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By Lien Hoang
April 6—Beginning May 1, most Vietnamese employees will be eligible for unemployment insurance coverage. Decree 28 of the Labor Law eliminates the 10-employee threshold for determining employer liability for unemployment insurance and makes all employers subject to the obligation as long as they have workers with contracts of at least three months.
According to Eli Mazur, a counsel at YKVN in Ho Chi Minh City, this expansion of unemployment insurance coverage is one of “the biggest economic changes for employers under the new regime.”
The changes come at a time when Vietnam is discouraging temporary work and pushing businesses to put longer-term employees on their payrolls, exemplified by the March release of Decree 5, which cut the number of times companies can renew short-term contracts.
The calculation of monthly employer UI liability had been based on a nationwide “common minimum salary,” under which insurance premiums would be calculated based on that amount even for employees with higher monthly salaries. According to Mazur, Decree 28 “significantly” increases the reference figures by using different “regional minimum salaries,” which are higher in more densely populated areas such as Hanoi, Ho Chi Minh City and the industrial parks surrounding them.
Under Decree 28, businesses that buy unemployment insurance will be entitled to state funding for “training, retraining, or raising professional skill levels to maintain employment for the worker” of up to 1 million dong ($46.32) per worker per month for up to six months.
To qualify, employers have to have contributed to the insurance fund for 12 months, experienced a business downturn or natural disaster, lack sufficient finances to do the training on their own and have a plan to carry out the training. Vietnam did not offer this financial aid before Decree 28, Mazur said: “Such support is newly stipulated.”
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For more information on Vietnamese HR law and regulation, see the Vietnam primer.
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