Major Changes in Social Insurance Law in 2024 (Part 2)
2024/10/20
- Vu Hai Yen, Tran Thi Thu Uyen
Introduction
In the previous article, I explained the revised social insurance law of 2024 (hereinafter referred to as the “Revised Law”), which will come into effect on July 1, 2025.
This article will continue to explain the changes in workers’ rights and employers’ responsibilities brought about by this revision.
In addition to social insurance eligibility, the basis for social insurance premium payments, and one-time social insurance benefits, the revised law also addresses the rights and penalties of mandatory social insurance enrollees in Vietnam.
By having employers and workers accurately understand the amendments, they can fully benefit from them and help prevent violations of the law.
１.Strengthening penalties related to overdue social insurance premiums and attempts to evade payment
The employer’s delay or avoidance of social insurance premium payments negatively affects the rights of workers. The amended law stipulates more specific measures to address overdue payments and avoidance of payment.
The details are as follows.
Articles 40 and 41 of the 2024 Social Insurance Act
「1. Enforced payment of the arrears plus an interest of 0,03%/day on the arrears to the social insurance and unemployment insurance funds.
2. Administrative penalties as prescribed by law.
3. Disqualification from commendation and awards.」
Clear penalties will be specified in Article 1 of this provision in the future.
Administrative fines are stipulated as follows.
Government Decree No. 12/2022/ND-CP:
+ Employers who default on social insurance payments shall be subject to an administrative fine of 12 to 15% of the total amount of compulsory social insurance fees at the time the administrative violation record is created. However, the fine shall not exceed 75,000,000 VND (Article 39, Clause 5).
+ Employers who avoid paying social insurance and unemployment insurance but are not subject to criminal prosecution may be subject to administrative fines ranging from 50,000,000 to 75,000,000 VND (Article 39, Clause 7).
Please note that fines for organizations are twice those for individuals (Article 6, Clause 1 of Decree 12/2022/ND-CP), and companies that are more than six months overdue on social insurance payments will be publicly listed on the social insurance debtors list on the website.
Currently, investigations into companies’ labor conditions and social insurance payment statuses are being tightened, and the scope of these investigations is expanding to include newly established businesses and those in their third to fifth years of operation. The 2024 revision of the Social Insurance Act is believed to aim at strengthening penalties for employers who delay or evade social insurance premium payments.
To reduce the risk of being cited for legal violations by the Labor Bureau and Social Insurance Bureau, employers need to thoroughly review their internal regulations related to social insurance and ensure proper management.
２. Clarification of Rights Available to Special Social Insurance Participants
The 2014 Social Insurance Law did not clearly stipulate the rights that Vietnamese workers working abroad could enjoy under social insurance. Therefore, the revised law included the following provision in Article 8.
「In case a international treaty to which the Socialist Republic of Vietnam is a signatory has a specific period of social insurance participation by workers in Vietnam and overseas as a condition for receiving social insurance benefits, the social insurance payout in Vietnam shall be calculated according to the period over which social insurance is paid by the employee in Vietnam.」
Vietnamese workers who have been working abroad and continuously paying social insurance premiums in Vietnam from the past to the present can now receive benefits after returning to Vietnam.
Currently, Vietnam has concluded social insurance agreements only with South Korea.
Before the social insurance agreements were concluded, workers had to pay social insurance premiums in both countries, and the period of social insurance contributions outside their home country could not be accumulated.
As a result, workers were required to pay more social insurance premiums than usual.
By entering into a social security agreement, workers from one country working in the other can avoid double payment of social security and gain appropriate social security rights.
On the other hand, currently, Vietnam and Japan have not concluded a social security agreement.
Therefore, workers who have a work permit and a labor contract of 12 months or more are subject to compulsory insurance.
However, according to Article 2, Clause 2 of Decree 143/2018/ND-CP and Article 3, Clause 1 of Decree 11/2016/ND-CP, foreign workers who meet the conditions for internal transfer within the company are exempt from the obligation to pay social insurance and health insurance.
Whether one is subject to social insurance is determined based on the issued work permit, so please keep this in mind when obtaining your work permit.
３. Monthly benefits for workers who do not meet the pension eligibility requirements and those who have not yet reached the age for receiving social pension
Before the amendment law was promulgated, there were no provisions for systems for workers who did not meet the pension eligibility requirements and those who had not yet reached the age to receive social pensions.
According to Article 23 of the amended law, monthly benefits are paid in the following two cases.
・Workers who have reached retirement age but have not paid social insurance premiums for a sufficient period to receive a pension and are not eligible for social pension benefits.
・For those who have not received or are in the process of claiming the social insurance lump-sum payment, monthly benefits are paid.
The details are as follows.
| Social Insurance Act of 2014 | Social Insurance Act of 2024 | |
| Pension Eligibility Requirements | + Paid social insurance contributions for 20 years or more + General receiving age: Men 60 years old, Women 55 years old (Article 54 of the 2014 Social Insurance Act) |
+ Paid social insurance for more than 15 years + General receiving age: Men 61 years old, Women 56 years and 4 months old (The above refers to the retirement age in 2024. Thereafter, the retirement age is extended annually by 3 months for men, until they reach 62 years old in 2028, and by 4 months for women, until they reach 60 years old in 2035.) (Article 64 of the amended Social Insurance Act of 2024 and Article 169 of the Labor Act) |
The aforementioned amendments apply only to Vietnamese citizens. Regarding the condition that one must have been enrolled in social insurance for 20 years to first receive a pension, citizens were dissatisfied with the length of this period, which had led to a decline in their motivation to join social insurance.
Under the amended law, even in cases of delayed enrollment or intermittent enrollment, individuals will be able to receive a monthly pension by accumulating social insurance contributions over 15 years.
The above benefits require workers to complete procedures themselves at the insurance agency they use.
In conclusion
The amended law expands workers’ rights, guarantees adequate benefits to domestic and foreign social insurance subscribers, and requires employers to comply with regulations.
It is believed that the social insurance law will change gradually, and future government ordinances are likely to provide more specific guidelines.
Information will continue to be shared as soon as the amendments are made.
References
・2014 Social Insurance Act
・2024 Social Insurance Act
・Government Ordinance No. 12/2022/ND-CP
・Government Ordinance 143/2018/ND-CP
This article was translated using Yarakuzen.
