Labour Regulations Update in August 2024

LATEST UPDATES OF THE LAW ON SOCIAL INSURANCE NO. 41/2024/QH15

On 29^th June 2024, the National Assembly issued the Law on Social Insurance No. 41/2024/QH15, which will come into effect on 1^st July 2025.

Talentnet would like provide you some highlights in the Law on Social Insurance No. 41/2024/QH15 as below:

I. Expansion of compulsory Social Insurance (SI) participants:

1. Business household owners;
2. Business managers, controllers, representatives of state-owned capital, representatives of company capital at subsidiaries and parent companies as prescribed by the Law on Enterprise;
3. Members of the Board of Directors, General Directors, Directors, members of the Supervisory Board or controllers, and other elected management positions of cooperatives, union of cooperatives as prescribed by the Law on Cooperative who do not receive a salary;
4. Employees working part-time, with a monthly salary equal to or higher than the minimum salary base for compulsory SI contributions;
5. Cases where employees and employers agree under different names but the content reflects paid employment, salary, and management, administration, and supervision by one party;
6. Non-professional workers at the commune level, in villages, and residential groups;
7. Permanent militia. 

II. Clearly stipulates cases that are not subject to compulsory Social Insurance participation:

1. Individuals who are receiving a pension, social insurance benefits, or monthly statutory allowances;
2. Domestic workers;
3. The subjects specified at Points m and n, Clause 1, Article 2 of this Law who have reached retirement age as prescribed in Clause 2, Article 169 of the Labor Code, except for cases where the SI contribution period is missing a maximum of 6 months as prescribed in Clause 7, Article 33 of this Law.

III. Additional cases for voluntary social insurance participation:

Subjects specified at Points a and b, Clause 1, Article 3 of this Law who are temporarily suspending their labor contracts or employment contracts, except in cases where both parties have agreed on making compulsory social insurance contributions during this period.

IV. Specific regulations on “reference level” in place of “basic salary”:

• The reference level is the amount used to calculate the contribution rate and the benefits of some SI regimes in this Law as decided by the Government.
• The reference level is adjusted based on the increase in the consumer price index, economic growth, in accordance with the capability of the state budget and the SI fund.

V. Social Pension Scheme:

1. Subjects:
   Vietnamese citizens aged 75 and above, or aged between 70 and 75 who are poor or near-poor households, and do not receive a pension or monthly SI benefits.

2. Benefits:

• Receive a monthly social pension at a rate set by the Government. Adjusted every 3 years.
• The health insurance is sponsored by the state budget.
• Funeral expenses are supported when the beneficiary dies.

VI. Benefits for employees who do not meet the conditions for a pension and are not yet reached the age to receive a social pension:

1. Subjects:
   Vietnamese citizens of retirement age but with less than 15 years of social insurance contributions to receive a pension, and also do not meet the conditions to receive a social pension. If they do not receive a lump sum SI allowance or maintain their insurance contribution, they can receive a monthly allowance from their own contributions upon request.
2. Benefits:

• Allowance: The duration and monthly amount of the allowance are determined based on the employee’s contribution period and contribution base. The minimum monthly allowance is equal to the social pension.
• Health Insurance: The state budget will cover health insurance costs.
• Death Benefits: Upon death, the beneficiary’s family will receive a one-time payment for any unpaid months of allowance, and they may also be eligible for funeral expenses.

VII. Expanding Benefits for Social Insurance Participants:

1. Regulations on one-time SI allowance:

• For employees who joined SI before 30^th June 2025: They can still receive a one-time SI allowance if they meet (all) the following conditions:
  • After 12 months of not continuing to contribute to social insurance.
  • If they do not participate in voluntary social insurance and have not contributed to social insurance for a total of 20 years.
• For individuals who start contributing to social insurance from 1^st July 2025, a one-time withdrawal of SI allowance is only allowed in the following special cases:
  • Reaching retirement age but not having contributed for 15 years and not continuing to contribute to social insurance;
  • Emigration;
  • Having one of the following diseases: cancer, paralysis, decompensated cirrhosis, severe tuberculosis, AIDS; having a disability rate of 81% or more; having a severe disability;
  • Terminating their labor contract or when their work permit, professional certificate, or license expires without renewal.

2. Choosing between a pension or a one-time SI allowance:

• Emigration;
• For individuals with one of the following diseases: cancer, paralysis, decompensated cirrhosis, severe tuberculosis, AIDS;
• For individuals with a disability rate of 81% or more; individuals with a severe disability;
• For employees when their labor contract or work permit, professional certificate, or license expires without renewal;
• If an individual meets the conditions for both a pension and a one-time social insurance payment, they can choose to receive a monthly pension or a one-time social insurance payment.

3. Amendments and supplements to the pension regime:

• The minimum required number of years of SI contributions for a monthly pension has been reduced from 20 years to 15 years (not applicable to those receiving a disability pension).
• For male employees who have contributed to SI for 15 years but less than 20 years, the monthly pension will be 40% of the average monthly salary used as the basis for social insurance contributions as specified in Article 72 of this Law, corresponding to 15 years of contributions. For each additional year of contribution, an additional 1% will be added.

4. Supplementing regulations on one-time pension upon retirement:

• For each additional year of contribution beyond the specified threshold in Clause 1 of this Article (i.e., for male workers with more than 35 years of social insurance contributions and female workers with more than 30 years), the one-time allowance is equal to 0.5 times the average monthly salary used as the basis for social insurance contributions for each additional year up to the legal retirement age.
• In cases where an employee has already met the requirements for a pension but continues to contribute to social insurance, the allowance is equal to 2 times the average monthly salary used as the basis for social insurance contributions for each additional year beyond the legal retirement age until the actual retirement date.

Talentnet will continue to update when there are detailed instructions from the authorities.

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