problems with the 'adjacent month' clause in the unemployment benefits regime in Vietnam, the 'adjacent month' clause in the unemployment benefits regime in Vietnam, problems with the 'adjacent month' clause in the unemployment benefits regime , problems with the 'adjacent month' clause ,

Problems with the ‘adjacent month’ clause in the unemployment benefits regime in Vietnam

The unemployment benefit system in Vietnam was put into operation to help employees have a small amount of monetary support during the time when they cannot find a job after leaving their old company. However, despite many advantages, since being put into operation, the mechanisms for paying unemployment benefits are still too complicated, making it difficult for employees who want to receive unemployment benefits – their rightful benefit. One of the difficulties in the current unemployment insurance regime is the provision of the ‘adjacent month’ clause.

According to an article on VnExpress, Nguyen Thi Cam Tien and her husband working at Asia Garment Co., Ltd (District 12) are among the victims of overly complicated regulations to enjoy unemployment benefits.

Every month, Ms. Tien was deducted nearly 600,000 VND from her monthly salary for social insurance payments with an income of more than 6 million VND a month. However, after 4 years of working, Ms. Tien and her husband learned that their company only paid 1.5 years of their working time to the social insurance fund. The rest of the time, they are owed salaries by the company, a relatively common thing for manufacturing and exporting enterprises in Vietnam.

Many employees are forced to stop working after being repeatedly owed wages and not getting paid social insurance benefits by the agency. They complained to the authorities that the company owed more than 8 billion VND to social insurance agency. Disappointed, Ms. Tien and her husband, along with 400 other employees quit.

Although the company evaded full insurance payment, recalling 1.5 years of actual social insurance payment, Tien and her husband wanted to receive the unemployment benefit, but were shocked to receive the result that the application was not qualified at the start because the month preceding the resignation (the adjacent month), the couple did not participate in the social insurance and unemployment insurance regimes.

With 18 months of premium payment, Ms. Tien should have received 3 months of unemployment benefits, but because the company did not pay social insurance in the adjacent month before she quit her job, she was not eligible to receive unemployment benefits.

In other words, the company’s mistake has affected the rights of employees. From 2.5 years of underpayment to not receiving unemployment benefits, it’s all from the business side. The current provisions of the law on unemployment benefits cause harm to the rights of employees through no fault of their own.

Not only the case of Ms. Cam Tien, but every year, tens of thousands of employees face similar difficulties when trying to apply for unemployment benefits in Vietnam. In 2021 alone, the whole country has more than 801,000 people applying for unemployment benefits, but more than 37,000 people are refused of payment.

The balance of the Vietnam Social Insurance Fund at the end of 2021 is more than VND 61,400 billion. The balance is more than twice the total expenditure on unemployment insurance regimes and management costs, so the state budget does not have to support it.

Legal perspective

According to current regulations, every month, business owners and employees deduct 2% of their salary to contribute to the unemployment insurance fund, with maximum support of 1% from the state.

With the time of payment to the social insurance fund from 12 to 36 months, the employee who loses his/her job will be entitled to at least three months of unemployment allowance at the rate equal to 60% of the average salary of the preceding 6 months before losing his/her job. The maximum benefit is 12 months with 1 month added after every 12 months of additional contributions to the social insurance fund.

Regarding the conditions for enjoying unemployment benefits, although not specified in the Employment Law 2013 No. 38/2013/QH13, Decree 28/2015/ND-CP and Decree 61/2020/ND-CP amending and supplementing Decree 28/2015/ND-CP all have provisions on the ‘adjacent month’ when considering the time when employees are on the unemployment insurance regime in Vietnam.

Clause 2 Article 12 Consolidated Document 3922/VBHN-BLDTBXH 2020 Decree guiding the Employment Law stipulates that an employee is determined to be paying unemployment insurance premiums according to the provisions of Article 49 of the Employment Law if approved by the social insurance in the following cases:

  • Paid unemployment insurance in the month of termination of the labor contract or working contract.
  • Have paid unemployment insurance premiums in the adjacent month of termination of the labor contract or working contract.
  • There is an adjacent month of termination of the labor contract or working contract or the month of termination of the labor contract or work contract, but leave work due to illness or maternity for 14 or more working days in the month, not receive a monthly salary at the unit.
  • There is an adjacent month of termination of the labor contract or working contract or the month of termination of the labor contract or working contract but leave work without pay for 14 or more working days in the month at the unit.
  • There is an adjacent month of termination of the labor contract or working contract or the month of termination of the labor contract or working contract that suspends the performance of the labor contract or working contract from 14 working days or more per month at the unit.

Because the insurance agency has the principle that whenever the business pays, the insurance agency confirms it. Therefore, with enterprises that owe insurance, employees are not allowed to be confirmed having an adjacent month which is a necessary condition to receive unemployment benefits, along with other conditions such as confirmation of termination of the labor contract, employment contract, submitted an application for unemployment benefits, acquire no new job after 15 days from the date of submitting the application for benefits as prescribed in Article 49 of the Employment Law 2013.

Solution

Every month, employees are subtracted a part of their salary by the company for submission to the social insurance, health insurance and unemployment funds. The minus part is at least a few hundred thousand VND, may be up to millions of VND. Enterprises that owe social insurance are not the fault of the employees, but mainly due to the weak management mechanism and the limited capacity of the leadership. However, according to current regulations, the employee is the affected party when the enterprise or the employer makes a mistake and owes social insurance contributions.

Thereby, Vietnam needs to review the current regime and ensure that the rights and interests of employees comply with the law. Avoid the introduction of overly complicated regulations that do not depend on the will of the two parties in the labor relationship in order to reduce the number of individuals eligible for social benefits, preserving the social insurance fund which essentially was established to solve social problems in Vietnam.

Currently, the Decrees amending, supplementing, and guiding the implementation of the Employment Law 2013 are facing many problems and shortcomings, affecting the rights and interests of employees. Thereby, the competent authorities should consider how to solve unemployment benefits for employees in the direction of focusing on protecting the rights of employees rather than the sustainability of the insurance fund.

Clause 2, Article 156 of the Law on Promulgation of Legal Documents 2015 No. 80/2015/QH13 stipulates: “In case the legal documents contain different provisions on the same issue, the document with higher legal effect shall prevail.”

Accordingly, when the Decrees amending, supplementing and guiding the implementation of the Employment Law 2013 are unreasonable, insurance agencies and Vietnamese labor agencies may consider not applying the conflicting provisions in the above decrees and apply the provisions of the Employment Law 2013 to settle unemployment benefits for employees, ensuring the rights of employees.

ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.

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