PROBATIONARY EMPLOYEES: ARE THEY REQUIRED TO PAY SOCIAL INSURANCE?

According to the current developments, employees often have a probationary period of 1 to 2 months to get used to the job before officially signing a labor contract with the employer. During the probationary period, besides salary, social insurance is also a benefit that employees are concerned about. In the following article, VSE explains whether employees are required to pay social insurance or not based on provisions of current law

22/11/2023

PROBATIONARY EMPLOYEES: ARE THEY REQUIRED TO PAY SOCIAL INSURANCE?

I. Legal basis

- The labour code 2019

- Law on social insurance 2014

II. Are probationary employees required to pay social insurance

1. People that are required to pay Compulsory social insurance

According to Clause 1 Article 2 of Law on social insurance 2014, Employees being Vietnamese citizens shall be covered by compulsory social insurance, including:

- Persons working under indefinite-term labor contracts, definite-term labor contracts, seasonal labor contracts or contracts for given jobs with a term of between full 3 months and under 12 months, including also labor contracts signed between employers and at-law representatives of persons aged under 15 years in accordance with the labor law

- Persons working under labor contracts with a term of between full 1 month and under 3 months

In fact, employees can sign a labor contract with provisions for a probationary period or sign a probationary contract. In each case, social insurance payment will be regulated differently

2. The employee signs a labor contract with probationary content

According to Clause 1 Article 2 of Law on social insurance 2014, employees who sign a labor contract with the employer for a period of 1 month or more will be subject to compulsory social insurance payment since most labor contracts include regulations on paying compulsory social insurance. However, in case the labor contract stipulates that during the probationary period the employee will not pay compulsory social insurance, the employee will not have to pay social insurance

3. The employee signs a probationary contract

According to Article 24 of The labour code 2019, employees and employers can freely enter into probationary contracts with contents not prohibited by law and a probationary contract usually includes the following contents:

- The employer’s name, address; full name and position of the person who concludes the contract on the employer’s side;

- Full name, date of birth, gender, residence, identity card number or passport number of the person who concludes the contract on the employee’s side

- The job and workplace

- Job- or position-based salary, form of salary payment, due date for payment of salary, allowances and other additional payments

- Working hours, rest periods

- Personal protective equipment for the employee

Thus, a probationary contract will usually have no provisions on social insurance payment. In addition, according to Law on social insurance 2014, employees who sign probationary contracts will not be required to pay compulsory social insurance.

III. Conclusion

Thus, if a probationary employee signs a labor contract, he or she will be subject to compulsory social insurance contributions unless the contract has other provisions. On the contrary, if a probationary employee only signs a probationary contract, he or she will not be subject to compulsory social insurance contributions.

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

Attention: This legal update is not an advice and should not be treated as such.