2026 Law Update: Labor Contracts and New Unemployment Insurance Rules

2026 Law Update: New Unemployment Insurance Rules and Required Labor Contract Revisions

This is a law update (LAWUP): it analyzes only new points from the Law on Employment 74/2025 (effective 01/01/2026) and their impact on labor contracts. For the general handbook, see C0122.

Vietnam 2026 unemployment insurance labor contract — what changed? The Law on Employment 74/2025/QH15 has been in force since 01/01/2026, with a change directly affecting every employer of short-term labor: unemployment insurance (UI) extends to employees working under fixed-term labor contracts of 01 month or more. If your company uses many 1–3 month contracts (seasonal, project-based…), this is a must-read.

Contents

• 1. The new point: UI extends to 1-month+ contracts
• 2. Impact on costs and labor administration
• 3. Labor contract review checklist (applicable from 01/01/2026)
• 4. Common mistakes with short-term labor
• 5. Frequently asked questions
• 6. When to work with a lawyer
• References

1. The new point: UI extends to 1-month+ contracts

Under the Vietnam 2026 unemployment insurance labor contract reform (Law on Employment 74/2025), since 01/01/2026 UI coverage has extended to employees working under fixed-term labor contracts of 01 month or more. Previously the common threshold was 3 months — meaning a large volume of short-term workers (1–3 month contracts) enters mandatory UI for the first time.

Note the Labor Code 2019 framework: only two labor contract types exist (indefinite-term and fixed-term, Article 20) — no more seasonal contracts. So "fixed-term contracts of 01 month or more" covers seasonal and project positions employers still call "seasonal contracts".

2. Impact on costs and labor administration

• Higher labor costs: for each newly covered worker, employers pay additional UI (employers a maximum of 1% of UI-contribution salary; employees a maximum of 1% — Article 33 of the Employment Law 74/2025/QH15). For hundreds of seasonal workers, the cumulative figure is significant.
• Registration procedures: newly covered workers must be registered, with monthly social/UI participant lists adjusted.
• Contract contents: social/UI insurance clauses in templates must reflect the new threshold — old templates stating "UI from 3-month contracts" have been wrong since 01/01/2026.
• Inspection risk: the social insurance agency cross-checks data — employers with many short-term contracts but no UI payments will attract post-01/01/2026 inspections.

3. Labor contract review checklist (applicable from 01/01/2026)

• [ ] Inventory all fixed-term contracts of 01 month to under 03 months still in force
• [ ] Update templates: social/UI insurance clauses per the new 01-month threshold
• [ ] Review internal labor rules and collective agreements referencing old UI rules
• [ ] Prepare UI registration workflow for short-term workers (with accounting/social insurance)
• [ ] Train HR on contract classification and new UI duties
• [ ] Re-budget 2026 labor costs for short-term positions

4. Common mistakes with short-term labor

1. Chaining sub-1-month contracts to "dodge" UI — violates labor contracting rules and fails where the relationship is substantively employment.
2. Using service/lump-sum contracts instead of labor contracts for regular work — authorities assess substance over contract titles.
3. Forgetting to update templates — old UI clauses in contracts signed after 01/01/2026 create contradictions and dispute risk.
4. Deducting the employee's UI contribution (max 1% of monthly salary) without registering UI — a violation that also grounds complaints.

5. Frequently asked questions

Q: What is the biggest new UI point in Law on Employment 74/2025?

A: UI coverage extends to employees working under fixed-term labor contracts of 01 month or more (effective 01/01/2026). Previously, the common threshold was 3 months.

Q: Must 1–3 month labor contracts pay UI from 2026?

A: Yes, if they are fixed-term contracts of 01 month or more. Employers must register and pay UI for covered employees from 01/01/2026.

Q: What must employers revise in labor contract templates?

A: Review social/UI insurance clauses: update UI coverage to the new 01-month threshold; check short-term (1–3 month) templates in use; update internal labor rules and collective agreements referencing old rules.

Q: What are the UI contribution rates?

A: Under Article 33 of the Employment Law 74/2025/QH15: employees and employers each contribute a maximum of 1% of the monthly UI-contribution salary (specific rates set by guiding regulations). Wider coverage means higher labor costs for short-term positions.

Q: What are the penalties for not paying UI for the newly covered?

A: Administrative penalties on social/UI insurance, arrears recovery plus late-payment interest. Employees losing UI benefits may complain or sue.

Q: How does this article differ from handbook C0122?

A: C0122 is the general labor contract handbook. This is a law update (LAWUP) focusing only on new points from Law on Employment 74/2025 effective 01/01/2026 and their impact on drafting and reviewing labor contracts.

6. When to work with a lawyer

Work with a lawyer when: promptly reviewing all labor contract templates, internal rules and collective agreements under current rules; facing social/UI insurance inspections or arrears for short-term labor; or redesigning contract structures for seasonal/project workforces. FLAT Law Firm advises FDI and domestic enterprises on labor — contact hotline 0988424851.

References

• Law on Employment 74/2025/QH15 (effective 01/01/2026).
• Labor Code 2019 (45/2019/QH14).
• Content cross-checked at time of writing (28/9/2026).

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