I am a private enterprise owner. To my knowledge, the 2014 Law on Social Insurance came into force on January 1, 2016. How will my enterprise pay social insurance premiums under the Law?
According to the Law, the compulsory social insurance premium rate in 2016 remain unchanged at total 26 percent of a monthly wage, in which employees will have to pay 8 percent of their monthly wage to the pension and survivorship allowance fund while their employers will pay 18 percent of full pensionable monthly wage (14 percent to the pension and survivorship allowance fund; 1 percent to the labor accident and occupational disease fund; and 3 percent to the sickness and maternity fund).
From January 1, 2018, social insurance premiums will be calculated based on wages, allowances and other additional amounts stated in labor contracts__Photo: nguyentandung.org
As previously prescribed, employees were required to pay compulsory social insurance premiums based on their basic wages. However from January 1, 2016, through December 31, 2017, they will have to pay insurance premiums based on their wages plus allowances stated in their labor contracts.
From January 1, 2018, social insurance premiums will be calculated based on wages, allowances and other additional amounts stated in labor contracts.
Wage and other entitlements and welfares stated in a labor contract are prescribed as follows:
* Regarding wage
, the wage level for social insurance premium payment is that agreed in the labor contract, which must not be lower than the region-based minimum wage. In case the monthly wage is 20 times higher the basic wage, the monthly wage on which social insurance premiums are based must equal 20 times the basic wage.
Job-based or post-based wage level is that stated in the wage scale or table made by the employer under Article 93 of the Labor Code. Wage payable for an employee who performs the simplest job in normal working conditions and normal working time (excluding additional amounts paid for overtime or night work) must not be lower than the region-based minimum wage stipulated by the Government.
The labor contract must clearly state the time-based wage for the job or post in the wage scale or table agreed by the employee and employer. For an employee enjoying a product-based or piecework-based wage, the time-based wage will be stated in the labor contract to determine the product’s unit price or piecework-based wage.
* Regarding wage allowances
, only the following allowances that are stated in the labor contract will base on for the social insurance premium payment:
- Wage allowances to be paid as a compensation of poor working conditions, complexity of jobs, low living standards or labor attraction level which are neither included nor fully included in the wage level stated in the labor contract.
- Wage allowances to be paid for the work performance and results of the employee.
* Regarding other additional payments
which are those to be paid in addition to wage and wage allowances and related to the job performance or post as stated in the labor contract, excluding bonus, mid-shift meal allowance, supports and allowances paid by the employer and not related to the job performance or post as stated in the labor contract, the social insurance premium payment will be based on:
- Additional payments in specific amounts determined together with the wage agreed upon in the labor contract and paid regularly in each period of wage payment.
- Additional payments in unspecific amounts determined together with the wage agreed upon in the labor contract and paid regularly or irregularly in each period of wage payment for the work performance and results of the employee.
The monthly wage serving as a basis for social insurance premium payment do not include other entitlements and welfares, such as innovation bonuses; mid-shift meal allowances; vehicle fuel, telephone, travel, housing rent, child care and nurturing supports; allowances for employees whose relatives die or get married, employees’ birthday gifts, employees facing difficulties due to labor accidents or occupational diseases and other allowances and supports. All these allowances and supports will be stated separately in labor contracts.
Therefore, your enterprise has to make wage scale and table for use as a basis for modifying labor contracts and paying social insurance premiums in accordance with the above-mentioned regulations.- (VLLF)