In light of the growing tension of the Covid-19 pandemic, the production and operation of many businesses has to be suspended or narrowed, leading to the suspension of work of many people. In this case, enterprises need to comprehend the relevant legal regulations to fulfill their obligation to pay salary and contribute compulsory social insurance premium for their employees. Within the scope of this article, we only refer to the case where the enterprise applies the regulations on suspension of work under current Labor Code.
Causes of work suspension
According to the provision on salary payment when employees have to temporarily stop working, the Labor Code 2019 has divided the causes of work suspension into three main groups: (i) the employer’s fault, (ii) the employee’ fault and (iii) objective reasons. The case where the employee has to temporarily stop working due to a “major epidemic” falls into group (iii).
Covid-19 has been identified as an extremely dangerous infectious disease and was declared as an epidemic nationwide. Therefore, the work suspension of employees due to Covid-19 is determined as the one caused by “major epidemic”. According to the guidance of the Department of Labor Relations and Wages, an employee is considered to suspend working due to the impact of the Covid-19 if:
- he/she is in quarantine;
- his/her workplace or residential place is in the blocked area;
- his/her workplace must temporarily suspend operations for disease prevention and control at the request of the competent authority;
- his/her place of work cannot operate because the employer or co-worker is in quarantine or has not returned to work.
In other cases, employers should not automatically consider any work suspension during this time as a result of a “major epidemic”. Any causes should be evaluated on case-by-case basis to determine the accurate payment obligation accordingly.
Obligation of employer
The salary during work suspension due to Covid-19 will be agreed by employers and employees, provided that, for the first 14 days, it is not lower than the minimum wage prescribed by the State. From the 15th day onwards, the salary will completely depend on the agreement of the two parties. However, the law stays silent in case both parties cannot reach an agreement on this issue.
At the same time, the employer still has to pay social insurance premium for employees based on the salary during the work suspension instead of the salary initially agreed in the labor contract. In this case, the employers need to carry out procedures to adjust the salary being the basis to calculate the compulsory insurance contribution. In case the two parties agree that the employee will not be paid (after the first 14 days of work suspension), the enterprise is not required to contribute social insurance if that employee does not work and not receive salary for 14 working days or more in one month.
Support from the State
For employees who have to stop working due to medical isolation or blockade for 14 days or more from 01 May 2021 to the end of this year, and have been participating in compulsory social insurance right before the work suspension, the State will support VND1,000,000 per person. The enterprise needs to prepare the documents specified in Decision 23/2021/QD-Ttg to request this support for their employees. The deadline for receiving applications is 31 January 2022.
Enterprises are also allowed to borrow money from the Bank for Social Policies at 0% interest rate without security measures to pay salary for employees participating in compulsory social insurance who have to stop working for 15 consecutive days or more from 01 May 2021 to the end of 31 March 2022. Enterprises must have no NPL at any credit institutions and foreign bank branches at the time of applying for this loan.
Besides, to support enterprises in overcoming financial difficulties, the State has policies on social insurance payment as follows:
First, the contribution rate of 0% is applied to the labor accident and occupational disease insurance fund from 01 July 2021 to the end of 30 June 2022.
Second, enterprises are allowed to suspend the contirbution of the retirement and survivorship fund for 6 months from the month the enterprise submits the application, if the number of employees subject to social insurance contribution at the time of submission has been reduced by more than 15% compared to April 2021. To be clearer, the reduced number of employees participating in social insurance includes the employees in the following cases: (i) termination of labor contract, (ii) suspension of labor contract performance; (iii) taking unpaid leave; (iv) suspension of work for 14 working days or more in a month. After the contribution suspension period, the enterprises and its employees shall continue to contribute to this fund and make supplementary payment for suspension period (for employees experience work suspension).