Question 164: Are Employers obliged to pay compulsory insurance and trade union dues for elderly Employees on pension?

1.Compulsory insurance

Under the law, elderly Employees on pension are not subject to compulsory insurance. Specifically as follows:

  • For SI payment[1], those who enjoy pension, SI allowances and monthly allowances while entering into LCs are not subject to compulsory SI;
  • For HI payment[2], monthly pensioners will be paid for SI insurance by the SI agency. Therefore, in this case, Employers shall not pay health insurance for Employees as monthly pensioners; and
  • For UI payment[3], Employees working under definite LCs and enjoying monthly pensions shall not pay UI.

However, pursuant to Article 186.3 of the Labor Code, for Employees who are not subject to compulsory SI, HI and UI, apart from salary payment based on their work, at the same salary period, Employers shall pay Employees 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 Employers to pay insurance for Employees, it forces Employers to convert insurance payments into a monetary sum to be paid directly to Employees in their salary period.

2. Trade union fees

With respect to the payment of trade union fees, the current Vietnamese law does not distinguish between elderly Employees and Employees within normal working age as members of the grassroots trade unions. Therefore, in principle, Employees as members 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 trade union members), 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, elderly Employees shall still pay monthly fees as usual.

Be noted that foreign Employees who are enjoying pensions paid by their countries will obviously not be considered to be eligible to enjoy pensions in accordance with the Vietnamese law.

[1]Article 123.9 Law on SI

[2]Article 12.2 (a) Law on HI

[3]Article 43.2 Law on employment

[4]Article 23.2 Decision 1908/QĐ-TLĐ dated 19/12/2016