Tiếng Việt
中文 (中国)
Although the severance allowance and unemployment allowance have different operating mechanisms, they both have the same goal of supporting employees financially when they have no active income and are unemployed, or jobless. The severance allowance ended on January 1, 2009, and was replaced by the unemployment insurance regime. However, whether it is the severance allowance or the current unemployment insurance regime, there are still many notable difficulties and shortcomings. In the following article, ASL LAW will explain the problems in the unemployment insurance regime in Vietnam.
Pursuant to Article 140 of the Law on Social Insurance 2006: “This Law takes effect from January 1, 2007; especially for voluntary social insurance, from January 1, 2008, for unemployment insurance, from January 1, 2009”. Thus, from January 1, 2009, the severance allowance regime has officially ceased to be effective to switch to the unemployment insurance regime specified in the Law on Social Insurance 2006. Employees and employers have compulsory rights and obligations in participating in the unemployment insurance regime in Vietnam.
However, employees who have signed labor contracts and worked before January 1, 2009, will still be entitled to severance allowance and job loss allowance paid by the employer over working time before joining unemployment insurance.
From the time of payment of unemployment insurance, the employee is only entitled to severance allowance for the probationary period without paying social insurance, maternity leave, sickness for 14 days or more, or the period of a work stoppage that is not by the employee’s fault without being paid for 14 days or more in a month.
Unemployment insurance regime in Vietnam
Unemployment insurance regime was established on the principle of equally sharing risks among all participating individuals as well as all other insurance schemes in Vietnam and the world.
Compared with the previous severance allowance regime, unemployment insurance is welcomed by both groups of employees and employers, because unemployment insurance operates on the basis of employees and employers jointly contributing to the Unemployment Insurance Fund managed by the State, while the previous severance allowance was managed by the enterprise and paid by themselves when the employee quit.
According to Article 57 of the 2013 Employment Law, employees pay 1% of the monthly salary and the employer contributes 1% of the monthly salary fund of employees who are participating in the Unemployment Insurance Fund. In which, the monthly salary on which unemployment insurance premiums are based is the salary used as the basis for payment of compulsory social insurance.
Regarding the process, within 03 months from the date of termination of the labor contract, the employee who has not had a job and wishes to receive unemployment benefits must submit 1 set of application dossiers for unemployment allowance to the Employment Service Center in the locality where the worker wants to receive unemployment benefits. In case the submitted dossier is valid, the Employment Service Center will submit it to the Director of the Department of Labor, War Invalids and Social Affairs for a decision on the employee’s enjoyment of unemployment benefits.
The unemployment benefit level will be equal to 60% of the average monthly salary on which unemployment insurance premiums are based on the preceding 06 months before the moment the employee quits. Employees who pay the full 12 – 36 months will enjoy 03 months of allowance. After that, for every additional 12 months of unemployment insurance premium contribution, the employee will be entitled to an additional 01 month of benefits until a maximum of 12 months of benefits.
The problem of the unemployment insurance regime in Vietnam today
According to statistics from the Vietnam Social Insurance, in 2010 the number of people participating in unemployment insurance was 7.2 million people. By 2015, this number reached 10.3 million people. In 2020, the whole country has more than 13.3 million people participating in the unemployment insurance regime in Vietnam.
These figures clearly show the attractiveness of the unemployment insurance regime over more than a decade of development, supported by the preferential policies of the Government of Vietnam. In particular, within the 2 years of the outbreak of the Covid-19 pandemic, the unemployment insurance regime has created practical support for a large number of employees who have lost their jobs.
However, in practical application, the implementation of the unemployment insurance policy still has many difficulties and shortcomings:
First, there is a difference in the maximum contribution rate between the social insurance and unemployment insurance regimes, although the salary for which unemployment insurance premiums are based is based on the salary as the basis for paying compulsory social insurance. The maximum salary for social insurance contributions is equal to 20 months’ base salary. Similarly, the maximum salary on which unemployment insurance premiums are based for employees subject to the salary regime prescribed by the State is 20 months’ base salary, but for employees who pay unemployment insurance according to the salary regime decided by the employer, the maximum contribution will be 20 months of the regional minimum salary.
This inconsistency leads to difficulties in the effective management of the participants and the monitoring of the collection of social insurance and unemployment insurance for the employer.
Secondly, another shortcoming in the current unemployment insurance regime is the laxity and lack of strictness in the conditions for enjoying unemployment benefits.
Regulations on the implementation of the job counseling and introduction regime for unemployed employees have not yet been specific or legislated. This leads to the implementation of these stages being only a formality, not highly effective.
In addition, the conditions for receiving financial support for training and retraining as well as improving vocational skills to ensure jobs for employees are not really suitable with the actual situation in the Vietnamese market.
Thirdly, there is a large gap between the time of participation in unemployment insurance and the unemployment benefits regime.
Clause 2, Article 50 of the Employment Law 2013 stipulates the period of enjoying unemployment benefits as follows: “The period of enjoying unemployment benefits is calculated according to the number of months of paying unemployment insurance premiums, for every full 12 months to full 36 months, the employees are entitled to 03 months of unemployment benefits, after that, for every additional 12 months of full payment, they will be entitled to 01 more months of unemployment benefits but not exceeding 12 months.”
According to the above regulations, when the full 12 months of unemployment insurance have been paid or participated, employees will be eligible for 3 months of unemployment benefits. Meanwhile, employees must contribute at least 48 months to be eligible to receive 4 months of unemployment benefits or more.
The loophole in the regulation on the time to enjoy unemployment benefits in the Employment Law 2013 has led to the situation that employees who have paid the full 12 months of unemployment insurance can actively quit their jobs to enjoy unemployment benefits. After receiving the full 3 months of unemployment benefits, the employees return to do other jobs that pay for social insurance in the next 12 months and then continue to take leave.
In fact, there are many cases where the employee agrees with the employer about continuing to work for the enterprise during those 3 months of receiving unemployment benefits but still reports to the insurance agency that they cannot find a job, work, currently unemployed.
The tacit agreement as mentioned above or constantly rotating jobs creates a great burden for the employer or the unemployment insurance fund. Employers face the risk of personnel fluctuations, leading to difficulties in implementing business plans.
Solution
In order to solve the above problems, the Social Insurance Agency has repeatedly proposed to amend the conditions on the termination of labor contracts, and employment contracts entitled to unemployment benefits with the active cases of terminating the labor contract, the work contract to not be considered for unemployment benefits to match the nature of unemployment insurance and ensure compliance with the provisions of the Employment Law.
In addition, correcting the nature of the above issues will also limit the abuse of the policy by taking the initiative to quit work, unilaterally terminating labor contracts to enjoy unemployment benefits, reducing the burden on the unemployment insurance fund, and providing financial assistance to employees who are actually unemployed.
In addition, increasing the enforcement of the law related to unemployment insurance violations to make employees feel responsible, and obligated as well as deterrence if they do not fulfill their obligations is also necessary.
Q&A
Client: “In practice, I have heard about a case where an employee has had 12 months of unemployment insurance premiums but only received 1 month of unemployment benefits from the insurance agency, not 3 months, which is different from the regulations in the law. Is this true?”
As mentioned above, based on Clause 2, Article 50 of the Employment Law 2013 stipulates the period of enjoying unemployment benefits as follows: “The period of enjoying unemployment benefits is calculated according to the number of months of paying unemployment insurance premiums, for each period of unemployment insurance premium payment, from full 12 months to full 36 months, the employees will be entitled to 03 months of unemployment allowance, after that, for every additional 12 months, they will be entitled to an additional 01 month of unemployment allowance but not exceeding 12 months.”
Thus, if the employee has paid unemployment insurance premiums for the full 12 months or more, he/she will be entitled to 3 months of unemployment allowance. The fact that the insurance agency only pays unemployment benefits for 1 month to employees is not complying with the provisions on unemployment benefits according to the provisions of the Employment Law. Therefore, employees have the right to:
- Submit a complaint to the head of the social insurance agency making the payment for settlement
- In case the employee disagrees with the complaint settlement result of the social insurance agency directly paying, the employee has the right to complain to the provincial labor State management agency.
- In case of disagreement with the settlement result of the provincial labor authority, the employee has the right to initiate a lawsuit in court.
Related posts:
- Preservation of leave for Vietnamese employees
- Regulations on the recruitment and employment of minor employees in Vietnam
- Regulations on payment of wages for overtime employees working at night in Vietnam
- Cases not entitled to the occupational accident regime in Vietnam in 2022
- Authorization to receive wages on behalf of employees in Vietnam in 2022
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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