From a business perspective, participating in social insurance is a mandatory obligation to ensure the rights of employees in times of illness, accident, maternity, or retirement. To fulfill this responsibility and obligation in accordance with the law, businesses need to identify the individuals required to participate in mandatory social insurance and the contribution rates according to the latest regulations.
This article provides a complete and detailed guide on social insurance for businesses.
Regulations on mandatory social insurance participation for businesses.
1. What is compulsory social insurance?
Compulsory social insurance It is a type of social insurance organized by the State. workers , and employer You must participate.
To determine which individuals are required to participate in social insurance, it is necessary to clarify who constitutes an employee, who constitutes a foreign employee, and who constitutes an employer.
2. Who are the individuals required to participate in compulsory social insurance?
a) The worker is a Vietnamese citizen:
Workers who are Vietnamese citizens and are subject to mandatory social insurance include:
- Workers employed under indefinite-term employment contracts, fixed-term employment contracts, seasonal employment contracts, or contracts for a specific job with a duration of at least 03 months but less than 12 months, including employment contracts signed between the employer and the legal representative of a person under 15 years of age as stipulated by labor law;
- People working under fixed-term employment contracts from from 01 month to less than 03 months;
- Those who go to work abroad under contract are regulated by the Law on Vietnamese workers going to work abroad under contract;
- Business managers and cooperative managers receive salaries;
b) Workers who are foreign citizens:
Foreign workers who come to work in Vietnam must have a work permit or professional certificate or professional license issued by a competent authority of Vietnam and have an indefinite labor contract or a fixed-term labor contract of at least one year with an employer in Vietnam.
c) The responsibility of enterprises to pay social insurance contributions
Employers participating in compulsory social insurance include state agencies, public service units, people's armed forces units; political organizations, socio-political organizations, socio-professional organizations, social-professional organizations, and other social organizations; foreign agencies and organizations, and international organizations operating in Vietnam; enterprises, cooperatives, individual business households, partnerships, other organizations, and individuals who hire and employ workers under labor contracts.
Social insurance contribution rates and levels at enterprises.
1. What is the basis for mandatory social insurance contributions?
The mandatory social insurance contribution rate is calculated based on the employee's monthly salary, including contributions to the retirement fund, death benefit fund, sickness fund, maternity fund, and occupational accident and disease fund (according to Articles 85 and 86 of the Social Insurance Law and Decree No. 58/2020/ND-CP).
In which:
- The maximum monthly salary for calculating social insurance, health insurance, and occupational accident and disease insurance contributions is 20 months. base salary (29.800.000 VND). The basic salary in 2021 is 1.490.000 VND.
- The maximum monthly salary for unemployment insurance contributions is 20 months. regional minimum wage (88.400.000 VND). The regional minimum wage in 2021 is 4.420.000 VND.
2. The amount of social insurance contributions that businesses must pay for Vietnamese employees.
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Contribution rate of businesses (Employers): 21,5% |
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|
Social Insurance |
UI |
Health insurance |
||
|
Retirement and death benefits |
Illness and Pregnancy |
Occupational Accidents and Diseases |
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|
14 % |
3% |
0,5 % |
1% |
3% |
Employee's contribution rate: 10,5% | ||||
Social Insurance | UI | Health insurance | ||
Retirement and death benefits | Illness and Pregnancy | Occupational Accidents and Diseases | ||
8% |
|
| 1% | 1,5 % |
3. The amount of social insurance contributions that businesses must pay for foreign workers.
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Contribution rate of businesses (Employers): 6.5% |
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|
Social Insurance |
UI |
Health insurance |
||
|
Retirement and death benefits |
Illness and Pregnancy |
Occupational Accidents and Diseases |
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|
3.5 % |
0,5 % |
3% |
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Employee's contribution rate: 1,5% | ||||
Social Insurance | UI | Health insurance | ||
Retirement and death benefits | Illness and Pregnancy | Occupational Accidents and Diseases | ||
|
| 1,5 % | ||
Salary amounts subject to social insurance contributions.
1. Salary amounts subject to social insurance contributions from January 1, 2016 to December 31, 2017
From January 1, 2016 to December 31, 2017, the monthly salary used for calculating social insurance, health insurance, and unemployment insurance contributions was the salary and salary allowances as stipulated in Clause 1 and Point a, Clause 2, Article 4 of Circular No. 47/2015/TT-BLDTBXH dated November 16, 2015 of the Ministry of Labor, Invalids and Social Affairs guiding the implementation of some provisions on labor contracts, labor discipline, and material responsibility of Decree No. 05/2015/ND-CP dated January 12, 2015 of the Government detailing and guiding the implementation of some contents of the Labor Code (hereinafter referred to as Circular No. 47/2015/TT-BLDTBXH).
According to point a, clause 2, Article 4 of Circular No. 47/2015/TT-BLDTBXH, salary allowances are allowances intended 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 agreed salary in the labor contract, such as: position allowance; responsibility allowance; allowance for arduous, hazardous, and dangerous work; seniority allowance; regional allowance; mobility allowance; attraction allowance; and other allowances of a similar nature.
2. Salary amounts subject to social insurance contributions from January 1, 2018 to December 31, 2020
From January 1, 2018 onwards, the monthly salary used for calculating social insurance, health insurance, and unemployment insurance contributions will be the salary and salary allowances as stipulated in Clause 1 of this Article and other supplementary amounts as stipulated in Point a, Clause 3, Article 4 of Circular No. 47/2015/TT-BLDTBXH.
3. Salary amounts subject to social insurance contributions from January 1, 2021 onwards.
Circular 06/2021, issued by the Ministry of Labour, Invalids and Social Affairs on July 7, 2021, stipulates the basis for mandatory social insurance contributions. Accordingly, from January 1, 2021, the income subject to social insurance contributions and the income not subject to social insurance contributions are regulated as follows:
Income items subject to mandatory social insurance contributions:
1. Salary based on job or position
2. Salary allowances as agreed upon by both parties, including:
– 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 agreed salary in the labor contract;
– Salary allowances are linked to the employee's work process and performance.
For example:
+ Allowances for position and title;
+ Responsibility allowance;
+ Allowances for arduous, hazardous, and dangerous work;
+ Seniority allowance;
+ Regional allowance;
+ Travel allowance;
+ Attraction allowance and other allowances of a similar nature.
3. Additional payments, with a specific amount determined in conjunction with the agreed-upon salary in the employment contract, are paid regularly during each pay period.
Income not subject to mandatory social insurance contributions:
1. Bonuses as stipulated in Article 104 of the 2019 Labor Code
2. Meal allowance during shifts
3. Allowances such as: Gasoline; Telephone; Transportation; Housing; Childcare; Raising young children.
4. Employee support allowances: Allowance for the death of a family member; Allowance for a family member's marriage; Allowance for the employee's birthday.
5. Allowances for workers in difficult circumstances who suffer work-related accidents or occupational diseases.
6. Additional payments of unspecified amounts, along with the agreed-upon salary in the employment contract, paid regularly or irregularly in each pay period, linked to the employee's work process and performance.
4. Paying social insurance contributions in special cases.
During periods when employees cease work in accordance with labor laws but continue to receive wages, both the employee and the employer shall pay social insurance, health insurance, and unemployment insurance contributions based on the employee's wages during the period of work stoppage.
Answer the question: "What allowances are not subject to social insurance contributions?"
This question pertains to the period and years prior, and how to understand allowances as additional payments alongside the basic salary. To be clear, allowances are those stipulated by the Labor Law and clearly stated in the employment contract. Since January 1, 2018, these allowances have been subject to mandatory social insurance contributions.
Instructions on how to determine the salary amount used as the basis for calculating social insurance contributions.
1. Important principles to know when determining the amount of mandatory social insurance contributions.
The salary used as the basis for mandatory social insurance contributions is income consistent with the entire wage system of the enterprise and legal regulations, not calculated by dividing the employee's income into purely mathematical components.
2. Formula for calculating the amount of social insurance contributions
Social insurance contribution amount = Salary amount used as the basis for social insurance contributions. x (multiply) Social insurance rate as per regulations.
3. The most accurate procedure for determining the salary used as the basis for calculating social insurance contributions.
Businesses need to determine employee wages, which include the following income components:
a) Salary based on job or position:
This refers to the time-based wage for a job or position, based on the wage scale or salary table established by the employer in accordance with Article 93 of the Labor Code; for employees receiving piece-rate or contract wages, the time-based wage is recorded to determine the unit price of the product or the contract wage.
2. Labor standards must be at an average level that ensures the majority of workers can meet the requirements without extending normal working hours, and must be tested before being officially implemented.
3. Employers must consult with the employee representative organization at the workplace, if such an organization exists, when developing wage scales, salary tables, and labor norms.
Salary scales, wage tables, and labor standards must be publicly displayed at the workplace before implementation.
b) Salary allowances as agreed upon by both parties are as follows:
- Salary allowances are provided 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 agreed salary in the labor contract;
- Salary allowances are linked to the employee's work process and performance.
c) Other additional terms as agreed upon by both parties as follows:
- These additional payments are defined as specific amounts of money, along with the agreed-upon salary in the employment contract, and are paid regularly in each pay period;
- Additional payments, whose exact amounts are not specified, are made in addition to the agreed-upon salary in the employment contract, paid regularly or irregularly in each pay period, and are linked to the employee's work process and performance.
For other benefits and entitlements such as bonuses as stipulated in Article 104 of the Labor Code, innovation bonuses; meal allowances; allowances for fuel, telephone, travel, housing, childcare, and raising young children; support when an employee's relative dies, when an employee's relative gets married, or on the employee's birthday; allowances for employees facing difficult circumstances due to work accidents or occupational diseases; and other support and allowances, these should be recorded as separate items in the labor contract.
d) Other benefits
For other benefits and entitlements such as bonuses as stipulated in Article 104 of the Labor Code, innovation bonuses; meal allowances; allowances for fuel, telephone, travel, housing, childcare, and raising young children; support when an employee's relative dies, when an employee's relative gets married, or on the employee's birthday; allowances for employees facing difficult circumstances due to work accidents or occupational diseases; and other support and allowances, these should be recorded as separate items in the labor contract.
2. The bonus regulations are decided by the employer and publicly announced at the workplace after consulting with the employee representative organization at the workplace, if such an organization exists.
FAQ - Frequently Asked Questions about Corporate Social Insurance
Based on current regulations on social insurance for businesses, the subjects required to participate in social insurance are:
- Employees working under indefinite-term employment contracts, fixed-term employment contracts, seasonal employment contracts, or contracts for a specific job with a duration of at least 03 months but less than 12 months, including employment contracts signed between the employer and the legal representative of a person under 15 years of age as stipulated by labor law;
- Employees working under fixed-term employment contracts of 1 month to less than 3 months (effective from January 1, 2018);
- Business managers and cooperative managers receive salaries;
- Foreign workers who come to work in Vietnam must have a work permit or professional certificate or professional license issued by a competent authority of Vietnam (effective from January 1, 2018, as stipulated by the Government).
- Employers, including businesses, cooperatives, individual business households, partnerships, other organizations, and individuals who hire or employ workers in any of the above-mentioned cases, are also subject to mandatory social insurance participation.
Therefore, the law does not specify how many employees a business must have to participate in mandatory social insurance; rather, it stipulates... Even businesses with few employees must participate in mandatory social insurance for those employees if they have signed contracts for one month or more.
Businesses that employ and pay wages but fail to contribute to social insurance will be subject to the following legal penalties:
- Social Security Inspectorate
- Imposing administrative penalties for violations related to social insurance.
- Collection of overdue social insurance contributions and penalties for late payment of social insurance contributions, calculated from the time the obligation arises until the time of inspection.
- Salaries should not be included in business expenses.
Businesses that incorrectly calculate wages used as the basis for social insurance contributions, resulting in underpayment of social insurance, will be penalized according to the law as follows:
- Social Security Inspectorate
- Imposing administrative penalties for violations related to social insurance.
- Collect backdated social insurance contributions and impose penalties for late payment of the outstanding social insurance contributions from the time the obligation arose until the time of inspection.
As explained above, proper social insurance must meet the following criteria:
- Pay the full amount for all employees working under employment contracts of one month or more.
- Paying the full amount: This means the Social Insurance contribution amount = The salary used as the basis for Social Insurance contributions x Social Insurance rate. The salary used as the basis for Social Insurance contributions must comply with the Labor Law and the Social Insurance Law.
Therefore, to determine whether it is correct and complete, the two items mentioned above need to be checked and reviewed.
According to regulations on electronic transactions in the field of social insurance, businesses can choose to register and declare social insurance contributions electronically directly through the Vietnam Social Insurance Electronic Portal.https://gddt.baohiemxahoi.gov.vn/) or through an I-VAN organization.
However, at any given time, you can only select and register with a single provider (either I-VAN service providers or e-transaction gateways).
Depending on the company's preference, they can choose the most suitable method.