Issue of August, 2025 – New policies under the 2024 Law on Social Insurance

Dear Valued Clients,

On June 29, 2024, the National Assembly officially passed the Law on Social Insurance No. 41/2024/QH15 (“2024 Social Insurance Law”), which will take effect from July 1, 2025. This new legislation replaces the Law on Social Insurance No. 58/2014/QH13, as amended and supplemented by Law No. 84/2015/QH13 and Law No. 35/2018/QH14 (“2014 Social Insurance Law”), as well as Resolution No. 93/2015/QH13 dated June 22, 2015 of the National Assembly regarding the one-time social insurance payment policy for employees.
The enactment of the 2024 Social Insurance Law is aimed at addressing the limitations of the 2014 Law, ensuring consistency and alignment with the 2019 Labor Code, and institutionalizing the reform objectives set forth in Resolution No. 28-NQ/TW dated May 23, 2018 of the Central Executive Committee of the Communist Party of Vietnam (“Resolution 28”).

1. Subjects Required to Participate in the Compulsory Social Insurance Scheme

Unlike the 2014 Social Insurance Law, one of the notable changes introduced in the 2024 Social Insurance Law is the expansion of eligible participants entitled to full social insurance (“SI”) benefits, through the broadening of compulsory SI coverage to include:

(a) Household business owners, as prescribed by the Government;

(b) Managers of enterprises, controllers, representatives of state capital, and representatives of enterprise capital in companies and parent companies under the Law on Enterprises; members of the Board of Directors, General Directors, Directors, members of the Supervisory Board or controllers, and other elected management titles of cooperatives and unions of cooperatives under the Law on Cooperatives who do not receive salaries;

(c) Part-time employees whose monthly wages are equal to or higher than the minimum wage used as the basis for compulsory SI contributions;

(d) Employees and employers who enter into agreements under different titles but whose content reflects paid employment, wages, and the management, direction, and supervision of one party over the other,…

In addition, to gradually move toward a policy of compulsory SI for all employed individuals with income and wages—once necessary conditions are met in line with the spirit of Resolution No. 28—the 2024 Law authorizes the Standing Committee of the National Assembly to determine additional groups subject to compulsory SI participation. This decision will be based on proposals from the Government and aligned with the socio-economic development conditions of each period. The 2024 Law also provides clearer provisions regarding the compulsory SI participation of foreign workers in Vietnam. Specifically, foreign nationals working in Vietnam are subject to compulsory SI if they are employed under a fixed-term labor contract of 12 months or more with a Vietnamese employer, except in the following cases:

(a) Internal transfers within enterprises, as defined under regulations on foreign workers in Vietnam;

(b) At the time of signing the labor contract, the individual has reached the retirement age as stipulated in Article 169.2 of the 2019 Labor Code;

(c) International treaties to which the Socialist Republic of Vietnam is a signatory contain differing provisions.

These additions ensure consistency with the 2019 Labor Code and enhance benefit entitlements for newly covered groups, thereby expanding the overall coverage of the SI system.

2. Minimum Contribution Period for Pension Entitlement

Effective July 1, 2025, when the 2024 Social Insurance Law comes into force, employees participating in either compulsory or voluntary SI will be entitled to a monthly pension upon reaching retirement age as defined by the Labor Code, provided they have contributed to SI for at least 15 years, instead of the previous minimum requirement of 20 years. It is important to note that this minimum contribution period does not apply to individuals retiring due to reduced working capacity.

This change aims to broaden access to retirement benefits for workers who join the SI system late or have intermittent contribution histories, ensuring they can still receive monthly pensions upon retirement. The new policy also encourages workers to preserve and continue their SI participation rather than opting for a one-time withdrawal, thereby contributing to long-term, stable, and sustainable social security.

Notably, for voluntary SI participants, the 2024 Law allows a lump-sum payment for up to 5 years of missing contributions to meet pension eligibility requirements—offering greater flexibility and convenience in accumulating retirement entitlements.

3. Salary Basis for Social Insurance Contributions

The 2024 Social Insurance Law has made important strategic adjustments to clarify and perfect regulations on wages as a basis for protecting employees. According to Article 31 of the 2024 Social Insurance Law and detailed guidance in Article 7 of Decree No. 158/2025/NĐ-CP, which provides implementation guidelines for certain provisions of the Law on compulsory social insurance, the basis for determining social insurance contributions for employees is the reference amount. Article 7 defines the reference amount as the monetary value used to calculate both contribution levels and benefit entitlements under certain social insurance schemes, as determined by the Government. This reference amount will be adjusted based on the consumer price index, economic growth rate, and must remain consistent with the fiscal capacity of the state budget and the social insurance fund.

However, Clause 13, Article 141 of the 2024 Law stipulates that until the basic salary is officially abolished, the reference amount shall be equal to the basic salary. Once the basic salary is abolished, the reference amount must not be lower than the last applicable basic salary.

4. Extension of Contribution Deadline for Employers

A notable change in the 2024 Law is the adjustment of the monthly deadline for compulsory SI contributions by employers. Previously, under the 2014 Law, contributions had to be completed by the last day of the month. The new law allows employers to delay payment until the last day of the following month—effectively granting an additional month to fulfill their financial obligations to the SI authority.

This change is considered more practical for business operations, especially for enterprises facing cash flow challenges, financial planning constraints, or internal accounting delays. The extended deadline helps businesses better manage budgets, reduce the risk of penalties for late payments, and facilitates compliance with SI regulations.

5. Monthly Pension Entitlement

The 2024 Law retains the pension calculation method from the 2014 Law: Female employees: 45% of the average salary used for SI contributions after 15 years of participation, with an additional 2% for each subsequent year, up to a maximum of 75%. Male employees: 45% after 20 years of participation, with 2% added per additional year, also capped at 75%.

However, the 2024 Law introduces key adjustments to enhance fairness and expand benefits: For early retirement due to reduced working capacity: No reduction in pension rate if retirement is less than 6 months early. A 1% reduction applies for early retirement between 6 and 12 months. This reverses the previous rule, which imposed a 1% reduction for retirement under 6 months early.

Additionally, for male employees with 15 to under 20 years of SI contributions, the monthly pension is calculated at 40% of the average salary, with a 1% increase for each additional year—lower than the 2% applied to those with 20+ years.

6. One-Time Retirement Allowance

The 2024 Law continues the provision for a one-time retirement allowance for employees whose SI contribution period exceeds the maximum used for pension calculation: Male employees: Contributions exceeding 35 years. Female employees: Contributions exceeding 30 years. The allowance equals 0.5 times the average salary used for SI contributions for each excess year, calculated up to the statutory retirement age.

A new provision incentivizes continued SI participation beyond retirement age. Employees who continue working and contributing after reaching retirement age will receive a one-time allowance equal to 2 times the average salary for each excess year—quadruple the current rate. This applies to contributions beyond 35 years (men) or 30 years (women), from the statutory retirement age to actual retirement.

This policy is seen as a strong incentive for prolonged participation, enhancing retirement benefits and supporting sustainable social security.

7. Lump-Sum Social Insurance Payment

The 2024 Law expands eligibility for lump-sum SI payments to better support workers in special circumstances. Under Article 102, employees who have ceased SI participation may request a lump-sum payment if they fall into one of the following categories:

(a) Reached retirement age under Article 169.2 of the Labor Code but have less than 15 years of SI contributions and do not continue participating. This is a new provision compared to the 2014 Law, which required at least 20 years for pension eligibility. Alternatively, they may opt for monthly allowances under Article 23.

(b) Suffer from 81% or greater loss of working capacity or are classified as severely disabled under medical board certification or the Law on Persons with Disabilities.

(c) Contributed to SI before July 1, 2025, and after 12 months are no longer eligible for compulsory SI and have not joined voluntary SI, with total contributions under 20 years.

(d) Eligible for pension but no longer reside in Vietnam, such as legally emigrating abroad.

(e) Diagnosed with serious illnesses including cancer, paralysis, decompensated cirrhosis, advanced tuberculosis, or AIDS..

These provisions reflect a more flexible and humane approach to SI policy, aiming for universal coverage while safeguarding individual rights. However, employees should carefully consider the long-term impact of opting for a lump-sum payment, as it may affect future retirement benefits.

8. State Management of Social Insurance Contributions and Measures Against Evasion

The 2024 Social Insurance Law introduces significant reforms to enhance the effectiveness of state management over the collection and payment of social insurance (SI) contributions, and to strictly address violations—particularly prolonged delays and evasion—that negatively impact workers’ rights and the sustainability of the SI fund.

The Law clarifies the definitions of “late payment” and “evasion” of SI and unemployment insurance (UI) contributions. According to Articles 38 and 39: Late payment refers to the failure to pay or fully pay SI and UI contributions within the legally prescribed timeframe. Evasion refers to the deliberate failure to register, pay, or fully pay SI and UI contributions after 60 days from the due date, despite having been urged by competent authorities.

To address these issues, the 2024 Law introduces the following measures:

(a) Strengthened Management of SI Collection and Payment The Law clearly defines the responsibilities of relevant agencies in identifying, managing, and monitoring individuals and entities subject to SI participation. The SI authority is tasked with urging compliance, guiding registration procedures for compulsory SI, and coordinating with inspection and audit bodies to detect and handle violations.

(b) Sanctions for Violations:

(i) Enterprises in violation must pay the full amount of delayed or evaded contributions, along with a penalty of 0.03% per day, calculated on the overdue amount and duration—similar to tax late payment penalties.

(ii) Administrative fines may be imposed for late SI or UI payments, with penalties reaching up to VND 150 million, and violators may be disqualified from commendations or awards.

(iii) Serious cases of SI or UI evasion may lead to criminal liability. Under Article 216 of the Criminal Procedure Code, employers may face fines ranging from VND 50 million to VND 1 billion, or imprisonment from 3 months to 7 years, depending on the severity and number of affected employees.

Additionally, the 2024 Law stipulates that employers must compensate employees for any damages resulting from failure to fulfill SI obligations that infringe upon workers’ lawful rights.

These new provisions not only tighten financial discipline in implementing SI policies but also reinforce the protection of workers’ legitimate interests and promote stronger legal compliance across the business community.

As always, we hope you find this update useful and we look forward to the opportunity of working with you in the near future.

Sincerely,

ENT LAW LLC

The full version of this Legal Update can be found here.