New Regulations On Unemployment Insurance Take Effect From January 1st 2015

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Expanding the list of participants, amending provisions on conditions to enjoy unemployment allowance and on the level of such allowance, etc., are some of the significant adjustments on the policy of unemployment insurance stipulated in Law on Employment (2013), which will be brought into effect from January 01st, 2015.

At present, the contents of unemployment insurance are regulated in the Law on Social Insurance. However commencing from January 01st, 2015, such contents shall be stated in Law on Employment and take effect and comprise of the following noteworthy points:

Persons required to participate in unemployment insurance

Based on existing provisions, persons obligated to participate in unemployment insurance are employers who employ 10 or more laborers and Vietnamese employees working under labor contracts of an indefinite or definite term of between full 12 months and 36 months.

From January 01st, 2015, the list of persons required to participate in unemployment insurance includes all employers that hire or employ workers under labor contracts and expands to employees working under seasonal or job-based working contracts with a term of between full 3 months and under 12 months, as well as under labor contracts of indefinite or definite time.

Particularly, in case a worker has signed and is performing more than one labor contract, the worker and the employer under the first-signed labor contract shall be held responsible to participate in unemployment insurance.

Benefits of unemployment insurance

Apart from the benefits when participating in unemployment insurance according to current provisions such as unemployment allowance, vocational training support and job search assistance, Law on Employment has been amended with the regime of support for training, retraining, improving qualifications of occupational skills to maintenance employment for workers.

Wages on which unemployment insurance premiums are based

According to new regulations, the monthly wage, based on which unemployment insurance premiums are calculated, is the wage on which compulsory social insurance premiums are based under the Law on Social Insurance. In the event where the monthly wage, on which unemployment insurance premiums are based, is higher than the 20 months’ regional minimum wage, the 20 months’ regional minimum wage will be applied in accordance with the provisions at the time of payment of unemployment insurance premiums, unlike current provisions which base on the common minimum wage.

Conditions for unemployment allowance

As stipulated by Law on Employment, employees may only be entitled to unemployment allowance when satisfying the following conditions, which are deemed more specific and stricter than current provisions:

1. Terminating labor contracts, except the following cases:

a.  The employee unilaterally terminates the labor contract in contravention of law;

b.  The employee receives monthly pension or working-capacity-loss allowance.

2. Having paid unemployment insurance premiums within 24 months before terminating the labor contracts, for the case of contracts of indefinite and definite terms; or having paid unemployment insurance premiums for at least full 12 months within 36 months before terminating the labor contract, for the case of seasonal or job-based working contracts with a term of between full 3 months to under 12 months.

3. Having submitted a dossier for unemployment allowance entitlement to an employment service center;

4. Having yet to find any job after 15 days from the date of submission of the dossier for unemployment allowance entitlement, except for performance of military obligation, temporary detention or a prison sentence, etc.

Level and duration of unemployment allowance

1. Based on new regulations, while monthly unemployment allowance level of the employee equals 60% of the average monthly wage of 6 consecutive months before the worker becomes unemployed but must not exceed 5 times the region-based minimum wage level in accordance with the provisions at the time of termination of the labor contract”, current provisions do not regulate about the limit of maximum level.

2. The duration of unemployment allowance entitlement is based on the number of months of payment of unemployment insurance premiums. Accordingly, this duration is 3 months if the period of payment of unemployment insurance premiums is between full 12 months and full 36 months, which is added with 1 month for each additional period of payment of full 12 months, but must not exceed 12 months.

Termination of unemployment allowance

Basically, the cases of termination of unemployment allowance under the Law on Employment inherit from the current provisions of Law on Social Insurance and supplemented with the following cases: the employee performs public security service obligation; goes abroad under a labor contract; attends a training course of full 12 months or longer; is administratively sanctioned for violations of the law on unemployment insurance; is declared by a court as missing; is kept in temporary detention. Workers, who stop receiving unemployment allowance in cases such as finding a new job or performing military obligation, may have the period of payment of unemployment insurance premiums reserved for calculating the subsequent duration of receipt of unemployment allowance when they fully satisfy certain conditions. While under the current regulations, the employee will be entitled to onetime payment of the remaining value of unemployment allowance.

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