VN workers to enjoy more benefits under new Social Insurance Law
As of January 1, 2016, the revised Law on Social Insurance will go into effect. Many employers and employees have expressed their anxiety that under the new law, they will have to pay more in their social insurance. How do you respond to their concerns?
I would say that the percentage of insurance payment under the new law will remain the same as that of the old law. But the actual amount of money that an employee has to pay to the insurance scheme is a bit higher.
Under the new law, from January 1, 2016 to December 2017, the insurance money deducted from employees’ wages is based on their basic wage plus subsidiary payments written into the labour contract. And as of 2018, the insurance money paid by the employee will be subjected to changes if any amendments are made to the new labour contract signed between the employee and the employer. Under the new law, if an employee has to pay VND1 to the insurance fund, the employer will have to pay VND2.
Under the old law, the employer only pays the social insurance sum for his/her employee based on their minimum wage and according to the region where they work. Then, when the worker retires, their pension will be equal to 75 per cent of the accumulated sum they have paid throughout the years they participated in the insurance scheme. For example, if an employee earns VND15 million ($670) per month, the sum that he/she pays to the insurance scheme is based on his/her basic wages written into the labour contract (roughly between VND3-4 million). As a result, when the worker retires, he/she will receive 75 per cent of the VND3-4 billion monthly payment to the insurance scheme.
As I have mentioned, under the new Social Insurance Law, the employee has to pay more money to the insurance scheme than the old law.
An employee’s payment to the insurance scheme is based on his/her basic salary and allowances. The allowances include payments to compensate for hard working conditions, the type of work he/she performs and other factors.
However, bonus money - including money for meals between working shifts, travelling expenses, telephone expenses and other items - will be excluded from the list of items in the insurance scheme.
Details pertaining to regular spending, which are exempted from the insurance scheme, are written into the Circular 47 issued by the Ministry of Labour, Invalids and Social Affairs last November.
Do you think some employers could find loopholes in the new Social Insurance Law in order to pay less money to the insurance scheme for their employees?
Under the new law, beginning in 2016, the Viet Nam Social Insurance will commence a new function – the inspection of an employer’s social insurance participation.
In the past, many employers abused the social insurance fund to invest in their production or business instead of borrowing money from banks with high interest rates. Furthermore, under the previous law, employers that delayed their payment to the social insurance fund were fined by a sum that was equal to the interest of an investment sum. But under the new law, the fine will be doubled.
In addition, under the revised Criminal Code, any action to avoid or delay the payment of the social insurance fund will be treated as a crime.
Under the new law, information on the enterprise’s implementation of the social insurance law has to be posted in public places for their employees to see. In addition, the Social Insurance Agency also must release an annual report to each enterprise to inform the workers about their participation in the Social Insurance Scheme.
