Answer:
- In the case where a foreign Employee works part-time under a LC with the period of 03 months to less than 12 months, shall an Employer pay the HI for the Employee?
Under provisions of the Labour Code, when signing a LC, an Employer and an Employee shall participate in the following compulsory insurances: (i) SI; (ii) HI; (iii) insurance for labour accidents and occupational diseases; and (iv) UI if meeting conditions as required by law.
The subjects participating in the compulsory HI are any Employees, including Vietnamese Employees or foreign ones, working under indefinite-term LCs, definite-term LCs of fully 03-month period or more but not exceeding 36-month period according to the provisions of the Labour Code. On the other hand, Any Employee who works part-time is entitled to receive salary; has equality in the exercise of rights and obligations as a full-time Employee; have equality in opportunity, non-discrimination and occupational safety and hygiene[1]. Therefore, under this circumstance, it can be understood that the Employers shall pay the HI for the foreign Employees according to the type of signed LCs.
It should be noted that any foreign Employee working in Vietnam will be subject to the compulsory SI when having a work permit or a practising certificate or a practising license issued by a competent State authority of Vietnam and participate in the SI and insurance for labour accidents and occupational diseases when having an indefinite-term LC or definite-term LC from full 01 year or more with an Employer in Vietnam. If any foreign Employee is not eligible to participate in such types of insurance, the Employer will have to directly pay him or her an amount corresponding to the contribution rate of SI and insurance for labour accidents and occupational diseases in the same period with the period of paying monthly salary.
Except for the UI, since a foreign Employee working in Vietnam is not subject to the prescribed UI in Vietnam, an Employer must directly pay him or her an amount equivalent to the contribution rate of UI premium by law, which is comparable to 01% of the monthly salary as a basis for the UI payment. Or in another manner, it can be understood that the Employer will pay the foreign Employee either severance allowance or retrenchment allowance, depending on the reason for termination from time to time, upon the LC termination.
2. If so, what is the salary as a basis for HI payment when the LCs specifies the salary rate paid by the unit price of working hours multiplied by the actual working hours according to the timesheet?
Article 5.2 of the Law on SI prescribes that the payment rate of the compulsory SI is calculated on the basis of the monthly salary of an Employee. The HI payment rate is also calculated on the basis of such monthly salary. The HI payment rate is equal to 4.5% of the monthly salary of the Employee (of which the Employer will pay 3% and the Employee will pay 1.5%)[2].
Through referring to unofficial guidance of the Department of Labour Relations and Wages – MOLISA, for the purpose of paying the compulsory SI, the Employer and the Employee need to agree on the salary that the Employee will receive monthly based on the number of working hours as committed in the signed LC to serve as the basis for the payments of compulsory SI and HI.
The maximum monthly salary rate used to calculate the HI premium is 20 times of the statutory pay rate. The statutory pay rate at the time of publishing this Book is VND1,490,000/month. It should be noted that the monthly salary as the basis for the compulsory HI payment shall not be lower than the area minimum wage (the minimum wage in Region I since 01 January 2020 is VND4,420,000/month)[3].
3. Can an Employer prescribe a basic salary (area minimum wage) in the LC as a basis for HI payment to the Employee?
The monthly salary as the basis for the compulsory SI payment shall accurately reflect the actual number of hours that the Employee regularly works. Therefore, if the area minimum wage is the monthly salary as the basis for the compulsory SI payment in the LC, it can happen that this agreement is much different from the salary rate that the Employee actually receives. At that time, if the competent labour management agency inspects the enterprise, the Employer may be considered as failing to pay the full compulsory SI to the Employee and may be subject to administrative penalties, even be prosecuted for criminal liability[4].
[4] Articles 38.5 and 38.6 of Decree 28/2020/ND-CP of the Government dated 01 April 2020; Article 122.3 of Law on SI and Article 216 of Criminal Code
[3] Article 3.1(a) of Decree 90/2019/ND-CP of the Government dated 15 October 2019
[2] Article 7.1(a) of Decree 146/2018/ND-CP of the Government dated 17 October 2018
[1] Article 32.3 of Labour Code
