The Employment Law 2025, effective from 1 January 2026, marks the most significant reform of employment and unemployment insurance policies in over a decade. These amendments not only address gaps in the Employment Law 2013 but also introduce additional mechanisms to protect employees while supporting businesses to respond more flexibly to socio-economic fluctuations.
Below is a summary of the notable changes, along with a detailed comparison between the old and new laws:
Expansion of Employees Covered by Unemployment Insurance
Compared with the Employment Law 2013, which required unemployment insurance participation for employees working under indefinite-term labour contracts, fixed-term labour contracts, and seasonal or specific-job contracts with a duration from full 3 months to under 12 months, the latest Employment Law 2025 (effective from 1 January 2026) expands the scope of employees required to participate in unemployment insurance, specifically as follows:
- Inclusion of employees working under contracts with a term from 1 full month to less than 3 months
- Employees working under part-time labour contracts whose monthly salary is equal to or higher than the minimum salary used as the basis for compulsory social insurance contributions in accordance with the 2024 Social Insurance Law.
- Individuals working under agreements with different titles but whose contents demonstrate a paid employment relationship with management, supervision, and direction from one party.
Support for Businesses in Special Situations Regarding Unemployment Insurance
Under Clause 2, Article 30 of the Employment Law 2025, in special circumstances such as economic crises, natural disasters, or epidemics, the Government is permitted to reduce unemployment insurance contributions or provide direct financial support in order to ease the financial burden on businesses and help them maintain employment for their employees. According to the provisions of this Law, the maximum unemployment insurance contribution is set as follows: employees contribute up to 1% of their monthly salary used as the basis for social insurance, employers contribute up to 1% of the monthly wage fund of participating employees, and the State provides support of up to 1% of the monthly wage fund. In special circumstances, the actual contribution rate may be reduced at the Government’s discretion, ensuring fund balance while supporting businesses to overcome difficulties.
New Maximum Cap for Unemployment Benefits
The 2025 Law maintains the previous formula for calculating unemployment benefits but introduces a maximum cap to ensure fund sustainability. According to the new regulations, an employee’s monthly benefit cannot exceed five (5) times the regional minimum wage applicable in the last month the employee participated in unemployment insurance. This cap helps better manage high-income cases while maintaining the contribution-benefit principle.
| Zone | Current cap, until 31 December 2025 | New cap, effective from 1 January 2026 |
| Zone I | VND 24,800,000 | VND 26,550,000 |
| Zone II | VND 22,050,000 | VND 23,650,000 |
| Zone III | VND 19,300,000 | VND 20,700,000 |
| Zone IV | VND 17,250,000 | VND 18,500,000 |
Additionally, the Employment Law 2025 shortens the waiting period to receive benefits, allowing employees to receive support from the 11th working day after submitting a complete application, 5 days earlier than the current regulations which the unemployment benefit period is calculated from the 16th day following full submission.
In conclusion, compared with the Employment Law 2013, the notable improvement that are limiting monthly payments to five (5) times the regional minimum wage to ensure fund sustainability, with updated caps effective from 1 January 2026. It also shortens the waiting period for receiving benefits to the 11 working day after a complete application, five (5) days earlier than before.
Changes to Unemployment Benefit Eligibility for Short-Term Contracts
Clause 1, Article 38 of the 2025 Law adjusts the required insurance contribution period to be more flexible, especially for short-term contract employees. Specifically, employees with contracts of 1–12 months must have contributed for 12 months within the 36 months prior to contract termination to be eligible for unemployment benefits. Other cases (contracts of 12 months or more, or indefinite contracts) continue to apply the 24-month evaluation period as before.
Compared with the 2013 Law, this new rule addresses a major limitation: the previous law only applied a single 24-month period, without distinguishing contract length. This often-disadvantaged short-term contract employees, whose contribution periods were easily interrupted, making them ineligible for benefits. The 2025 Law is therefore more practical and expands benefit eligibility for this group.
Reduced Unemployment Insurance Contributions for Employees with Disabilities
The Employment Law 2025introduces an important incentive for employees with disabilities. Specifically, Clause 6, Article 33 allows employers to reduce unemployment insurance contributions for up to 12 months when hiring and employing persons with disabilities. This regulation aims to lower initial costs for businesses and encourage the expansion of job opportunities for disadvantaged groups.
Recommendations & discussions
With the changes taking effect from 1 January 2026, it is crucial for companies to incorporate these adjustments into their budgeting processes. Employers are advised to:
- Update the payroll software and internal calculations to align with new changes and properly reflect the maximum caps for Social Insurance contributions and related PIT payment calculations from 1 January 2026.
- Review to ascertain that the stated salaries in labour contracts and Salary Scale remain in accordance with the changes and their respective zones.
- Following the significant increase in the family circumstance-based deductions from 1 January 2026, employees may also reassess their current dependent registration to ensure it remains optimal under the new tax thresholds. In some cases, the higher deduction level may already be sufficient for an employee to reach a non-taxable or low-tax bracket, making some existing dependent registrations no longer necessary. As a result, employees may consider adjusting, either reducing the number of dependents claimed to reallocate the dependent to their eligible family member where such an arrangement would be more beneficial. This behavioural shift is expected to generate additional requests for dependent updates, removals, or transfers, requiring the employers to support verification, documentation processing, and system adjustments. Employers should therefore anticipate this trend and prepare corresponding internal guidance to help employees make informed and compliant decisions when optimising their PIT obligations under the revised regulation.
Nguyen Ngoc Truc Phuong – Manager – Payroll & HR Consulting -trucphuong.nguyen@Vieter.com