Tiếng Việt
中文 (中国)
In Vietnam, employees who are not subjected to compulsory social insurance will receive not only the part that they usually have to pay into the social insurance fund but also the part that the employer has to pay into the social insurance fund, contrary to the normal belief by the employer. So, how can this happen and what are the cases where the employee is entitled to receive money instead of paying social insurance contributions in Vietnam?
Most employees who go to work are subjected to the compulsory social insurance regime. However, there are some exceptions in which, instead of paying into the fund, the employer will pay the employee an equivalent amount directly to their monthly salary.
Clause 1, Article 168 of the Labor Code 2019 stipulates that employers and employees must participate in compulsory social insurance, health insurance, and unemployment insurance if they are eligible to participate.
Clause 3, Article 168, in addition, states the handling process in relation to the social insurance regime for cases in which the employees are not subjected to the compulsory social insurance regime.
Specifically, where an employee is not covered by compulsory social insurance, compulsory health insurance, or unemployment insurance, the employer shall, in addition to and at the same time with salary payment, pay the employee an amount equal to the compulsory social insurance, compulsory health insurance, and unemployment insurance premiums payable by the employer in accordance with regulations on social insurance, health insurance, and unemployment insurance.
Accordingly, employees who are not subject to compulsory social insurance will be paid by the employer an additional amount equivalent to the amount that the employer must pay insurance for the employees to the social insurance fund.
Cases where the employee is entitled to receive money instead of paying social insurance contributions in Vietnam
According to Clause 4, Article 4 of Decision 595/QD-BHXH 2017, there are 6 cases where the employee will receive money instead of paying social insurance, including:
- Domestic helpers;
- Employees who work but are receiving a monthly pension;
- Employees who work but are receiving monthly allowances according to the subsistence allowance regime for commune-level officials in Decree 09/1998/ND-CP;
- Employees who are receiving monthly allowance for loss of working capacity;
- Employees who are receiving monthly allowances as prescribed in Decision 91/2000/QD-TTg and Decision 613/QD-TTg in 2010;
- Employees who are active personnel in the Military, the People’s Public Security, the person doing the cipher work who is enjoying the monthly allowance according to Decision 142/2008/QD-TTg, Decision 38/2010/QD-TTg, Decision 53/2010/QD-TTg, and Decision 62/2011/QD-TTg.
In Vietnam, cases about employees who work but are receiving a monthly pension is the most popular type of cases to receive money instead of paying into the social insurance fund.
This is because it is not uncommon for elderly employees to reach retirement age but still want to continue working to earn extra income in Vietnam. Therefore, the number of elderly employees working and getting 2 types of salaries at once in Vietnam is large.
Calculation of the amount of money received instead of the payment into the social insurance fund
According to the guidance in Decision 595/QD-BHXH 2017, every month, employees will have to make contributions to insurance with certain percentages of their salary as a basis for paying compulsory social insurance.
At the moment, in August 2022, the employee has to pay 10.5% and the employer has to pay 20.5% of the employee’s salary to the social insurance fund, including health insurance, unemployment insurance, occupational accident-occupational diseases, etc.
From the beginning of October 2022, the employee still remains at the 10.5% rate of payment but the employer will increase the rate of payment to before the period of the support policies by the Vietnamese Government, at 21.5% of the employee’s salary.
If the employees are not subjected to the compulsory social insurance regime, they will be entitled to the entire 10.5% of their payment to the social insurance fund, as well as the 20.5% to 21.5% of the payment from the employer’s side.
The salary as stated here is regulated according to Clause 26, Article 1 of Circular 06/2021/TT-BLDTBXH, including:
- Salary according to job or title;
- Salary allowances to compensate for working conditions, job complexity, living conditions, and level of labor attraction where the salary in the contract has not been taken into account or is included but not sufficient;
- Supplements are defined at a specific rate and are paid regularly during each pay period.
Penalty for violating social insurance regime
If the employees working in an enterprise do not fall into 1 of the above 6 cases but make an agreement with the employer to not pay insurance to receive a part of the money, both the employee and the employer will be sanctioned for administrative violations in the field of labor.
In which case, according to Clause 1, Article 39 of Decree 12/2022/ND-CP, the employee is fined 500,000 VND to 1 million VND. Employers will be fined 12% to 15% of the total amount of insurance to be paid, but not exceeding VND 75 million (according to point c, clause 5, Article 39 of Decree 12/2022/ND-CP).
Conclusion
In reality, most Vietnamese enterprises pay the wrong level of social insurance for employees to reduce the amount to be paid to the social insurance fund.
Therefore, most employees are entitled to the minimum social insurance contribution whether they want it or not. Nonetheless, they accept it as it is part of the company’s policies.
Many businesses even make an agreement with employees not to pay social insurance and they will pay employees about 10.5% of that employees have to pay into the social insurance fund.
However, as the above article analyzes, if the employee is not required to pay social insurance as most businesses want, in fact, the employer has to pay more than the amount they normally pay to the social insurance fund.
In addition to the amount of 10.5% that is sure to be paid to the employee, the employer must also pay an additional 20.5% to 21.5% that they should pay on behalf of the employee to the employee. The total additional money that the employee should receive if they are in 1 of the above 6 cases is 31% to 32% of the actual salary of the employee.
Consequently, if abiding by the law, the employer loses an additional 10.5% more than the normal 20.5% to 21.5% that they must pay.
Therefore, it is compassionable and reasonable to comply with the law and pay the correct social insurance rate for employees according to the actual salary they receive.
ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.
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