Question:
Our company established a salary scale system starting in 2010 with the applied minimum enterprise salary level of 1,350,000 VND. We multiplied this salary level by the rank coefficient to determine the basic salary for Social Insurance premium calculation. However, in 2015, the minimum salary level set by the state in Ho Chi Minh City was 3,100,000 VND. For trained employees, an additional 0.07 coefficient was applied, making it 3,317,000 VND. We have three employees whose calculated salary using the minimum enterprise salary level (1,350,000 VND) with a rank coefficient (1.7) resulted in 2,970,000 VND, which is lower than the minimum salary level (3,317,000 VND) for trained employees. Therefore, we decided to increase their salary to 3,317,000 VND, even though it doesn’t fit within our company’s salary scale for Social Insurance premium calculation (not matching any rank coefficient). Later, when we signed employment contracts with new employees, we set their salary at 3,317,000 VND, which also doesn’t correspond to any rank coefficient in our salary scale, and we used this amount for Social Insurance premium calculation. However, the total salary is 6,017,000 VND, and the actual salary is 5,718,000 VND. The remaining amount is allocated to productivity and other allowances. Is this in accordance with the law?
Answer:
According to Law on Social Insurance, the Social Insurance premium is based on the salary determined by the employer. The salary used for Social Insurance premium calculation cannot be lower than the minimum salary level set by the State and must be in accordance with the salary scale or table constructed by the employer as per labor laws.
– Starting from January 1, 2016, the salary used for Social Insurance premium calculation includes salary and wage-related allowances as specified by labor laws.
– Starting from January 1, 2018, the salary used for Social Insurance premium calculation includes salary, wage-related allowances, and other additional components as specified by labor laws.
Question:
Our company issued a Decision to appoint some regular employees to managerial positions, with a managerial allowance of 2,500,000 VND/person/month. However, the decision states: “This allowance is not included in the main salary for Social Insurance, Health Insurance, and Unemployment Insurance contribution.” Is it correct for my company to issue such a decision?
In 2016, our company paid mandatory Insurance contributions for employees without including this allowance in the main salary for calculation. Is this correct?
Answer:
Based on Article 1, Clause 30 of Circular No. 59/2015/TT-BLDTBXH, the allowance is defined as additional wage components to compensate for factors related to working conditions, the complexity of the job, living conditions, labor attraction levels that are not fully accounted for or not fully accounted for in the agreed-upon wage in the labor contract. These components include position allowances, responsibility allowances, arduous, hazardous, dangerous allowances, seniority allowances, regional allowances, mobility allowances, attraction allowances, and similar allowances.
Therefore, the managerial allowance that the company provides falls under the scope of these regulations and should be considered for Social Insurance, Health Insurance, and Unemployment Insurance contribution calculation.
Question:
Our company pays employees’ salaries including: Basic salary; position allowance, responsibility allowance; productivity allowance; arduous allowance; seniority allowance; and attendance allowance.
I would like to ask, starting from 2016, for the purpose of mandatory Social Insurance contributions, which of the above components does our company consider in the calculation? Which document provides guidance on this?
Answer:
Based on Article 1, Clause 30 of Circular No. 59/2015/TT-BLDTBXH, the allowance is defined as additional wage components to compensate for factors related to working conditions, the complexity of the job, living conditions, labor attraction levels that are not fully accounted for or not fully accounted for in the agreed-upon wage in the labor contract. These components include position allowances, responsibility allowances, arduous, hazardous, dangerous allowances, seniority allowances, regional allowances, mobility allowances, attraction allowances, and similar allowances. Therefore, the managerial allowance that the company provides falls under the scope of these regulations and should be considered for Social Insurance, Health Insurance, and Unemployment Insurance contribution calculation.
Question:
Our company is a 2-member Limited Liability Company. The company falls under the category of very small-sized enterprises with only 3 employees.
The director of the company also serves as the chairman of the Board of Members (and is one of the 2 founding members). The director does not receive a salary but is entitled to a working allowance ranging from 3 to 5 million VND per month. (The amount of this working allowance is determined based on the Minutes of Meetings decided by the Board of Members at the beginning of each year). In the salary table, only the column for working allowance is filled, with the salary column showing 0. This allowance is accounted for as a business management expense. This arrangement has been in place from 2009 until the end of 2015. The director’s name and title were reported in the labor usage declaration in 2009.
Due to our lack of understanding of social insurance laws, we thought that since the director only receives a working allowance and not a salary, during this period (2009-2015), our company did not contribute to Social Insurance, Health Insurance, and Unemployment Insurance for the director as mentioned above. Is this a violation of the social insurance laws? If so, which specific provision of the law has been violated?
Answer:
Based on Point 1.5, Clause 1, Article 4 of Decision 959/QD-BHXH dated September 9, 2015, which provides regulations for managing the collection of Social Insurance, Health Insurance, and Unemployment Insurance contributions, and managing Social Insurance records and Health Insurance cards, the mandatory participants in Social Insurance include enterprise managers and cooperative managers who receive a salary.
In accordance with the above regulation, in the case where the director of the company is both a founding member and the chairman of the Board of Members, and only receives a working allowance without a salary, they do not fall under the category of mandatory participants for Social Insurance, Health Insurance, and Unemployment Insurance.
Question:
My company is fully participating in social insurance. However, in an upcoming meeting, the company’s director and employees are going to discuss a plan to pay employees based on a percentage of revenue (productivity-based salary). This salary component is not fixed monthly and fluctuates depending on sales figures. Besides the fixed monthly salary that is covered by insurance, does this productivity-based salary also need to be included in and subject to insurance contributions? The company finds it difficult to manage the calculations and declarations for insurance purposes due to the variable nature of this component.
Answer:
– Based on Article 30 of Circular No. 59/2015/TT-BLDTBXH dated December 29, 2015 by the Ministry of Labor – Invalids and Social Affairs, the basis for calculating social insurance, health insurance, and unemployment insurance contributions is the salary system determined by the employer from January 01, 2016 to December 31, 2017, including the salary and salary-related allowances stated in the labor contract.
– Salary-related allowances are those additional payments meant to compensate for labor conditions, complexity of tasks, living conditions, and attracting labor, which are not fully included or accounted for in the agreed salary in the labor contract. These include allowances for positions, responsibilities, hazardous and dangerous work, seniority, regional allowances, travel allowances, attractiveness allowances, and similar allowances.
– Other benefits and welfare items, such as innovation bonuses, mid-shift meals, fuel and transportation allowances, rent, child care, support for accidents or occupational diseases, and other forms of assistance, are recorded separately in the labor contract according to Clause 11, Article 4 of Decree No. 05/2015/ND-CP dated January 12, 2015 by the Government providing detailed regulations and guidance on the implementation of certain provisions of the Labor Code, and these items are not subject to social insurance contributions.
