Maximum Duration for Unemployment Insurance in Vietnam: 12 Months

Unemployment insurance plays a crucial role in helping workers stabilize their lives when facing job loss. In this context, the regulations on the duration of unemployment insurance in Vietnam become a decisive factor for the financial security of workers during the period of seeking new employment. This article will delve into this timeframe, with a particular focus on the stipulation that the duration of unemployment insurance should not exceed 12 months, even if the contributor has paid for more than 12 years.

The issue of the duration of unemployment insurance in Vietnam is significant for workers, especially in the current dynamic labor market. According to the regulations in Article 50 of the 2013 Labor Code, the duration of receiving unemployment benefits is calculated based on the number of months of unemployment insurance contributions as follows:

• For those who have contributed for 12 to 36 months, they are entitled to 3 months of unemployment benefits.
• Subsequently, for each additional 12 months of contribution, they are entitled to an extra 1 month of unemployment benefits, but the maximum duration should not exceed 12 months.

Therefore, although the regulations state that workers can only receive a maximum of 12 months, many contributors still misunderstand this provision. Commonly, contributors believe that if they have contributed for more than 12 years and meet the conditions for the full 12-month unemployment benefits, they can retain the excess for the next unemployment period.

However, in reality, if contributors have paid for more than 12 years of unemployment insurance and decide to claim the benefits, they will only receive a maximum of 12 months of unemployment insurance, and the excess duration will not be retained.

For example, if a contributor has paid for 20 years of unemployment insurance, takes a break, and claims benefits for the first time, they will receive a maximum of 12 months of unemployment benefits. After working normally for four years and continuing to participate in the social insurance system, when they take a break for the second time to claim unemployment benefits, they will only receive four months of benefits corresponding to the four years of new contributions. The remaining eight-month surplus from the first claim will not be retained, meaning that the contributor will lose this contribution entirely.

The nonretention of more than 12 months also applies in cases where a worker claims benefits for the first time but does not reach the full 12 months. For instance, in the above case, if the worker claims only 10 months of benefits for the first time, they will retain two months instead of 10 months. When claiming benefits for the second time, they will receive two plus four months, totaling six months of unemployment benefits.

With the current method and regulations for receiving unemployment benefits, workers looking to optimize their contributions to the system should consider the plan of contributing for 12 years, taking a 12-month break, and then returning to work.

Currently, many Vietnamese workers are adopting a strategy of contributing continuously for 30-40 years, without interruptions, without claiming unemployment benefits and taking a break before retirement for a few years corresponding to the number of years contributed, hoping to receive unemployment benefits for 30-40 months. However, when receiving the 12th month of unemployment benefits, they realize that the maximum duration is only 12 months and is not retained for the surplus duration.

ASL Law is a Vietnamese law firm based in Hanoi and Ho Chi Minh City, Vietnam. © 2024 ASL Law. All rights reserved. Reposted with permission of Lexology.