Legal Alert | November 2024 | Law on Social Insurance No. 41/2024/QH15

In this Legal Update, we would like to highlight key changes and impacts of LSI 2024 compared to LSI 2014 on enterprises and employees.

1. Enterprises 

1. Adjustment and expansion of subjects covered by compulsory SI 

• Subjects covered by compulsory SI have been adjusted and expanded to include the following additional cases:

• Case 1: Vietnamese citizens working under employment contracts (EC) with an indefinite term, EC with a term of at least one month in full, including cases where the agreement is signed under a different name but contains content reflecting paid employment, salary, and the management, operation and supervision of one party. This expansion to agreements with different names which have the nature of an EC aligns with the definition of "employment contract" in Labor Code 2019 and practical application. 

• Case 2: Vietnamese citizens working under ECs with a term of at least one month in full but receiving salary in the month equal to or higher than minimum salary used as a basis for compulsory SI premiums. Comparing to applicable regulations, according to LSI 2024, enterprises must make compulsory SI premiums for part-time employees receiving monthly salary equal to or higher than the reference level. 

• Case 3: Vietnamese citizens being enterprise managers/controllers/representatives of state capital/representatives of enterprises’ capital who do not receive salaries. Monthly compulsory SI premiums of these subjects equal to 3% of salary used as a basis for compulsory SI premiums to the sickness and maternity fund, 22% of salary used as a basis for compulsory SI premiums to the retirement and survivorship fund. 

• Case 4: foreign citizens who are employees in Vietnam according to definite term ECs with a term of at least 12 months with employers in Vietnam, except cases of (i) intra-company transferee; or (ii) he/she has reached retirement age at the time of signing the ECs; or (iii) otherwise provided under an international treaty to which Vietnam is a contracting party. Hence, the participation of foreign citizens in compulsory SI has been specified in LSI 2024, rather than in decrees as is currently the case. 

1. Enterprises are no longer required to periodically publicly disclose information on SI premiums

• The public disclosure responsibility of employers under LSI 2014 has been abolished, including:

• Every 06 months, publicly disclosing information on SI premiums to employees; providing information on employees’ SI premiums when requested by the employees or trade union organizations. 

• Annually, publicly disclosing information on employees’ SI premiums as provided by the SI agencies according to the provisions of Clause 7 Article 23 of LSI 2014. 

1. Shortening timeframe for issuing the first SI book 

LSI 2024 requires SI agencies to issue the first SI book within 05 working days (currently it is 20 days) from the date of receipt of a full and complete dossier; if the SI book is not issued, a written response with specified reason must be provided. 

1. Changes to the minimum and maximum salary levels used as the basis for compulsory SI premiums

• Under LSI 2014, for employees paying SI premiums based on the salary regime decided by employers, the minimum salary used as the basis for compulsory SI premiums is equal to the regional minimum salary and the maximum is 20 times of the base salary level. 

• Under LSI 2024, the above content has been changed along with the introduction of a new term, called the “reference level”. Specifically, the minimum salary used as the basis for compulsory SI premiums is equal to the reference level and the maximum is 20 times of the reference level at the time of contribution. The reference level is an amount decided by the Government to calculate the contribution and entitlement of certain SI regimes.  

1. Changes to the contribution and the entitlement under SI regime

• For employees whose salaries are decided by employers, monthly salary is the basis for compulsory SI premiums, including position-based or title-based salary, salary allowances and other additional amounts agreed to be paid regularly and stably in each salary period. LSI 2024 has narrowed down the scope of other additional amounts to only the amounts agreed to be paid regularly and stably in each salary period, instead of all additional amounts as per the current regulations.

• Enterprises and employees can agree on SI premiums for the month in which the employee is not entitled salary for 14 working days or more, and based on the most recent SI premiums basis, instead of not being allowed to pay SI premiums in such case under LSI 2014.  In cases where an employee takes sick leave for 14 working days or more in the first month of working or the first month returning to work, SI premiums for that month are still required. 

• LSI 2024 has extended deadline for compulsory SI premiums in case of monthly payment, particularly, the employers can make payment at the latest by the last day of the following month, instead of the last day of the current month as per current regulations. In case of payment term of every 3 or 6 months, payment can be paid at the latest by the last day of the month following right after the payment cycle. Compared with LSI 2014, enterprises are now allowed to make SI premiums 1 month later than the current regulations, without being considered falling into the late SI contribution. 

1. Specification of measures for addressing late payment or evasion of compulsory SI and unemployment insurance

• With the aim of more stringent management of violations related to late payment/evasion of contributions of compulsory SI and unemployment insurance (UI), LSI 2024 adds detailed provisions explaining the behaviors of late payment/evasion, specifically: