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In light of the complicated developments and unpredictability of the Coronavirus (COVID-19) pandemic, with aims to support enterprises and employees in dealing with difficulties arising from the COVID-19 outbreak, the Vietnam Prime Minister has ordered Vietnam Social Security and Vietnam General Confederation of Labor to issue guidance on suspension of mandatory contributions, which includes: (i) social insurance premiums to retirement and survivorship funds, and (ii) trade union fees.

1. Suspension of Social Insurance Contribution to Retirement and Survivorship Funds

On 17 March 2020, Vietnam Social Security issued Official Letter No. 860/BHXH-BT on the suspension of contribution to retirement and survivorship funds for enterprises in difficulty due to COVID-19. Accordingly, this suspension is applicable to enterprises in service of passenger transport, tourism, accommodation, restaurant and other special industries experiencing difficulties due to COVID-19, which fall under either of the following circumstances:

  • Enterprises cannot provide work for employees, in which the number of employees who are subject to social insurance contribution but must temporarily suspend working is 50% or more of the total number of available employees before the business suspension; or
  • Enterprises suffer losses greater than 50% of the total value of assets due to COVID-19 (excluding land value).

Such enterprises are eligible to suspend the contribution until June 2020. However, in case COVID-19 pandemic has not been alleviated by the end of June 2020, the enterprises can continue suspending the contribution until December 2020.

After the suspension period, employers and employees still have to make supplementary payment for such period without having to pay interest on late payments.

2. Suspension of Trade Union Fee Contribution

On 18 March 2020, Vietnam General Confederation of Labor (“VGCL”) issued Official Letter No. 245/TLD regarding delay in payment of trade union fee for enterprises meeting difficulties due to COVID-19. In particular, the VGCL allows for the delay of payment of trade union fees during first six months of 2020 until 30 June 2020. Nevertheless, this delay is only applied to enterprises which have at least 50% of the total number of employees who are subject to social insurance contribution but must temporarily suspend working.

By the end of June 2020, if such enterprises still have been adversely affected by COVID-19, the payment of trade union fees can be delayed until 31 December 2020.


It is expected that Vietnamese labor authorities may have further instructions or incentives to help enterprises and employees overcome difficulties in business due to COVID-19 pandemic. We will keep you posted of any further updates.

If you have any questions on the matters covered or need further clarification on any particular issue, please do not hesitate to contact us.

Author

Thuy Hang Nguyen is a partner in Baker McKenzie's Ho Chi Minh office and the head of the Employment and Labor practice in Vietnam. She joined the Firm in 2006 and has been involved in a wide range of practice areas in various investment projects. She has extensive experience in employment and labor law, and has advised on corporate and regulatory compliance issues in Vietnam, including mergers and acquisitions, foreign investment licensing, corporate and commercial matters. Ms. Nguyen is a leading authority and frequent speaker on employment and labor law in Vietnam and the Asia Pacific region.