In brief
On 16 June 2025, the National Assembly passed the new Law on Employment No. 74/2025/QH15 (“Employment Law”), which took effect on 1 January 2026, superseding the Law on Employment No. 38/2013/QH13 dated 16 November 2013.
The Employment Law introduced several changes to previously applicable regulations, impacting the subjects of compulsory unemployment insurance (UI) contributions, UI contribution rates and obligations of employers in relation to UI.
Recommended actions
Employers should review which employees are subject to compulsory UI and their current insurance contribution status for compliance with the new regulations.
Please contact us if you require further analysis of the impacts of the updated Employment Law.
In more detail
UI subject changes
The Employment Law expands the scope of individuals subject to participation in UI (to align with the expanded scope of social insurance subjects introduced under the Law on Social Insurance 2024). In particular, Vietnamese individuals (among others) who are working: (i) under a contract with a term of at least one month (previously three months) that is reflective or indicative of an employment contract, regardless of the name or description of this contract; (ii) under a part-time labor contract with a monthly salary equal to or higher than the lowest salary rate used as the basis for compulsory social insurance contributions; and (iii) as business managers, controllers or representatives of a company’s capital that receive a salary, will now be subject to UI.
The Employment Law also expands the scope of employees not subject to UI, including employees: (i) working under probationary contracts; (ii) receiving pension, social insurance benefits or other government allowances; and (iii) eligible for (but not receiving) a pension.
Amended UI contribution rates
Instead of the previous fixed 1% UI contribution rate, the Employment Law sets a maximum contribution rate of: (i) 1% of monthly salary for employees; and (ii) 1% of monthly salary fund for employers. The monthly salary fund is calculated based on the total monthly salaries of employees subject to UI, including salary, allowances and other additional amounts paid regularly and stably.
Notably, the maximum contribution rate does not allow employers to freely determine the applicable contribution rate. Rather, the specific contribution rate (within the stated maximum) will be prescribed by the government in implementing decrees. The change from a fixed to a maximum contribution rate is intended to allow the government to reduce UI contribution rates for economic crises, recessions or force majeure events.
The current rate is still 1% according to Decree No. 374/2025/ND-CP guiding the Law on Employment 2025 on UI.1
Other notable changes
- Employees who unilaterally terminate their labor contracts illegally, or retire to receive a pension, are ineligible for unemployment allowance.
- Employers are entitled to a reduction in UI contributions for up to 12 months for disabled employees.
- If an employee is ineligible for unemployment allowance due to the employer’s failure to fully pay UI contributions, the employer must directly pay the employee an amount equivalent to their unemployment allowance entitlement.
1 Article 4 of Decree No. 374/2025/NĐ-CP.
Hoang Anh Nguyen, Special Counsel, has contributed to this legal update.
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