Basic Salary in 2021 Does Not Increase: How Are Employee Benefits Affected?

Base Salary 2021 remains unchanged, how will the allowances of employees be affected? (Illustration)

Previously, in Resolution 86/2019/QH14, the National Assembly assigned the Government of Vietnam to adjust the statutory pay rate from 1.49 million VND/month to 1.6 million VND/month from July 01, 2020.

However, due to the impact of the Covid-19 pandemic, in Conclusion 77-KL/TW dated June 5, 2020, and Resolution 122/2020/QH14 dated June 19, 2020, the Politburo and the National Assembly agreed not to adjust the statutory pay rate for officials and public employees, armed forces from July 1, 2020, until further notice. Most recently, in Clause 7, Article 3 Resolution 128/2020/QH14 on the state budget estimate for 2021, the National Assembly also agreed that in 2021, the statutory pay rate and the poverty line would not be adjusted.

Therefore, the statutory pay rate for 2021 for officials and public employees will remain at 1.49 million VND/month until further notice. With the unchanged statutory pay rate for 2021, some social insurance allowances for employees will remain the same as they are, specifically:

1. One-time childbirth allowance, postnatal convalescence allowance, male employee with wife giving birth allowance

According to the provisions of Article 38 of the Social Insurance Law 2014, a female employee giving birth or an employee adopting a child under 6 months old shall receive a one-time allowance for each child equal to 2 times the statutory pay rate in the month of childbirth or adoption. If a child is born but only the father participates in social insurance, the father shall receive a one-time allowance equal to 2 times the statutory pay rate in the month of childbirth for each child. Meanwhile, the postnatal convalescence allowance for a female employee entitled to postnatal convalescence and health recovery policies for one day will be 30% of the statutory pay rate.

If the statutory pay rate 2021 rises to 1,600,000 VND:

- One-time childbirth allowance: 1,600,000 VND x 2 = 3,200,000 VND;- Postnatal convalescence allowance: 1,600,000 VND x 30% = 480,000 VND;- Male employee with wife giving birth allowance: 1,600,000 VND x 2 = 3,200,000 VND.

However, since the statutory pay rate 2021 remains unchanged at 1,490,000 VND:

- One-time childbirth allowance: 1,490,000 VND x 2 = 2,980,000 VND;- Postnatal convalescence allowance: 1,490,000 VND x 30% = 447,000 VND;- Male employee with wife giving birth allowance: 1,490,000 VND x 2 = 2,980,000 VND.

Thus, the statutory pay rate is the basis for calculating the one-time childbirth allowance, adoption allowance, postnatal convalescence allowance, and the allowance for male employees with wives giving birth. The unchanged statutory pay rate 2021 will directly affect the allowance amounts employees receive.

2. Convalescence and health recovery allowance after illness

Article 29 of the Social Insurance Law 2014 stipulates that employees who have taken sick leave for the full duration in a year and within 30 days after returning to work but their health has not recovered shall be entitled to convalescence and health recovery from 5 to 10 days in a year. The convalescence and health recovery allowance after illness is 30% of the statutory pay rate per day.

With the statutory pay rate 2021 remaining at 1,490,000 VND/month, the convalescence and health recovery allowance after illness will be 1,490,000 VND x 30% = 447,000 VND.

It can be seen that the convalescence and health recovery allowance after illness for employees is also based on the statutory pay rate. Hence, the unchanged statutory pay rate 2021 means that this allowance will not change.

3. One-time or monthly allowance for work accident, occupational disease

Employees who have accidents at work leading to a reduction in labor capacity from 5% upwards shall be entitled to work accident policies if:

- The accident occurs at the workplace and during working hours;- The accident occurs outside the workplace or working hours when performing tasks required by the employer;- The accident occurs on the route to and from the workplace within a reasonable time and route.

Additionally, employees who contract occupational diseases listed by the Ministry of Health and the Ministry of Labor - Invalids and Social Affairs while working in hazardous environments or jobs, leading to a reduction in labor capacity from 5% upwards, shall be entitled to occupational disease policies.

Allowance levels for work accidents, occupational diseases are calculated as follows:

One-time allowance

An employee whose labor capacity is reduced by 5% to 30% is entitled to a one-time allowance with a reduction of 5% labor capacity equivalent to 5 times the statutory pay rate; for each additional 1% reduction, the employee receives an additional 0.5 times the statutory pay rate.

Thus, instead of increasing to 1,600,000 VND x 5 = 8,000,000 VND if the statutory pay rate 2021 rises, employees with a 5% reduction in labor capacity in 2021 will still receive an allowance of 1,490,000 VND x 5 = 7,450,000 VND.

Monthly allowance

Employees whose labor capacity is reduced by 31% or more are entitled to a monthly allowance with a reduction of 31% labor capacity equivalent to 30% of the statutory pay rate; for each additional 1% reduction, the employee receives an additional 2% of the statutory pay rate.

Hence, the monthly allowance for employees with work accidents or occupational diseases in 2021 will remain at 1,490,000 VND x 30% = 447,000 VND.

4. Funeral allowance, monthly survivorship allowance

- Funeral allowance: Persons responsible for funeral arrangements for deceased employees eligible for funeral allowance as per Clause 1, Article 66 of the Social Insurance Law 2014, or declared dead by the court, will receive one-time funeral allowance equal to 10 times the statutory pay rate at the month of death.

Hence, the funeral allowance in 2021 remains at 1,490,000 VND x 10 = 14,900,000 VND.

- Monthly survivorship allowance: The unchanged statutory pay rate 2021 also impacts the monthly survivorship allowance. According to Clause 1, Article 68 of the Social Insurance Law 2014, the monthly survivorship allowance for each dependent is 50% of the statutory pay rate; in cases where the dependent has no direct caregiver, the monthly survivorship allowance is 70% of the statutory pay rate.

If the statutory pay rate 2021 increased to 1,600,000 VND/month, the monthly survivorship allowance would rise to 1,600,000 VND x 50% = 800,000 VND for each dependent and 1,600,000 VND x 70% = 1,120,000 VND for dependents without direct caregivers. However, the unchanged statutory pay rate 2021 means these allowances remain at 1,490,000 VND x 50% = 745,000 VND and 1,490,000 VND x 70% = 1,043,000 VND.

It can be seen that the unchanged statutory pay rate 2021 will affect numerous allowances that employees are entitled to. For information on when and how the statutory pay rate might be adjusted, THU KY LUAT will update clients and members as soon as official information is available.

Thuy Tram

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