LABOR CODE UPDATES 19 July 2018
19 July 2018 Key changes in labor related in effect from 1 January 2018 Notable points Since the Law on Social Insurance 2014 was released on 20 November 2014 and took effect partially from 1 January 2016, it has been recently fully effective from 1 January 2018 which extends to new types of employees within the social insurance scheme, the reinterpretation of salary definition for social security contribution base and pension benefits. Further guidance in details are mentioned at the Decree 115/2015/TT- BLDTBXH, Circular 59/2015/TT-BLDBTXH; and others related to minimum wages at Decree 141/2017/ND-CP and Decree 72/2017/ND-CP. As a part of, and in addition to, the Law on Amending and Supplementing a Number of Articles of the Penal Code 2015 has taken effective from 1 January 2018 which entered into forced in the employer s obligations in terms of labor management and social security scheme.
Content In This Updates SOCIAL SECURITY A key feature of the guidance is its inclusion of new types of employees within social insurance scheme Changing salary definitions under new guidance Changing the pension benefit scheme MINIMUM WAGES From 1 January 2018, four regions have set baseline compensation rates between VND 2.76 million and VND 3.98 million. With effect from 1 July 2018, the common minimum wage applied will be VND 1,390,000 per month PENAL CODE Criminal liability for certain crimes in labor related Legal ref. # SOCIAL SECURITY Title 115/2015/ND-CP Decree No. 115/2015/ND-CP dated 11 November 2015, guidance on the law on social insurance regarding compulsory social insurance. 59/2015/TT- BLDTBXH MINIMUM WAGES Circular No. 59/2015/TT-BLDTBXH dated 29 December 2015, detailing and guiding the implementation of some articles of the Law on Social Insurance on compulsory social insurance. 141/2017/ND-CP Decree No. 141/2017/ND-CP dated 7 December 2017 on regional minimum wage rate for the employees under labor contract. 72/2018/ND-CP PENAL CODE Decree No. 72/2018/ND-CP dated 15 May 2018 on statutory pay rate for public official and public employees and the armed forces personnel. 12/2017/QH14 Law No. 12/2017/QH14 dated June 20, 2017 on amendments to the Penal Code No. 100/2015/QH13
New types of employees within the social insurance scheme Social Security Minimum Wages Penal Code Further guidance Point b, Article 2, Law on Social Insurance 2014, the key feature of change is its inclusion of new types of employees within the social insurance scheme. Those considering hiring the following types of employees should note their inclusion within the social insurance for year 2018 onward: Employees working under labor contracts with a term of between 1 and 3 months; (before 1 Jan 2018, it is applicable for 3-months labor contract and above only.) Expatriates working in Vietnam under a work permit, practicing license, or practicing certificate issued by a (*) Currently, the Ministry of Labor, Invalids and Social Affairs (MOLISA) is still working on a draft for a new Decree detailing and guiding the implementation of the Law on Social Insurance on compulsory social insurance for foreign employees signing a labor contract with any company or agency in Vietnam as said at the Official Letter No. 1032/LDTBXH-PC dated 19 March 2018. competent body of Vietnam (*) These are additional types which extends the subject of statutory insurance application after 1 Jan 2018.
Changing salary definitions Social Security Minimum Wages Penal Code While Clause 2, Article 30, Circular No. 59/2015/TT-BLĐTBXH largely upholds the definition of salary which is defined as an employees nominal wage plus allowances stated in their labor contract the scope of the term allowances has seen critical reinterpretation under new guidance. The following allowances should be noted for the inclusion or exclusions from employees calculable salaries: Before 1 Jan 2018 only basic salary is the base of statutory insurance contribution Included Position allowance Seniority allowance Hardship allowance Area allowance Mobility allowance Attraction allowance Excluded Bonuses (Article 103, Labor Code) Incentive bonuses Meal allowance (mid-shift) Gasoline allowance Mobile allowance Transportation allowance Child care allowance Accommodation allowance Allowances for the support of occasions such as weddings, funerals, and birthday Allowances paid to employees as a result of accidents and other occupations health hazards or as said at the labor contract (Article 4, Decree 05/2015)
Changing pension benefits scheme Social Security Minimum Wages Penal Code Pursuant to Clause 2, Article 56 of Law on Social Insurance 2014 and detailed instruction of Circular 56, the period of pension benefit calculation is officially extended from year 2018. Female retirees Monthly pension rate = 45% equivalent to 15 years of social insurance payment (2018 onward) Male retirees Monthly pension rate = 45% equivalent to: 16 years of social insurance payment (2018) 17 years of social insurance payment (2019) 18 years of social insurance payment (2020) 19 years of social insurance payment (2021) 20 years of social insurance payment (2022 onward) Before 1 Jan 2018 Both female and male retirees were the same on Monthly pension rate = 45% equivalent to 15 years of social insurance payment For each additional year: Female = +3% Male = +2% Maximum rate for both = 75% A both shall be added with 2% for each additional year of social insurance payment that maximum rate is 75%.
Regional minimum wages & common minimum wage Social Security Minimum Wages Penal Code From 1 January 2018, four-tiered regions have set baseline compensation rates between VND 2.76 million and VND 3.98 million as following: Region I: VND3,980,000/month ( 6.1%) Region II: VND3,530,000/month ( 6.3%) Region III: VND3,090,000/month ( 6.6%) Region IV: VND2,760,000/month ( 6.9%) The salary cap for Unemployment Insurance contribution for each region: Region I: VND79,600,000/month Region II: VND70,600,000/month Region III: VND61,800,000/month Region IV: VND55,200,000/month This change reflected to the unemployment insurance contribution cap as it is imposed at 20 times the regional minimum wage. With effect from 1 July 2018, the common minimum wage applied will be VND1,390,000/month ( 6.9%). The salary cap for Social Insurance and Health Insurance contribution irrespective of regions: VND27,800,000/month The salary cap for social insurance and health insurance contributions will be practically as same as unemployment insurance at 20 times the common minimum wage.
Social Security Minimum Wages Penal Code Criminal liability for certain crimes in labor related under Vietnam s updated Penal Code According to Law No. 12/2017/QH14 on amendments to the Penal Code No. 100/2015/QH13, enterprises with the primary purpose of seeking profit may be subject to criminal liability for certain crimes. The Amended 2015 Penal Code sets out 32 offenses which enterprises may be subject to criminal liable for. Some key offenses in labor related are: (i) fraud in social insurance, unemployment insurance, health insurance; (ii) evasion of statutory insurance payment for employees; (iii) illegal termination of employees; Penalties applicable to enterprises include monetary fines, forcible termination or suspension of business operations and bans from conducting certain business activities and/or raising capital. Monetary fines: Community sentence: Imprisonment: VND10mil - VND100mil; VND100mil - VND200mil; VND200mil VND500mil; VND500mil VND1bil; VND1bill VND3bil; Up to one year; or 01-02 years; For a duration between 03 months and 12 months; For a duration between 06 months and 36 months; From 01 to 05 years; From 05 to 10 years; As part of the punishment for either of the tiers of violation listed above, the person in question may be barred from holding their professional position for a period of up to five years
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