(I.e. Last updated on September 14, 2026, according to Decree 283/2026/ND-CP Effective from September 10, 2026.
This article provides guidance on penalties for paying social insurance contributions lower than actual wages and solutions to ensure compliance, avoid penalties, and prevent back taxes from being collected.
Question:
If a company pays social insurance contributions at a rate lower than the actual salary stated in the employment contract, as agreed upon with the employee, will it be penalized?
Reply:
Point a, Clause 2, Article 44 Decree 283/2026/ND-CP Determined: the registered salary used as the basis for mandatory social insurance contributions is lower than the amount stipulated in Clause 1, Article 31. Social Insurance Law This is the act of evading social insurance contributions., which is no longer considered as underpayment as per the old regulations:
A fine of 18% to 20% of the total amount of evaded mandatory social insurance contributions, but not exceeding VND 75.000.000, shall be imposed on employers who commit any of the following acts of evading social insurance contributions:
a) Registering a salary as the basis for mandatory social insurance contributions that is lower than the amount stipulated in Clause 1, Article 31 of the Social Insurance Law.
– Clause 2, Article 44 of Decree 283/2026/ND-CP
The aforementioned amount of VND 75.000.000 applies to individuals. According to Clause 1, Article 7 of the Decree, the fine for organizations is twice the fine for individuals, so businesses can be fined up to VND 150.000.000. Household businesses are subject to the same penalties as individuals according to Clause 3, Article 7.
In addition to the fine, the business must also remedy the consequences. According to point b, clause 3, Article 44, the business is compelled to:
- Pay all outstanding mandatory social insurance contributions.
- A fee of 0,03% per day will be charged to the social insurance fund based on the amount of unpaid contributions and the number of days the contributions were evaded.
This is a significant change compared to the old regulations. Previously, the additional amount to be paid was calculated as twice the average investment interest rate of the social insurance fund in the preceding year. Now, it is a fixed rate of 0,03% per day, equivalent to approximately 10,95% per year, calculated continuously for the number of days until the enterprise pays in full.
In serious cases, criminal prosecution may be pursued.
Article 4 Decree 283/2026/ND-CP The regulations stipulate the transfer of case files involving violations with suspected criminal elements to the competent authority. If the act of evading social insurance contributions constitutes a crime, it will be prosecuted under the Criminal Code, not just subject to administrative penalties.
Note
According to Article 67 of Decree 283/2026/ND-CP, acts that occurred and ended before the Decree came into effect will be handled according to the legal document in effect at the time the act was committed. However, registering lower-than-regulated salaries for insurance contributions often persists over multiple contribution periods. If this situation continues after September 10, 2026, the new penalty framework will apply.
Solution:
According to Article 7 Decree 158/2025/ND-CP:
The salary used as the basis for mandatory social insurance contributions is determined according to the provisions of Clause 1, Article 31 of Social Insurance Law and is specified in detail as follows:
1. The salary used as the basis for mandatory social insurance contributions, as stipulated in point b, clause 1, Article 31 of the Social Insurance Law, is the monthly salary, including the salary based on the job or position, salary allowances, and other supplementary payments, in which:
a) The salary for a job or position, calculated based on the time spent (monthly) in that job or position, is determined according to the salary scale or salary table established by the employer in accordance with Article 93 of the Labor Code and agreed upon in the labor contract;
b) Salary allowances to compensate for factors related to working conditions, job complexity, living conditions, and the level of labor attraction that have not been taken into account or have not been fully taken into account in the salary specified in point a) of this clause, as agreed upon in the labor contract; excluding salary allowances that depend on or fluctuate according to labor productivity, work process, and the quality of work performed by the employee;
c) Other supplementary payments, with specific amounts determined together with the salary as stipulated in point a) of this clause, are agreed upon in the labor contract and paid regularly and stably in each pay period; excluding other supplementary payments that depend on or fluctuate based on labor productivity, work process, and the quality of work performed by the employee.
2. The salary used as the basis for mandatory social insurance contributions for the subjects specified in point l, clause 1, Article 2 of the Social Insurance Law is the monthly salary as agreed upon in the labor contract.
If the employment contract stipulates hourly wages, the monthly wage is calculated by multiplying the hourly wage by the number of working hours in the month as agreed upon in the employment contract.
If the employment contract stipulates a daily wage, the monthly wage is calculated by multiplying the daily wage by the number of working days in the month as agreed upon in the employment contract.
If the employment contract stipulates a weekly wage, the monthly salary is calculated by multiplying the weekly wage by the number of working weeks in the month as agreed upon in the employment contract.
3. The salary used as the basis for compulsory social insurance contributions for the subjects specified in point k, clause 1, Article 2 of the Social Insurance Law is the monthly allowance of part-time workers at the commune, village, or residential group level. If the monthly allowance of part-time workers at the commune, village, or residential group level is lower than the lowest salary used as the basis for compulsory social insurance contributions, then the salary used as the basis for compulsory social insurance contributions shall be equal to the lowest salary used as the basis for compulsory social insurance contributions as stipulated in point d, clause 1, Article 31 of the Social Insurance Law.
4. The salary used as the basis for compulsory social insurance contributions for the subjects specified in point i, clause 1, Article 2 of the Social Insurance Law is the salary that these subjects receive according to the provisions of the law.
5. In cases where the salary stated in the labor contract and the salary paid to the employee are in foreign currency, the salary used as the basis for compulsory social insurance contributions shall be calculated in Vietnamese Dong based on the foreign currency salary converted to Vietnamese Dong using the average exchange rate of the buying rate for transfers of Vietnamese Dong against foreign currency published by the four state-owned commercial banks at the end of the day on January 2nd for the first six months of the year and July 1st for the last six months of the year; if these days fall on holidays or days off, the exchange rate of the next working day shall be used.
The Department of Wages and Social Insurance has provided detailed guidance on this matter at Official Document 1198/CTL&BHXH-BHXH October 05, 09.
Minimum and maximum levels of base closure:
🔸 Minimum level: The salary for the job stated in the labor contract must not be lower than the regional minimum wage. From January 1, 2026, according to Decree 293/2025/ND-CPThe minimum monthly wage is:
- Region I: 5.310.000 VND
- Region II: 4.730.000 VND
- Region III: 4.140.000 VND
- Region IV: 3.700.000 VND.
🔸 Maximum amount: equal to 20 times the reference amount at the time of payment. The current reference amount is VND 2.340.000 per month, corresponding to a maximum amount of VND 46.800.000 per month.
Therefore, the understanding that "net salary is the basis for social insurance contributions" only accurately reflects the situation where the enterprise has not yet established a salary scale and salary table, and has not clearly separated the components in the labor contract. Once the enterprise has a clear salary system, the basis for contributions is determined according to Article 7 of Decree 158/2025/ND-CP mentioned above, not based on the total amount the employee receives each month.
What should businesses do?
- Review the salary scale and payroll. If one is not already in place, it must be established and publicly disclosed at the workplace. Without this step, the enterprise lacks a valid basis for separating salary components, and the very act of not establishing or disclosing it is subject to penalties under Clause 1, Article 23. Decree 283/2026/ND-CP.
- Separate the clauses in the employment contract. Clearly state the salary based on the job, salary allowances, additional payments with specific amounts, and separate out-of-pocket benefits that are not subject to contribution.
- Compare the registered amount with the actual records. Compare the salary level registered with the social insurance agency with the level stated in each employee's labor contract.
- Recheck the regional minimum wage levels. After the regional minimum wage increases from January 1, 2026, contracts signed before that date may already be lower than the new floor level, and businesses may not have adjusted accordingly.
- Address cases of underpayment promptly. A late payment penalty of 0,03% per day is calculated continuously based on the number of days of delay; each month of delay increases the payment obligation.
- Maintain records proving the basis for the closure. Salary scales, payrolls, salary and bonus regulations, employment contracts, and payroll statements are the documents required to be presented during inspections and audits.