Supplementing Wages for Employees in Lieu of Mandatory Social Insurance Contributions - Permissible?
[Your Position]
[Your Contact Information]
[Company Name]
[Date]
Based on the provisions of Clause 1, Article 2 of the Social Insurance Law 2014, if evaluating employees working under labor contracts, the following cases require the employer to participate in social insurance for the employees:
- Employees working under labor contracts with a term ranging from 01 month to less than 03 months;
- Employees working under indefinite-term labor contracts, definite-term labor contracts, seasonal labor contracts, or labor contracts for a specific job with a term ranging from 03 months to less than 12 months.
Note: From 2021, when the Labor Code 2019 officially takes effect, there will only be two types of labor contracts: definite-term labor contracts and indefinite-term labor contracts.
In comparison to your case, your company hires laborers for industrial cooking, signing a labor contract with a term of 1 year. Therefore, your company is required to participate in social insurance for these employees. The issue of workforce structuring is an internal matter of the company, and the company must resolve it on its own. However, if a labor contract is signed with an employee, the company is obliged to register for social insurance for them.
Paying an additional amount into the employee's salary equivalent to the social insurance contribution only applies to cases where the employees are not subject to mandatory social insurance, such as probationary workers, domestic workers, etc. In your company's case, it is not permissible to replace the obligation to participate in mandatory social insurance for the employees in this manner.
In case of violating the obligation to contribute mandatory social insurance for employees, the company may be subject to administrative penalties as stipulated in Article 5 and Point c, Clause 4, Article 38 of Decree 28/2020/ND-CP. To be specific:
Fines ranging from 24% to 30% of the total amount required to be paid for mandatory social insurance and unemployment insurance at the time of making the administrative violation record but not exceeding 150,000,000 VND for the act of not fully paying the mandatory social insurance and unemployment insurance for eligible employees, which does not amount to evasion.
Respectfully!
