ALLOWANCES AND SUBSIDIES NOT CONSIDERED THE BASIS FOR PAYMENT OF COMPULSORY SOCIAL INSURANCE

I work for CF Joint Stock Company and earn VND 20 million/month, in which the basic salary is 14 million VND, the rest is my allowances and subsidies. My company does not pay the full amount of social insurance and I have to pay social insurance myself. I would like to know if my salary (VND 20 million) is the basis for the payment of compulsory social insurance.

Looking forward to being advised by FDVN Law Firm. Thank you.

FDVN’s opinions:

 [1]. Monthly salary as the basis for payment of compulsory social insurance:

According to Clause 2.1 and Clause 2.2, Article 6 of Decision No. 595/QD-BHXH:

 “2.1. From January 01, 2016 to December 31, 2017, the monthly salary as the basis for payment of compulsory social insurance is the salary plus (+) allowances according to Clause 1 and Point a Clause 2 Article 4 of Circular No. 47/2015/TT-BLDTBXH.

Allowances specified in Point a Clause 2 Article 4 of Circular No. 47/2015/TT-BLDTBXH include allowances that are meant to make up for unfavorable working conditions, complex nature of work, unfavorable living conditions, or to attract workers that are not included in the agreed salary under the employment contract, such as: position allowance, responsibility allowance, allowances for hard, toxic or dangerous works, seniority pay, area-based allowance, traveling allowance, attraction allowance and similar allowances.

2.2. From January 01, 2018 onwards, the monthly salary as the basis for payment of compulsory social insurance is the salary plus (+) allowances according to specified in Point 2.1 of this Clause and other additional payments specified in Point a Clause 3 Article 4 of Circular No. 47/2015/TT-BLDTBXH .”

Under the provisions of Clause 1 and Point a Clause 2 Article 4 of Circular No. 47/2015/TT-BLDTBXH:

 “1. The time-based salary or position-based salary shall be the salary rate in salary scale and salary table defined by the employer under the law on labor. Employees paid product-based salary or piecework salary, the time-based salary rates shall be used to determine the product unit price or the piecework salary.

2. Allowances, specifying contractual allowances, in particular:

a) The allowances that are amounts offset against the working conditions, the complexity of jobs, the living conditions, and the employee attraction level which is not included or incompletely included in the contractual salary.”

According to Point a Clause 3 Article 4 of Circular No. 47/2015/TT-BLDTBXH:

“Other extra payments, specifying other contractual extra payments, in particular:

a) Measured extra payments and the contractual salary mentioned in the labor contract that are be paid regularly in each period of salary payment.”

Therefore, based on the above regulations, from 1 January 2018, the monthly salaries considered the basis for payment of compulsory social insurance is the salary plus (+) allowances according to law, such as: position allowance, responsibility allowance, allowances for hard, toxic or dangerous works, seniority allowances, location allowance, traveling allowance, attraction allowance and the other allowances which have the similar nature.

 [2]. Monthly salary not considered the basis for payment of compulsory social insurance:

According to Clause 3 Article 30 of Circular No.59/2015/TT-BLĐTBXH and Point 2.3 Clause 2 Article 5 of Decision No. 595/QD-BHXH, the income which is not considered the basis for payment of compulsory social insurance is:

• Bonus as stipulated in Article 103 of the Labor Code is a sum of money paid by an employer to his/her employees based on annual business results and the level of work performance of employees.
• Initiative bonus, meals between shifts, gasoline, telephone, travel, accommodation, and child care allowances.
• Assistance the death of employees’ relatives, the marriage of employees’ relatives, employees’ birthday, subsidy to the employees in a difficult situation in case of work accident, occupational disease, and other allowances and assistance recorded in separate items in the labor contract.

Therefore, you and your company shall not pay for compulsory social insurance on the basis of monthly salary which is VND 20 million. You have to base on the amounts analyzed above to determine the compulsory social insurance to be paid.

Legal advisor: Nguyen Thi Suong

FDVN Law Firm