COVID-19: Vietnam Issues Financial Assistance for Employers, Employees
- Vietnam has issued Resolution No. 42 to help employers and employees affected by COVID-19.
- The Resolution consists of a financial package targeting six individual and business types.
- The incentives are the latest to help the economy recover and support businesses once the pandemic ends.
Vietnam on April 9 issued Resolution No. 42/NQ-CP (Resolution 42) to help individuals and businesses affected by the COVID-19 pandemic. The Resolution consists of a financial package for those affected by the pandemic and targets six categories of individuals and businesses.
The six categories are:
- Impacted employees;
- Impacted employers;
- Household businesses (with revenue under US$4,265 (100 million VND) a year);
- People with meritorious service to the country;
- Poor and near-poor households; and
- Social protection beneficiaries.
We outline the financial assistance for employees and employers below.
Financial assistance of US$77 (VND 1.8 million) per month:
- Employees whose labor contract is temporarily suspended or have to take unpaid leave for a month or above will be eligible. This can be applicable for a maximum period of up to three months starting from April 1.
Financial assistance of US$43 (VND 1 million) per month:
- Employees who lose jobs but are not eligible for unemployment allowance or that work without a labor contract and have lost their jobs are eligible.
Employees must submit their application to the relevant local authority from April 1 onwards to avail of the benefits. If the employee is eligible for more than one allowance category they will only be entitled to the one with the highest allowance financial assistance amount.
Incentives for employers
Businesses and employers that have been affected by COVID-19 and have already paid at least 50 percent of salary for work suspension from April to June 2020 as per the Labor Code can borrow a loan with zero percent interest, collateral-free from the Vietnam Bank for Social Policies (VBSP) for a maximum term period of 12 months. VBSP is a government policy bank, which implements preferential credit policies for the poor and other policy beneficiaries. The bank is non-profit, offering a full range of services to the poor at subsidized rates.
The maximum loan value is 50 percent of the regional minimum salary per employee for a month and for a maximum of three months. As per law, if an employee is suspended from work due to the pandemic, they must still be paid an amount agreed by both parties, but not lower than the regional minimum wage.
Employers affected by the pandemic may also apply for a suspension of their contribution to the retirement and survivorship funds of the social insurance program for a maximum of 12 months if the number of employees subject to social insurance contribution has been reduced by at least 50 percent.
Guiding documents and implementation
The government issued Decision No 15/2020/QD-TTg on April 24 guiding the implementation of Resolution 42. The Decision consists of forms, and applications that can be used by businesses and employees for submitting their applications.
As Vietnam looks to restart its economy after the social isolation measures were lifted, these incentives will be welcomed by businesses and employees alike and shows the government’s push to further kick-start trade activities.