Will Reduce ½ of the Insurance Contribution to the Occupational Accident and Disease Fund for Employees?

According to current regulations, each enterprise must contribute a monthly payment of 22% of the salary fund as the basis for social insurance contributions to three funds: Social Insurance Fund (18%), Health Insurance (3%), and Unemployment Insurance (1%). Out of the 18% of the salary that the enterprise contributes to the Social Insurance Fund, it is divided into three types of funds: Sickness and Maternity Fund (3%), Occupational Accident and Disease Fund (1%); Retirement and Death Fund (14%).

According to the provisions of Article 4 of Decree 37/2016/ND-CP, the contribution rate to the Occupational Accident and Disease Insurance Fund stipulated in Clause 3, Article 44 of the Law on Occupational Safety and Health is specified as follows:

- A rate of 1% on the salary fund for social insurance contributions of employees who belong to the following categories:- (1) Officials and public employees according to the regulations on officials and public employees;- (2) Officers, professional military personnel of the People's Army; officers, non-commissioned officers in professional operations, officers, non-commissioned officers in technical specialties of the People's Public Security; people working in cipher organizations enjoying salaries as military personnel;- (3) Defense workers, police workers, and people working in other positions in cipher organizations;- (4) Persons working under indefinite-term labor contracts and definite-term labor contracts of 3 months or more, and persons working under labor contracts with a term of 1 month to less than 3 months, not including household servants;- (5) Managers of enterprises, managers of cooperative operations who receive salaries.

In the case where the employer is an enterprise, cooperative, individual business household, or production collective operating in agriculture, forestry, fishery, or salt production and pays salaries based on products or contracts, payments can be made monthly, every 3 months, or every 6 months.

- And a rate of 1% on the statutory pay rate for each employee in category (6) non-commissioned officers, soldiers of the People's Army; non-commissioned officers, public security soldiers serving for a limited time; students in the army, public security, or cipher undergoing training and receiving living expenses.

However, recently, in the Draft Decree, the Ministry of Labor, Invalids and Social Affairs (MOLISA) has proposed to halve the current contribution rate for a short period to reduce costs for businesses as follows:

- A rate of 0.5% on the salary fund for social insurance contributions of employees for groups (1), (2), (3), (4), and (5) as mentioned above; and- A rate of 0.5% on the statutory pay rate for each employee in category (6).

This contribution rate will be applied until December 31, 2019.

Previously, the Ministry of Labor, Invalids and Social Affairs proposed two options for reducing contributions to the Occupational Accident and Disease Insurance Fund within compulsory social insurance:

- Option 1 is to uniformly reduce the rate applied to all industries, expectedly to 0.5% of the salary fund for social insurance contributions of employees. According to the Ministry, this option is straightforward and can be implemented immediately. Therefore, the Ministry has submitted the Draft Decree based on this option.- Option 2 is to adjust the rate flexibly according to the risk level and consequences of accidents in each industry. This option encourages proactive prevention and reduction of occupational accidents and diseases. However, determining the flexible rate requires time to study and accurately calculate the risk levels and occupational accidents for each industry.

Currently, the Draft Decree is open for public comments on the Government of Vietnam’s electronic information portal.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE