What is determination of monthly salaries as the basic for payment of insurance in Vietnam?

What is determination of monthly salaries as the basic for payment of insurance in Vietnam?

In Section 4 of Official Dispatch 1734/BHXH-QLT 2017, it is stipulated that monthly salaries as the basic for payment of insurance is prescribed as follows:

4.1. Salaries paid by the State

a) Regarding an employee whose salary is paid by the State, the monthly salary as the basis for payment of compulsory social insurance is the salary plus (+) position allowance and seniority pay (if any). This salary is calculated according to the statutory pay rate.

The monthly salary as the basis for payment of compulsory social insurance mentioned in this Point also applies the reassignment coefficient specified by salary laws.

b) Regarding part-time employees of communes, wards and towns, the monthly salary as the basis for payment of social insurance is the statutory pay rate.

4.2. Salaries paid by non-state employers.

a) The salary as the basis for payment of insurance of employees, including:

- Salaries specified in labor contracts.

- Allowances such as position allowance, responsibility allowance, allowances for hard, toxic or dangerous work, seniority pay, area-based allowance, travelling allowance, attraction allowance and similar allowances.

- Additional payments with specific amounts and the agreed salaries under the labor contract and the salaries paid regularly in each period of salary payment, applicable from January 01, 2018.

b) The monthly salary as the basis for payment of compulsory social insurance does not include other benefits such as rewards for creative ideas, payments for mid-shift meals; subsidies on costs of traveling, calling, housing, child care benefits; benefits provided upon the death or marriage of a employee’s relative, bonus upon the employee’s birthday, benefits for employees suffering from occupational accidents or occupational diseases and other benefits specified labor contracts.

c) The monthly salary as the basis for payment of insurance of an enterprise manager receiving salaries is the salary decided by the enterprise and those of a cooperative manager receiving salaries is the salary decided by the general assembly of members.

d) The monthly salary as the basis for payment of compulsory social insurance, health insurance and unemployment insurance must not fall below the region-based minimum wage of the person holding the simplest position under normal working conditions.

- A person whose job or position requires training (including training provided by the employer) must be higher than the region-based minimum wage by at least 7%;

- The salary of a person working under strenuous, toxic or dangerous conditions must be higher by at least 5% than that of a person having a similar job or position under normal working conditions; The salary of a person working under extremely strenuous, toxic or dangerous conditions must be higher by at least 7% than that of a person having a similar job or position under normal working conditions.

e) If the monthly salary as the basis for payment of social insurance, health insurance and occupational accident and occupational disease insurance exceed 20 times the statutory pay rate, the monthly salary the basis for payment of abovementioned types of insurance shall be equal to 20 times the statutory pay rate. If the employee’s monthly salary is greater than 20 times the region-based minimum wages, the monthly salary as the basis for payment of unemployment insurance premium shall be equal to 20 times the region-based minimum wages.

How many days late in paying compulsory social insurance do I have to pay interest on unpaid insurance premiums and contributions in Vietnam?

In Subsection 6.1, Section 6 of Official Dispatch 1734/BHXH-QLT of 2017, there are regulations on calculating late payment interest and arrears as follows:

Late payment interest and collection of arrears

6.1. Late payment interest:

An employer who pays insurance contributions and premiums for at least 30 days late shall pay the interest on unpaid insurance premiums and contributions.

6.2. Collection of arrears:

a) Collection of arrears due to evasion of payment: If an employer evades payment of insurance contributions or premiums, fails to pay insurance contributions or premiums for sufficient participants, fails to pay sufficient insurance contributions or premiums or appropriates insurance contributions or premiums (hereinafter referred to as "evade payment of insurance contributions or premiums”) and these violations are concluded by social insurance authorities according to results of specialized inspection in terms of payment of insurance contributions and premiums or by the competent authority from January 01, 2016, apart from insurance contributions and premiums payable, the interest imposed on evaded insurance contributions and premiums in evasion period and late payment interest shall also be collected as follows:

- Regarding the entire evasion period before January 01, 2016, the rate of late payment interest applicable in 2016 shall be applied;

- Regarding the evasion period from January 01, 2016 onwards, the annual rate of late payment interest applicable at the time when the evasion of payment of insurance contributions and premiums is discovered shall be applied;

- If an employer requests the collection of arrears in the added period of 6 months or more enclosed with the inspection results provided by the social insurance authority or inspecting authority or enclosed with the decision on penalty for administrative violations issued by the competent authority.

b) Collection of arrears due to increase in the monthly salary as the basis for payment of social insurance, unemployment insurance, occupational accident and occupational disease insurance: If an employee pays social insurance contributions or premiums of unemployment insurance or occupational accident and occupational disease insurance after 6 months from the day on which the competent person signs the decision on or labor contract (appendix of labor contract) for increasing the pay scale or increasing monthly salary and allowances as the basis for paying insurance contributions and premiums, the arrears shall include contributions and premiums payable as prescribed by law and the interest thereon.

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Thus, if you are late paying compulsory social insurance for 30 days or more, you must pay interest on the compulsory social insurance amount in Vietnam.

What is determination of interest rate for late payment of compulsory social insurance in Vietnam?

In Subsection 6.3, Section 6 of Official Dispatch 1734/BHXH-QLT of 2017, there are regulations on calculating late payment interest and arrears as follows:

Late payment interest and collection of arrears

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6.3. Rate (%) of late payment interest at the time of interest calculation shall be determined as follows:

- Regarding compulsory social insurance, unemployment insurance, occupational accident and occupational disease insurance, the rate of late payment interest shall be equal to 2 times the monthly average investment interest rate of the social insurance fund of the preceding year announced by Vietnam Social Security.

- In case of health insurance, the rate of late payment interest shall be equal to 2 times the monthly interest rate of the interbank market with a term of 9 months announced by the State Bank of Vietnam on its Portal in the preceding year. If the interest rate of interbank market in the preceding year has its term other than 9 months, the interest rate of the term preceding the 9-month term shall be applied.

6.4. Formulas for calculating rates of late payment interest are specified in Articles 37 and 38 of the Decision No. 595/QD-BHXH.

Thus, interest rate for late payment of compulsory social insurance is calculated as 02 times the average social insurance fund investment interest rate of the previous year on a monthly basis announced by Vietnam Social Insurance.

Best regards!