Employee social security contributions are a major expense for any company. Many companies contribute social security contributions that are lower than actual wages. Is it illegal for businesses?
1. What is the level of social security contributions?
Pursuant to Decree No. 595/QD-BHXH of 2017 and pursuant to Decree No. 58/2020ND-CP, enterprises and their employees shall allocate part of their salary fund to pay social insurance, health insurance and unemployment insurance as follows: shall be extracted in proportion.
– Enterprises: Pay 21.5% or 21.3% of monthly wages as the basis for social insurance health insurance and unemployment insurance premiums.
・Employees: 10.5% of monthly salary, which is the base of social insurance premiums.
Therefore, monthly social insurance is stipulated in Article 1, Clause 26 of Circular No. 06/2021/TT-BLDTBXH as follows:
2. From January 1, 2018 to December 31, 2020, the monthly salary on which social insurance premiums are based shall consist of the salary and salary allowance specified in Clause 1 of this Article and other additions specified in Clause 3 a. amount. Article 4 of Circular No. 47/2015/TT-BLDTBXH.
From January 1, 2021, the monthly salary that forms the basis of social insurance premiums shall be the salary, salary allowance, and other additional amounts specified in item a-b1 and c-item c1 of Article 3, Paragraph 5. Circular No. 10/2020/TT-BLDTBXH of the Ministry of Labour, Invalids and Social Affairs dated 12 November 2020 regulates labor contracts, collective bargaining boards, occupations and jobs that adversely affect reproductive and child-rearing functions (hereinafter referred to as Circular No. 10/2020/TT-BLDTBXH).
According to the provisions of this law, the monthly salary on which social insurance premiums are based is as follows:
– Salary
– salary allowance
– Other additional amounts are defined in specific amounts and salaries stipulated in the contract and are paid periodically during the salary period.
This amount is agreed and recorded in the labor contract on which the employee’s social insurance premium is based.
However, the following are exempt from social insurance premiums:
- Bonuses for employee performance and job performance.
- incentive bonus
- meal on shift
- Support for gasoline bills, telephone bills, transportation expenses, accommodation expenses, child rearing expenses, and child rearing expenses
- In addition, support for the death of relatives, marriage, birthdays, and subsidies for people with financial difficulties.
2. Is it illegal for social insurance premiums to be lower than wages?
The employee’s monthly salary, which is the basis for social insurance contributions, must be fixed and recorded directly in the labor contract.
According to Article 89 Clause 3 of the Social Insurance Law 2014, if the monthly salary is more than 20 times the basic salary, the monthly salary on which the social insurance premium is based must be equal to 20 times the basic salary, or VND 28.9 million. /Moon.
In reality, payments to employees occur in addition to monthly wages. These payments are not fixed and are calculated on social security contributions.
Therefore, it is not illegal if social insurance premiums are lower than wages. However, companies must ensure that their social insurance complies with the provisions of the law set out in Section 1.
Currently, although employers and employees agree to pay higher wages, employers often record lower wage levels than those in labor contracts due to their job titles, and the rest of the payments are made in allowances excluding social insurance premiums. included.
Employees receive adequate wages as agreed between the employer and the employee. However, social institutions are based on monthly wage levels contributed to social insurance to pay social insurance schemes, so employees may be disadvantaged in social insurance benefits.
Employees must have a clear agreement on their wages to be contributed to social insurance in order to save benefits when concluding a labor contract.
3. What is the fine for not paying social insurance premiums as stipulated by law?
It is legal if an employer pays social security contributions that are lower than the actual wages, but guarantees full payment of other amounts agreed between the employer and the employee. Employers will be fined for administrative violations if they fail to make false declarations to obtain lower social insurance premiums.
Pursuant to Decree No. 12/2022/ND-CP, Article 39, paragraph 5 b, fines are stipulated as follows:
5. A fine equivalent to 12% to 15% of the sum of compulsory social insurance premiums and unemployment insurance premiums, not exceeding VND 75,000,000 in total, shall be imposed on the employer at the time of making minutes of administrative violations. You and shall. Any of the following acts:
…
b) Failure to pay sufficient social insurance and unemployment insurance premiums for non-tax evasion purposes;
Therefore, the fine for not paying sufficient social insurance rights in accordance with the legal provisions is calculated according to the relevant proportion of the payment amount at the time of making minutes of administrative violations.
Pursuant to Article 6(1) of Decree No. 12/2022, the fine amounts to 12% to 15% of the total amount of compulsory social insurance. The fine is doubled from 24% to 30% of the total compulsory social insurance.
In addition, enterprises must pay social insurance as stipulated by law.
Here is the answer to your question: Is it illegal for social insurance premiums to be lower than actual wages?
