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August 7, 2013

New Decree Clarifies Compulsory Insurance Contribution Duties for Employees with Multiple Labor Contracts

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When an employee is employed by more than one company and thus holds multiple labor contracts in Vietnam at the same time, employers often have questions about how to handle the employee’s compulsory insurance contribution. Decree No. 44/2013/ND-CP, which came into effect on July 1, 2013, clarifies how compulsory insurance will be paid for employees with multiple labor contracts:

  • Social and Unemployment Insurance: The first employer to enter into a labor contract with the employee shall, along with the employee, pay into the relevant government funds. If the labor contract is terminated or altered, with the effect that the parties no longer need to contribute to compulsory social and unemployment insurance, the next employer to have entered into a labor contract with the employee will assume responsibility for paying into the funds.
  • Medical Insurance: The employer who provides the highest salary shall be responsible for paying into the medical insurance fund.
  • Payments by Other Employers: Employers of remaining labor contracts shall pay—at the same time the employee’s salary is paid—the statutorily required social, unemployment, and medical insurance contributions directly to the employee, rather than to the social, unemployment, or medical funds. The employee is exempt from mandatory contributions for secondary labor contracts.

The new Decree also requires employees to notify their employers of all their employment contracts at the time, and provide them with a copy of all such contracts. This is designed to foster informed decision making on the employer’s part.

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