Official Dispatch No. 3945/LDTBXH-LDTL dated September 30, 2015 of the Ministry of Labor, War Invalids and Social Affairs guiding the Labor Code

THE MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS

Official Dispatch No.3945/LDTBXH-LDTL dated September 30, 2015 of the Ministry of Labor, War Invalids and Social Affairs guiding the Labor Code

To:Vina Korea Co., Ltd
(Lot 13, Khai Quang industrial park, Khai Quang ward, Vinh Yen city, Vinh Phuc city)

The Ministry of Labor, War Invalids and Social Affairs has been received Official Dispatch No. 123/2015/CV-NS of Vina Korea Co., Ltd dated August 7, 2015 on request for guidance on a number of provisions of the Labor Code. The Ministry of Labor, War Invalids and Social Affairs hereby provide guidance as follows:

1. The working time serving as the basis for determining severance pay for employees

Pursuant to Clause 3 Article 14 of Decree No. 05/2015/ND-CP dated January 12, 2015 of the Government, the working time serving as the basis for determining severance pay is total of actual working time minus (-) the period of unemployment insurance payment as prescribed by law, and the working time for which severance pay is offered by the employer. The actual working time includes paid leaves under the provisions of the Law on Social Insurance. The period of unemployment insurance payment includes: the period over which the employee has paid unemployment insurance premiums in accordance with the law, and the corresponding period over which unemployment insurance premiums are paid by the employer. Working time serving as the basis for severance pay shall be expressed as full years. The period of 1 month to under 6 months shall be rounded up to ½ year; the period of 6 months and longer shall be rounded up to 01 year.

Therefore, in case an employee terminates the labor contract and has a period of at least 01 month in which he/she has not paid unemployment insurance because of his/her sickness or maternity, the company must pay severance pay to the employee for this period.

2. Unemployment insurance in the probation period

Pursuant to Law on Social insurance (2006, 2014), it is compulsory for employees working under indefinite-term labor contracts and definite-term labor contracts of at least 03 months (at least 01 month from January 1, 2018) to have social insurance.

Pursuant to Article 26 and Article 27 of the Labor Code, an employer and an employee may reach an agreement on the probation, the rights and obligations of both parties during the probation period. If an agreement on the probation is reached, both parties may enter into a probation contract. A probation contract must have the contents specified at Points a, b, c, d, dd, g and h, Clause 1, Article 23 of this Code, none of them require social insurance and health insurance.

Pursuant to the aforesaid provisions, in the probation period under probation contract, it is not compulsory for employees to have social insurance.

3. Social insurance and health insurance premiums paid for employees together with their wages

According to law on social insurance, the social insurance premiums shall be paid monthly, not daily. Pursuant to Clause 3 Article 85 of the Law on Social insurance 2014, employees who neither work nor receive wages for 14 working days or more in a month are not required to pay social insurance premiums in that month.

Pursuant to Clause 3 Article 186 of the Labor Code, if an employee is not compulsory to have social insurance, health insurance and unemployment insurance, the employer shall simultaneously pay to the employee a wage and an amount equivalent to premium of compulsory social insurance, health insurance and unemployment insurance, and annual leave payment in accordance with regulations.

According to the case mentioned in Section 3 of Official Dispatch No. 9876/BTC-TCDN, the employee shall be compulsory to have social insurance, compulsory health insurance, and compulsory unemployment insurance. Consequently, the employee must pay premiums of social insurance, health insurance, and unemployment insurance for employees as prescribed. Procedures and time of payment of social insurance and health insurance shall be prescribed by social security agency.

4. Wages for overtime work, public holidays and annual leaves

Pursuant to Clause 1 Article 90 of the Labor Code, wage is a monetary amount which is paid by an employer to an employee to do a job as agreed by both parties. Wage includes a wage amount which is based on the work or position, wage allowance(s) and other additional payments. Accordingly, the wage amount according to the work, position, wage allowance(s) and other additional payments shall serve as the basis for payment of work overtime, annual leaves, and public holidays.

Vina Korea Co., Co., Ltd must apply aforesaid regulations on a case-by-case basis./.

For the Minister

For the Director of Department of Labors and Wages

The Deputy Director