UNEMPLOYMENT INSURANCE IN LABOR CODE 2025
Topic 5:
UNEMPLOYMENT INSURANCE
MSc. Hoàng Thị Minh Tâm
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 01/2022/LĐ-ST dated July 26, 2022, of the People’s Court of Hải Châu District, Đà Nẵng City]
Case Summary:
Ms. Lê Thị Ngọc entered into an employment contract and worked at P Group Joint Stock Company (hereinafter referred to as Company P). After her maternity leave, Ms. Ngọc submitted a resignation letter, and Company P subsequently issued a decision to terminate her employment contract. However, Company P delayed fulfilling its obligation to pay unemployment insurance contributions and failed to promptly provide Ms. Ngọc with the decision terminating her employment contract.
As a result, Ms. Ngọc was unable to complete the procedures to apply for unemployment insurance benefits. Ms. Ngọc demanded that Company P compensate her with an amount equivalent to the unemployment benefits she would have otherwise received. The court held that the decision terminating the employment contract was one of the essential documents required to file for unemployment benefits. Company P failed to prove that it had delivered the termination decision to Ms. Lê Thị Ngọc or that the delay was not attributable to its fault. Consequently, the court upheld Ms. Ngọc’s claim.
Court Decision:
[…] The court granted Ms. Lê Thị Ngọc’s request, ordering P Group Joint Stock Company to pay compensation equivalent to three months of unemployment insurance benefits […].
COMMENTARY
I. Introduction
When participating in the labor market, both parties—employers and employees—desire stable and long-term employment relationships. However, in certain cases, due to objective or subjective factors, employees may find it necessary to terminate their employment relationships and face periods of unemployment. This situation impacts their income and the livelihood of their families. Timely income support and assistance in returning to employment are critical needs.
For this reason, unemployment insurance (hereinafter referred to as UI) was established to help safeguard employees’ rights when they lose their jobs. Unemployment insurance is a regime designed to partially compensate employees for lost income when they become unemployed, while also supporting vocational training, job retention, and job searches, funded through contributions to the Unemployment Insurance Fund [Article 3 of the 2013 Law on Employment].
The unemployment insurance scheme was first recognized under the 2006 Law on Social Insurance and took effect on January 1, 2009. Since 2013, it has been regulated by the 2013 Law on Employment (effective from January 1, 2015). The introduction of unemployment insurance not only provides employees with peace of mind but also reflects a communal approach to risk-sharing.
Nevertheless, in the implementation of unemployment insurance regulations, issues such as delayed contributions and delays in finalizing employees’ insurance records have significantly affected employees’ rights. In such cases, the approaches taken by legal authorities have lacked uniformity, resulting in inconsistent protection of employees’ rights.
II. Legal Issues
- Contributions to Unemployment Insurance
By its nature, unemployment insurance (UI) is a mandatory form of insurance for both employees and employers. Therefore, determining the applicable subjects of UI is essential to ensure the financial balance of the social insurance system. According to the law, employees eligible to participate in UI are Vietnamese citizens who enter into employment contracts with a term of three months or more or working contracts with employers [Article 43 of the 2013 Law on Employment].
Employers are required to enroll their employees in UI with the social insurance agency within 30 days from the effective date of the employment contract or working contract [Article 44 of the 2013 Law on Employment]. The contribution rates are determined based on the employee’s monthly salary. Employees contribute 1% of their monthly salary, while employers contribute 1% of the total monthly salary fund of employees participating in UI. Additionally, the State provides a maximum subsidy of 1% of the monthly salary fund for employees enrolled in UI, with this amount guaranteed by the central budget [Article 57 of the 2013 Law on Employment].
The salary used as the basis for UI contributions is determined by the salary stipulated in the employee’s employment contract.
The regulations governing the salary basis for UI contributions have evolved over time. From January 1, 2007, to before January 1, 2016 [the period during which the 2006 Law on Social Insurance was in effect until the 2014 Law on Social Insurance took effect], for employees contributing to social insurance under a salary regime determined by the employer, the monthly salary or wages used for social insurance contributions were the amounts specified in the employment contract [Article 94 of the 2006 Law on Social Insurance].
From January 1, 2016, to before January 1, 2018, for employees under an employer-determined salary regime, the monthly salary for social insurance contributions included the base salary and allowances as prescribed by labor laws. From January 1, 2018, onward, the salary basis for social insurance contributions comprises the base salary, allowances, and other supplementary payments as stipulated by labor laws [Article 89 of the 2014 Law on Social Insurance].
In cases where employers underpay or delay UI contributions for employees, they may face penalties under the law depending on the severity of the violation [Article 39 of Decree No. 12/2022/NĐ-CP dated January 17, 2022, on administrative penalties in the fields of labor, social insurance, and Vietnamese employees working abroad under contracts]. Specifically, in cases of evasion of social insurance contributions in general, including UI, employers may also face criminal liability [Article 216 of the 2015 Penal Code (as amended and supplemented)]. In the case at hand, the employer paid UI contributions but delayed completing the confirmation of contribution periods and delivering the employment contract termination decision to the employee, resulting in harm to the employee.
- Conditions for Receiving Unemployment Insurance
Under current legal provisions, an employee is entitled to unemployment insurance (UI) benefits upon satisfying the following conditions [Article 49 of the 2013 Law on Employment]:
“1. Termination of the employment contract or working contract, except in the following cases:
a) The employee unilaterally terminates the employment contract or working contract in violation of the law;
b) The employee receives a pension or monthly allowance for loss of working capacity;
Having contributed to unemployment insurance for at least 12 months within the 24 months prior to the termination of the employment contract or working contract, in cases specified under points a and b of Clause 1, Article 43 of this Law; or having contributed to unemployment insurance for at least 12 months within the 36 months prior to the termination of the employment contract, in cases specified under point c of Clause 1, Article 43 of this Law;
Having submitted an application for unemployment benefits at an employment service center as prescribed in Clause 1, Article 46 of this Law;
Having not found a new job within 15 days from the date of submitting the application for unemployment insurance benefits, except in the following cases:
a) Performing military or police service obligations;
b) Attending training or education programs with a duration of 12 months or more;
c) Being subject to measures such as placement in reformatory schools, mandatory education facilities, or mandatory rehabilitation centers;
d) Being detained pending trial or serving a prison sentence;
đ) Settling abroad or working abroad under a contract;
e) Death.”
The employees eligible to participate in UI, as currently regulated, include those working under employment contracts and public employees [Article 49 of the 2013 Law on Employment]. When an employee terminates their employment contract or working contract, the employer is responsible for completing the procedures to confirm the periods of social insurance and unemployment insurance contributions and returning these documents, along with any other documents retained by the employer, to the employee [Article 48 of the 2019 Labor Code].
In the case under discussion, the employer’s delay in fulfilling the aforementioned obligations caused the employee to submit their application for UI benefits past the deadline, resulting in the employee being unable to receive UI benefits despite having met the contribution period required for eligibility. Consequently, the employee’s right to UI benefits was directly impaired due to the employer’s failure to timely fulfill its obligations. This constitutes actual harm suffered by the employee as a result of the employer’s delay.
The employee in this case fully satisfied the eligibility criteria as a subject and the basis for terminating the employment relationship, in complete accordance with legal provisions. Moreover, the employee had contributed to UI for a sufficient duration to qualify for benefits under Clause 2, Article 49 of the 2013 Law on Employment. However, they were unable to submit their application on time to claim UI benefits because the employer failed to complete the procedures related to the termination of their employment relationship.
In similar cases, judicial perspectives have varied. One viewpoint holds that this constitutes actual harm suffered by the employee, for which the employer bears the responsibility to provide compensation [Judgment No. 01/2018/LĐ-ST dated January 18, 2018, of the People’s Court of T Town, Bình Dương Province: Ms. Tr and G Co., Ltd. consecutively signed two fixed-term employment contracts, each for 12 months. During the term of the second contract, both parties mutually agreed to terminate it.
While Ms. Tr was employed, the company failed to fully meet its obligations to contribute to social insurance and unemployment insurance for the employee. Ms. Tr filed a lawsuit demanding that the company pay the outstanding social insurance and unemployment insurance contributions and also compensate her for the company’s delay in fulfilling its obligations, which prevented her from receiving unemployment benefits. The court ordered the company to pay the outstanding social insurance contributions.
Additionally, the court found that the company’s failure to fulfill its responsibility to make insurance contributions and provide the insurance record book as required was a fault attributable to the company, resulting in the employee’s inability to receive unemployment benefits. The court determined this to be actual harm and ordered the company to compensate the employee with an amount equivalent to three months of unemployment benefits].
Conversely, another judicial perspective posits that the employee retains the ability to continue participating in employment relationships, and the period of unemployment insurance contributions not yet utilized can be preserved. The employer’s delay in finalizing the social insurance record does not cause actual harm to the employee. Consequently, the court rejected the employee’s demand that Company P be required to compensate an amount equivalent to the unemployment benefits the employee would have otherwise received
[Judgment No. 116/2016/LĐ-ST dated September 29, 2016, of the People’s Court of District 9, Ho Chi Minh City: Ms. Lê Thị Thanh T signed a 12-month fixed-term employment contract with Jabil Co., Ltd. While Ms. T was on maternity leave, the contract expired, and the company did not renew it. However, the company delayed finalizing and returning her insurance record, preventing Ms. T from submitting an application for unemployment benefits. Ms. T demanded compensation from the company for its delay, which resulted in her inability to receive unemployment benefits.
The court held that “Ms. T is still young and capable of continuing to participate in employment relationships, and her unused unemployment insurance contribution period will be preserved. The company’s delay in finalizing her social insurance record did not cause her actual harm. On the contrary, due to the delay in finalizing the social insurance record upon contract expiration, Ms. T’s maternity leave period was recorded as continuous participation in social insurance in her record book, which benefited the employee. Therefore, the court did not accept Ms. T’s request that Jabil Co., Ltd. compensate her for three months of unemployment benefits and interest on delayed payments”].
- Employee Rights in Receiving Unemployment Insurance
Employees participating in unemployment insurance (UI), upon termination of their employment contract, are entitled to unemployment benefits, as well as support for vocational training, education, and free job counseling and placement services [Articles 49, 54, and 55 of the 2013 Law on Employment]. Additionally, individuals receiving unemployment benefits are entitled to health insurance coverage as stipulated under health insurance laws [Article 51 of the 2013 Law on Employment].
Thus, employees enrolled in UI not only receive a degree of income security when they lose their jobs but also gain assistance to re-enter the labor market as quickly as possible. Consequently, when an employee is unable to submit their application on time to access UI benefits, it significantly impacts their rights [Pursuant to Clause 1, Article 46 of the 2013 Law on Employment: “Within three months from the date of termination of the employment contract or working contract, the employee must submit an application for unemployment benefits to an employment service center established by the state employment management agency”].
First, the Right to Unemployment Benefits
Employees are entitled to unemployment benefits when they meet the requirements set forth in Article 49 of the 2013 Law on Employment. The duration of benefits corresponds to the period of UI contributions. Specifically, according to Article 50 of the 2013 Law on Employment:
“1. The monthly unemployment benefit amount is equal to 60% of the average monthly salary subject to unemployment insurance contributions over the six consecutive months preceding unemployment, but shall not exceed five times the base salary for employees subject to the state-regulated salary regime, or five times the regional minimum wage as prescribed by the Labor Code for employees contributing to unemployment insurance under an employer-determined salary regime at the time of termination of the employment contract or working contract.
2. The duration of unemployment benefits is calculated based on the number of months of unemployment insurance contributions: for every 12 to 36 months of contributions, the employee is entitled to three months of benefits; thereafter, for each additional 12 months of contributions, the employee is entitled to one additional month of benefits, up to a maximum of 12 months.
3. The entitlement to unemployment benefits begins on the 16th day following the submission of a complete application for benefits as prescribed in Clause 1, Article 46 of this Law.”
In the cases discussed, based on the above provisions, if the employees met the eligibility criteria for UI, they would have received three months of unemployment benefits. However, due to their inability to submit applications on time, they did not receive these benefits. This loss of income directly affects the employees’ rights, yet judicial perspectives in the cited judgments differ.
The author believes that the judicial approach in the first and second cases is appropriate and ensures employees’ rights. In the third case (Judgment No. 116/2016/LĐ-ST), the court rejected the employee’s claim for compensation from the employer for the failure to receive unemployment benefits. The court’s reasoning was that the employee’s UI contribution period would be carried forward to the next instance of unemployment, meaning that while the employee was not eligible to receive benefits in this instance, the prior contribution period would be factored into the calculation of benefits for a subsequent period of unemployment, thereby preserving the employee’s rights.
The author disagrees with the court’s reasoning in the third case (Judgment No. 116/2016/LĐ-ST). The right to contribute to social insurance and unemployment insurance, to have contribution periods confirmed, and to have these records and other documents returned upon termination of the employment contract is an inherent right of employees. The employer’s delay in fulfilling these obligations upon contract termination constitutes a violation that adversely affects the employee’s rights.
Furthermore, the court’s assertion that if the employee does not receive benefits in this instance, they can still claim them in future periods of unemployment is a subjective argument. The financial difficulties faced by employees vary across different stages of life, and the assumption that an employee will necessarily experience unemployment again in the future is speculative.
Moreover, if the employee does not become unemployed in a later period, they will not receive the unemployment benefits corresponding to their prior contribution period, meaning the benefits they were entitled to based on their contributions would not automatically be granted. In reality, the employee contributed to UI, met the eligibility criteria, yet did not receive benefits due to reasons beyond their control.
Second, Other Employee Rights
The additional rights mentioned by the author—such as support in job searching, vocational training assistance, and health insurance coverage during the period of receiving unemployment benefits—cannot be exercised if the employee fails to submit an application as required. This is also considered an actual loss to the employee, stemming from the employer’s delay in fulfilling its obligations. The author agrees with the court’s stance in the case under discussion, which required the employer to fully pay insurance contributions, finalize and return the insurance record to the employee, and compensate the employee for the income they would have received from the unemployment insurance regime.
III. Conclusion
During the course of employment, there are periods when employees face difficulties due to job loss, which consequently affects their income. Support provided to employees through unemployment benefit regulations offers significant relief. Unemployment insurance serves as a mechanism for sharing responsibility between employers and employees, among employees themselves, and across different stages of an employee’s working life. Additionally, it reflects state support for the parties in employment relationships, as demonstrated through provisions governing the establishment of the unemployment insurance fund.
To ensure employees’ rights are protected in cases of unemployment, the timely contribution to the unemployment insurance fund and the completion of procedures to access benefits are critical. Employees themselves must be proactive in safeguarding their rights, while employers must act in good faith in fulfilling their obligations toward employees. Only then can employment relationships remain stable and employees’ rights be fully secured.
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