Supporting policies in Vietnam’s social insurance

Doan Vu Hoai Nam - Associate, ASL LAW

Typically, there are still many businesses in Hanoi and Ho Chi Minh City being quite frustrated because they still have to pay social insurance and health insurance premiums up to thousands of US dollars per month and, if paying late, they will be charged a very high penalty interest. Meanwhile, many groups have had to suspend operations for many months now due to an inability to meet the requirements to utilise a stay-at-work production model.

However, now the Vietnamese government has various policies to support businesses related to social insurance to solve some difficulties. Article 16 of Decree No.115/2015/ND-CP stipulates that enterprises are temporarily suspended from the duty of paying social insurance if they are facing difficulties due to a pandemic.

Specifically, the payment to the pension and survivorship fund will be suspended when one of the following two conditions is met: being unable to arrange jobs for employees, in which the number of employees participating in social insurance and temporarily leaving their jobs is at least 50 per cent of the total number of employees present before suspending production and business; and a loss of more than 50 per cent of the total value of property due to the COVID-19 pandemic.

However, to ensure production and maintain operations, not many businesses temporarily laid off up to 50 per cent of the total number of employees present before suspending production and business, and only some enterprises are in the status of being damaged by more than 50 per cent of the total value of assets. Therefore, it is difficult for enterprises to meet even one of these conditions.

In this situation, the government issued Resolution No.68/NQ-CP on policies to support employees and employers facing difficulties due to COVID-19, especially two policies related to social insurance and unemployment insurance.

Firstly, the employer is entitled to apply the normal payment rate of 0-0.5 per cent of the salary fund as a basis for paying social insurance to the Insurance Fund for Occupational Accidents and Diseases for 12 months, from July 1, 2020 to the end of June 30, 2022, for employees subject to occupational accident and occupational disease insurance. Accordingly, all the amount gained from this reduction will be used to support employees during COVID-19.

Secondly, with employers who have fully paid social insurance premiums or are temporarily suspending contributions to the pension and survivorship fund until the end of April 2021, and are affected by the pandemic resulting in a reduction of 15 per cent of employees participating in social insurance premiums or more compared to April 2021, both employees and employers are entitled to suspend payment to that fund for six months from the time of submitting the application.

This is one of the typical policies of this resolution when providing more reasonable conditions for businesses to meet. The contribution to the retirement and survivorship fund accounts for the majority of the social insurance contributions, so this policy has helped many businesses temporarily overcome initial difficulties.

Accordingly, in Article 7(1) of Decision No.23/2021/QD-TTg, it is clear that at the end of the suspension period specified in Article 6 of this decision, employees and employers continue to contribute to the retirement and death fund and return the social insurance contributions for the period of suspension, and no late payment interest will be charged on the premium.

In addition, there are other supporting policies for employees and business owners such as supporting employees to suspend the performance of labour contracts or take unpaid leave; supporting employees to terminate labor contracts or working contracts but are not eligible for unemployment benefits; supporting business households facing difficulties; and supporting employers to borrow capital to pay wages for work stoppage and pay for production recovery, with all points due to the COVID-19 pandemic.

Moreover, in order to create convenience and avoid confusion in accessing social insurance policies, the Ministry of Labour, Invalids and Social Affairs also issued Decision No.777/QD-LDTBXH specifying procedures supporting employees and employers to temporarily suspend contributions to the retirement and survivorship fund due to COVID-19.

In addition, at present, according to Resolution No.105/NQ-CP, the ministry directs and guides Vietnam Social Security to study and propose exemption from fines for late payment of social insurance arising in 2020 and 2021 according to the law, completed this month.

Accordingly, it is likely that businesses will be exempted from fines for late payment of social insurance due to the difficulties in social insurance payments caused by COVID-19. Therefore, businesses should take the initiative in accessing the state’s policies on social insurance and coordinate with state agencies to overcome the problems caused this year and last.