On 29 June 2006 the National Assembly of the Socialist Republic of Vietnam issued the new Social Insurance Law which replaces 1995 Regulations on Social Insurance and came into effect on 1 January 2007.
Below are some significant changes that employers should take note.
The new Law on Social Insurance contains the following significant changes:
1. The total maximum number of sick leave days each year in respect of employee(s) working in normal conditions are:
Employee(s) may receive sick leave allowance equivalent to 75% of salary rate paid for by the social insurance fund.
2. In the event a child of an employee is ill, the employee shall be entitled to the leave to care for the child each year as follows:
If this period expires and the child remains ill, his/her mother or father may continue to receive the above allowance. This is new which was not stipulated in the old law.
3. In respect of maternity allowance
Under the old law, maternity leave is as follows:
Under the new law, this is changed as below:
In the event the mother dies after giving birth, the father shall be entitled to the above until the child is 4 months' old.
Thus, maternity allowance is lower than before.
4. Level and mode of social insurance payment of employee(s)
Employee(s) must contribute 5% of their wages to a retirement and death fund each month. The new law provides that from 2010 this rate shall be increased by another 1% for every two years up to a maximum rate of 8%.
5. Level and mode of social insurance payment of employer(s)
Employer(s) must pay for the following funds:
The above shall be paid based on the social insurance payment wage of employee(s) as discussed below.
6. Social insurance payment wage of employee(s) shall be determined as follows:
Employee(s) shall contribute to social insurance according to the wage agreed in a labor contract.
In the event the salary which is stipulated in the labor a contract is higher than 20 months' based on the general minimum wage rate (currently VND 450,000), social insurance payment wage upon which contributions are to be made shall be only 20 months based on the general minimum wage rate.
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