by the Labor Code at the time of payment of unemployment insurance premiums.

How much shall the employees enjoy unemployment allowance?

If the employee satisfies the statutory conditions stipulated in the law on employment 2013, he/she is entitled to enjoy the monthly unemployment allowance of 60% of the average monthly wage used to pay unemployment insurance over the last 6 consecutive months prior to such job loss. However, the maximum shall not exceed 5 times the amount of basic wage applicable to the employees receiving wages under the State-prescribed regime, or shall not exceed 5 times the amount of the region-based minimum wage level under the Labor Code, applicable to employees who pay unemployment insurance premiums under the wage regime decided by employers at the time of termination of the labor contract or working contract.

The period of entitlement of unemployment allowance is based on the number of months for which unemployment insurance premiums have been paid. The period shall be three (03) months for full 12 months payment up to a full thirty six (36) months, and thereafter there shall be a further one (1) month’s entitlement where premiums have been paid for a full additional twelve (12) month period, but the maximum period of entitlement shall not exceed twelve (12) months.

Despite Decree No. 28/2015/ND-CP shall formally take effect as of 1st May 2015, the aforementioned above provisions are required to be applied as of 1st January 2015 by the related parties.

It is noted that this article does not constitute a legal advice and only constitutes a public information on a general matter.Feel free to contact us for further detailed information for any specific case.

NGUYEN Ha Dang. (Mr.)

Attorney at Law

Bar of Ho Chi Minh City

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