Question 193. Is an Employer obliged to pay compulsory insurance and trade union dues for an Older Employee on pension?

  1. Compulsory insurance

Under the law on insurance, the Older Employee on pension is not subject to compulsory insurance. Specifically, as follows:

  • For the SI payment[1], those who enjoy pension, SI allowance and monthly allowance while entering into LCs are not subject to the compulsory SI;
  • For the HI payment[2], the monthly pensioner will be paid for SI insurance by the SI agency. Therefore, in this case, the Employer shall not pay HI for the Employee as a monthly pensioner; and
  • For the UI payment[3], the Employee working under a definite-term LC and enjoying monthly pension shall not pay UI.

However, pursuant to Article 168.3 of the Labour Code, for any Employee who is not subject to the compulsory SI, HI, and UI, apart from salary payment based on his or her work, at the same salary period, the Employer shall pay the Employee an additional amount equal to the rate of paying compulsory SI, HI and UI and annual leave related amount as regulated. Thus, although labour legislation does not force the Employer to pay insurance for the Employee, it forces the Employer to convert insurance payments into a monetary sum to be paid directly to the Employee in his or her salary period.

2. Trade union fee

With respect to the payment of trade union fee, the current Vietnamese law does not distinguish between an Older Employee and an Employee of normal working age as a member of the grassroots trade unions. Therefore, in principle, any Employee as a member of an enterprise’s grassroots trade union shall pay a monthly trade union fee of 1% of the net salary (salary deducted from SI, HI, UI, PIT of a trade union member), but the maximum monthly trade union fee[4] is only 10% of the base salary as stipulated by the State from time to time. In this case, the Older Employee shall still pay monthly fees as usual.

Be noted that any foreign Employee who is enjoying pension paid by his or her country will obviously not be considered to be eligible to enjoy pension in accordance with Vietnamese law.

[1]Article 123.9 of Law on SI

[2]Article 12.2 (a) of Law on HI

[3]Article 43.2 of Law on employment

[4]Article 23.2 of Decision 1908/QD-TLD dated 19 December 2016