The statutory pay rate is the basis for calculating certain social insurance benefits to which employees are entitled. What are the effects of the non-increase of the applicable statutory pay rate in 2021 on the allowances of employees in Vietnam?
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Vietnam: What are the effects of the non-increase of the applicable statutory pay rate in 2021 on the allowances of employees? (Illustration)
Previously, in Resolution 86/2019/QH14, the National Assembly of Vietnam 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 of Vietnam agreed not to adjust the statutory pay rate applicable to Vietnamese 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 of Vietnam also agreed that in 2021, the statutory pay rate and the poverty line would not be adjusted.
Therefore, the applicable statutory pay rate in 2021 for officials and public employees will remain at 1.49 million VND/month until further notice. With the unchanged applicable statutory pay rate in 2021, some social insurance benefits for employees will remain:
1. Lump-sum allowance upon childbirth, allowance for convalescence and health rehabilitation, allowance for male employee whose wife gives birth in Vietnam
According to the provisions of Article 38 of the Social Insurance Law 2014, female employees giving birth or employees adopting an under-6-month child are entitled to a lump-sum allowance equaling 2 times the statutory pay rate for each child in the month of childbirth or child adoption. In case the mother gives birth to a child but only the father is covered by social insurance, the father is entitled to a lump-sum allowance equaling 2 times the statutory pay rate for each child in the month of childbirth. Meanwhile, the per-diem allowance for convalescence and health rehabilitation after the maternity leave period must equal 30% of the statutory pay rate.
If the applicable statutory pay rate in 2021 is 1,600,000 VND:
- Lump-sum allowance upon childbirth: 1,600,000 VND x 2 = 3,200,000 VND;
- Allowance for convalescence and health rehabilitation: 1,600,000 VND x 30% = 480,000 VND;
- Allowance for male employee whose wife gives birth: 1,600,000 VND x 2 = 3,200,000 VND.
However, since the statutory pay rate in 2021 remains unchanged at 1,490,000 VND:
- Lump-sum allowance upon childbirth: 1,490,000 VND x 2 = 2,980,000 VND;
- Allowance for convalescence and health rehabilitation: 1,490,000 VND x 30% = 447,000 VND;
- Allowance for male employee whose wife gives birth: 1,490,000 VND x 2 = 2,980,000 VND.
Thus, the statutory pay rate is the basis for calculating the Lump-sum allowance upon childbirth/adoption, allowance for convalescence and health rehabilitation, and allowance for male employees with wives giving birth in Vietnam. The unchanged statutory pay rate in 2021 will directly affect the allowances that employees receive.
2. Allowance for convalescence and health rehabilitation after sickness in Vietnam
Under Article 29 of the Social Insurance Law 2014, an employee who has taken leave under the sickness benefits for full 30 days in a year, but whose health has not yet recovered within 30 days after return to work, is entitled to a leave of between 5 days and 10 days in a year for convalescence and health rehabilitation. The per-diem allowance for convalescence and health rehabilitation after sickness must equal 30% of the statutory pay rate.
When the statutory pay rate in 2021 remains unchanged at 1,490,000 VND, the allowance for convalescence and health rehabilitation after sickness will be 1,490,000 VND x 30% = 447,000 VND.
The allowance for convalescence and health rehabilitation after sickness paid to employees is also based on the statutory pay rate. Hence, when the applicable statutory pay rate in 2021 remains, this allowance will not change.
3. Lump-sum or monthly occupational accident or occupational disease allowance in Vietnam
Employees suffering a working capacity decrease of 5% or more after getting occupational accidents in the following cases shall be entitled to occupational accident benefits in Vietnam:
- At the workplace and during working hours;
- Outside the workplace or beyond working hours while performing tasks assigned by their employers;
- On a route to and from residence and workplace within a rational time and on a rational 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.
Occupational accident or occupational disease allowance in Vietnam is calculated as follows:
Lump-sum allowance
Employees suffering a working capacity decrease of between 5% and 30% are entitled to a lump-sum allowance. Employees suffering a 5% working capacity decrease are entitled to an allowance equaling 5 times the statutory pay rate, which shall be added with half of the statutory pay rate for each additional 1% working capacity decrease
Thus, instead of receiving 1,600,000 VND x 5 = 8,000,000 VND in case the applicable statutory pay rate in 2021 is increased, employees suffering a working capacity decrease of 5% in 2021 will still receive an allowance of 1,490,000 VND x 5 = 7,450,000 VND.
Monthly allowance
Employees suffering a working capacity decrease of 31% or more are entitled to a monthly allowance. For employees suffering a 31% working capacity decrease, the monthly allowance must equal 30% of the statutory pay rate, which shall be added with 2% of the statutory pay rate for each additional 1% working capacity decrease; suffering
Thus, the monthly allowance for employees suffering from occupational accident or disease in 2021 will remain at 1,490,000 VND x 30% = 447,000 VND.
4. Funeral allowance, monthly survivorship allowance
- Funeral allowance: If employees eligible for funeral allowance as per Clause 1, Article 66 of the Social Insurance Law 2014 die, the persons who take charge of their funeral are entitled to a lump-sum funeral allowance equal to 10 times the statutory pay rate at the month of death. In case employees are declared dead by the court, their relatives will entitled to funeral allowance.
Thus, 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 in 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 applicable statutory pay rate in 2021 is increased to 1,600,000 VND/month, the monthly survivorship allowance would be increased 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, since the applicable statutory pay rate in 2021 remains, this allowance remains at 1,490,000 VND x 50% = 745,000 VND and 1,490,000 VND x 70% = 1,043,000 VND.
The unchanged statutory pay rate in 2021 will affect numerous allowances that employees are entitled to. For information on when and how the statutory pay rate might be adjusted, Lawnet will update customers and members as soon as official information is available.
Thuy Tram
