An employee’s social insurance premium is a significant expenditure for every organization. Many companies contribute social insurance premiums that are lower than actual wages. Is it illegal for companies?
1. What is the level of social security payment?
Pursuant to Resolution No. 595/QD-BHXH of 2017, Decree No. 58/2020ND-CP, companies and employees must extract part of the Salary Fund for payment of Social Security, Health Insurance and Unemployment Insurance in percentages as follows:
– Institutions: Pay 21.5% or 21.3% on the monthly salaries on which health and unemployment insurance depends.
Employees: pay 10.5% of their monthly salaries on which social insurance premiums depend.
Accordingly, the monthly social insurance is stipulated in Clause 26, Article 1, Circular No. 06/2021 / TT-BLDTBXH as follows:
2. From January 1, 2018 to December 31, 2020, the monthly salaries on which social insurance premiums are based shall be the salaries and salary allowances stipulated in Clause 1 of this Article and other additional amounts as provided in point a, Clause 3, Article 4 of Publication No. 47/2015/TT-BLDTBXH.
From January 1, 2021 onwards, the monthly salaries on which social insurance premiums are based are salaries, salary allowances and other additional amounts stipulated in Point A, Clause B 1 of Point B, Clause C 1 of Point C, Clause 5, Article 3 Publication No. 10/2020 / TT-BLDTBXH of November 12, 2020 issued by the Ministry of Labour, Disabled and Social Affairs detailing and directing the implementation of a number of articles of the Labor Code relating to employment contracts and collective bargaining boards, professions and jobs that negatively affect reproductive and child-rearing functions (hereinafter referred to as the Bulletin No. 10/2020 / TT-BLDTBXH).
In accordance with the provisions of this law, the monthly salaries on which social insurance premiums are based are as follows:
– Other additional amounts are determined by the specific amounts and salaries stipulated in the contract and paid regularly in the salary period.
This amount is agreed upon and recorded in the employment contract on which the social insurance premiums for employees are based.
However, a number of payments excluded from social insurance premiums include:
- Rewards for business results and employees’ level of work achievement.
- Incentive rewards
- Rosary mid meals
- Subsidy for petrol, telephone, transportation, accommodation, childcare and childcare fees
- Other support for death of relatives, marriage, birth and grants for difficult living conditions.
2. Social Security Premium Less Than Wage: Is It Illegal?
The employee’s monthly wages, which are based on social insurance premiums, are set at a fixed amount and recorded directly in the employment contract.
According to Clause 3, Article 89, Social Insurance Law 2014, if the monthly salary exceeds 20 times the basic salary, the monthly salary on which the social insurance premiums are based shall equal 20 times the basic salary, which is equivalent to VND 28.9 million/month.
In fact, there are some emerging payments to employees besides the monthly wages. These payments are not fixed and are calculated in social insurance premiums.
Therefore, it is not considered illegal when the social insurance premium is less than the wage. However, companies must ensure that social insurance must comply with the provisions of the Act set out in Section 1.
Currently, although the salary is high under the agreement between employers and employees, the employer often records the lower wage level due to titles compared to the wage level in the employment contract, the remaining amount will be included in the allowances except for social insurance contributions.
Employees still receive an adequate amount of wages that is agreed between the employer and the employee. However, an employee could be denied social insurance benefits because social agencies must rely on the monthly wage level that contributes to social insurance to pay for social insurance systems.
The employee must have a clear agreement on the wage that he contributes to social insurance in order to preserve his entitlements when concluding the employment contract.
3. What are the fines for not paying social security according to the provisions of the law?
It is legal for an employer to pay a Social Security premium that is less than the actual wage but still guarantees full other payments to be agreed upon between the employer and employee. The employer is punished with administrative offenses of fines for not declaring false information to obtain a low social insurance premium.
In accordance with Point B, Clause 5, Article 39, Decree No. 12/2022 / ND-CP, the fine will be determined as follows:
5. A fine of 12% to 15% of the total premiums for compulsory social insurance and unemployment insurance at the time of the commission of a minute of administrative offence, with a total fine of not more than VND 75,000,000, shall be imposed on any employer. He commits one of the following acts:
b) non-payment of social and unemployment insurance premiums but not due to evasion;
Accordingly, fines for non-payment of social insurance rights sufficient for legal provisions are calculated in accordance with the relevant ratio with the amount payable at the time of the commission of a minute of administrative offence.
Pursuant to Clause 1, Article 6, Decree No. 12/2022, the fine is between 12% and 15% of the total compulsory social insurance; The fine will be doubled from 24% to 30% of the total compulsory social insurance.
Besides, the enterprise shall pay the social insurance according to the provisions of the law.
Here is the answer to the question: Social Security Premium Less Than Actual Wage: Is It Illegal?