Employee probation vietnam lastest

When starting work at a company or organization, employees must go through a probationary period. So, is social insurance contributions required during the probationary period? What are the regulations regarding the maximum probationary period and probationary salary? Is it subject to personal income tax? In this article, Faro Vietnam will answer these questions.

1. Regulations on the Maximum Probationary Period for Employees

According to Article 26 of the Labor Code - Law No. 10/2012/QH13:

The maximum probationary period will be based on the nature and complexity of the job, but only one probationary period is allowed for a single job, and must meet the following conditions:

• The maximum probationary period shall not exceed 60 days for jobs requiring professional and technical qualifications at the college level or higher;
• The maximum probationary period is no more than 30 days for jobs requiring professional and technical qualifications from intermediate level, skilled worker, or professional staff;
• The maximum probationary period is no more than 6 working days for other jobs.

Maximum probationary period

Maximum probationary period

End of probationary period:

• If the probationary work is satisfactory, the employer must enter into a labor contract with the employee.
• During the probationary period, each party has the right to terminate the probationary agreement without prior notice and without compensation if the probationary work of both parties does not meet the agreed requirements.

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2. Salary during the probationary period

Article 26 of the 2019 Labor Law stipulates the probationary salary as follows:

The employee's salary during the probationary period shall be agreed upon by both parties, but must be at least 85% of the salary for that job.

3. Is it necessary to pay social insurance during the probationary period?

- According to Articles 4, 13, and 17 of Decision 959/QD-BHXH, the subjects participating in social insurance, health insurance, and unemployment insurance include:

+ Employees working under labor contracts or indefinite-term employment contracts, fixed-term labor contracts, seasonal labor contracts, or contracts for a specific job with a duration of 3 months to less than 12 months;

+ Employees working under labor contracts with a duration of 1 month to less than 3 months (effective from January 1, 2018);

+ Enterprise managers and cooperative managers receiving salaries.

- Articles 26 and 27 of the Labor Code – Law No. 10/2012/QH13 stipulate:

+ Employers and employees may agree on probationary employment, and the rights and obligations of both parties during the probationary period.

+ If there is an agreement on probation, the parties may enter into a probationary employment contract. The probationary contract must contain the provisions stipulated in points a, b, c, d, e, g, and h of Clause 1, Article 23 of this Labor Code, excluding provisions on social insurance and health insurance.

=> The probationary period under a probationary contract is not subject to social insurance participation.

Maximum probationary period

Is participation in social insurance required during the probationary period?

However: According to Clause 3, Article 186 of the Labor Code:

- For employees not subject to mandatory social insurance, mandatory health insurance, and unemployment insurance, in addition to paying wages for the work performed, the employer is responsible for paying an additional amount equivalent to the social insurance, health insurance, and unemployment insurance contributions to the employee at the same time as the employee's salary payment.

Therefore, although the company is not required to contribute to social insurance for probationary employees, it is responsible for paying an additional amount equivalent to the company's share of mandatory social insurance contributions (22%, including: Social Insurance 18%, Health Insurance 3%, Unemployment Insurance 1%) simultaneously with the employee's salary payment.

- According to point 3 of Official Letter No. 2447/LĐTBXH-BHXH dated July 26, 2011:

For employees with a probationary period specified in the employment contract, and that contract is subject to mandatory social insurance contributions, both the employer and the employee must contribute to mandatory social insurance for the entire probationary period. The salary or wage used as the basis for social insurance contributions during the probationary period is the salary or wage stated in the employment contract.
 

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Thus:

• If the probationary period is clearly defined in the employment contract, then social insurance contributions are not required.
• If the probationary period is stated in the long-term employment contract as being longer than 3 months, social insurance contributions must be paid for the entire probationary period.
• At the end of the probationary period, a decision must be made on whether the employee continues working or terminates employment (If they continue working, they must sign an employment contract and participate in social insurance).

4. Can probationary salaries be subject to personal income tax?

According to Article 2 of Circular 111/2013/TT-BTC, income from salaries and wages of employees is determined to be subject to personal income tax. Therefore, probationary salaries are also considered taxable income.

Thus, before paying salaries to employees, employers are allowed to deduct the tax payable from the employee's income according to Clause 1, Article 25 of Circular 111.

However, according to this regulation, employees only have to pay personal income tax in the following cases:

- Employees on probation by signing a labor contract of 3 months or more with total income from salaries and wages > 11 million VND/month (if there are no dependents; if there is one dependent, the income must be > 15.4 million VND/month).

- Employees who sign a probationary contract or a probationary employment contract of less than 3 months with a total income of 2 million VND or more per payment but do not submit a commitment form (Form 02/CK-TNCN) to the employer will have 10% of their probationary salary deducted.

The above is information regarding probationary salaries and maximum probationary periods. Hopefully, this information will be helpful to both employees and employers during the probationary period.

Faro Vietnam

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