Unemployment insurance by the rules

by Nguyen Thu Huyen, Bizconsult Law Firm

According to preliminary statistics from the Ministry of Labour, Invalids and Social Affairs, some 30,000 employees lost their jobs in 2008. Most of the lay-offs took place at foreign enterprises, and most were unskilled workers.

Until January 1 of this year, employers in Viet Nam were not legally required to provide unemployment insurance.

On December 12, 2008, the Government issued Decree No 127/2008/ND-CP pursuant to the Law on Social Insurance Law, since supplemented by ministry Circular No 04/2009/TT-BLDTBXH of January 22, 2009.

Under these guidelines, enterprises with 10 employees or more are required to provide unemployment insurance for Vietnamese employees who have signed indefinite-term labour contracts or definite-term contracts of from 12 to 36 months.

Within 30 working days of signing a labour contract, an employer must submit documents for contribution of unemployment insurance. Monthly, the employer shall contribute 1 per cent of the total salary fund. Employees shall contribute 1 per cent of their salary which shall be withheld by the employer and paid on the employee’s behalf to the social insurance fund.

An employee who is terminated shall be entitled to enjoy unemployment insurance when they fully satisfy three conditions: having paid unemployment insurance for at least 12 months during the 24 months prior to becoming unemployed; having registered their unemployment status with the labour authority; and unable to obtain employment for at least 15 days from the unemployment registration date.

The unemployment allowance will be equal to 60 per cent of the average monthly salary or remuneration during six consecutive months prior to unemployment. The period of enjoying unemployment allowance shall be: 3, 6, 9, or 12 months, if unemployment insurance premiums have been paid for between 12 – 36, 36 – 72, 72 – 144, or 144 months or more, respectively.

When an employee becomes unemployed, he/she must go to the district Department of Labour, Invalids and Social Affairs within seven days from the date of unemployment to register. An application dossier for enjoyment of insurance must be sent to this authority within 15 days from the date of registration. Within 20 days of the receipt of a proper dossier, the Chamber will examine and determine the level and the duration of enjoyment of insurance. The documents, if accepted, shall be dispatched to other relevant authorities for implementation.

Payment of the unemployment allowance will be terminated if the period of enjoying unemployment allowance has expired, or the employee has found a new job. After the termination, the previous duration of paid unemployment insurance shall not be counted for subsequent unemployment, if any.

Unemployed persons will also receive support in vocational training for a period of no more than six months under the level of supports stipulated by the law on vocational training. Furthermore, they shall be entitled to free consultancy services and medical insurance as employed persons. All related expenses shall be paid by the social insurance authority.

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