According to Section 1 of Article 168 of the 2019 Labor Code, employers and employees must participate in mandatory social insurance, health insurance, and unemployment insurance if they are eligible.
Also, according to Section 3 of this Article, if employees are not eligible for mandatory social insurance, health insurance, and unemployment insurance, employers are responsible for paying employees an additional amount equivalent to the amount employers pay for social insurance, health insurance, and unemployment insurance for employees as prescribed by law on social insurance, health insurance, and unemployment insurance, at the same time as salary is paid.
Accordingly, employees who are not eligible for mandatory social insurance will receive an additional payment from the enterprise equivalent to the amount that the enterprise must pay for insurance for employees.
Based on Section 4 of Decision 595/QD-BHXH 2017, the following employees will receive money in lieu of paying social insurance:
(1) Domestic helpers.
(2) Employees who are working but are receiving a monthly pension.
(3) Employees who are working but are receiving a monthly allowance under the living allowance regime for commune-level cadres in Decree 09/1998/ND-CP.
(4) Employees who are receiving a monthly disability allowance.
(5) Employees who are receiving a monthly allowance under Decision 91/2000/QD-TTg and Decision 613/QD-TTg in 2010.
(6) Employees who are military personnel, public security personnel, or secret service personnel who are receiving a monthly allowance under Decision 142/2008/QD-TTg, Decision 38/2010/QD-TTg, Decision 53/2010/QD-TTg, Decision 62/2011/QD-TTg.
However, if an employee does not fall into any of the above cases but agrees to receive money in lieu of paying insurance, both the employee and the employer will be subject to administrative penalties in the field of labor according to Article 39 of Decree 12/2022/ND-CP.
– Employees: Fined from VND 500,000 – 1 million.
– Employers: Fined from 12% – 15% of the total amount of insurance premiums due, but not exceeding VND 75 million.
How much money is received in lieu of paying social insurance?
Employees who are not eligible for mandatory social insurance will receive additional money from the enterprise in lieu of paying insurance. The amount of money employees receive is calculated based on the amount of mandatory insurance premiums that the enterprise must pay.
According to the instructions in Decision 595/QD-BHXH in 2017, each month, employers must deduct insurance premiums at certain rates (21.5% or 21.3%) of the salary used as the basis for mandatory social insurance. Of this amount, retirement – death is 14%; Sickness – Maternity is 3%; Work accidents – occupational diseases are 0.5% or 0.3%; Unemployment insurance is 1% and Health insurance is 3%.
For work accidents and occupational diseases insurance, enterprises that meet the conditions to pay for work accidents and occupational diseases at a lower level and are approved by the Ministry of Labor – War Invalids and Social Affairs shall pay at a rate of 0.3% (according to point b, Clause 1, Article 4, and Article 5 of Decree 58/2020/ND-CP). The rest must pay 0.5%.
Thus, if an employee is not eligible for mandatory insurance so that the enterprise can pay for insurance, the employee will receive a sum of money as follows:
The amount in lieu of social insurance payment = 21.5% or 21.3% x Salary used as the basis for social insurance payment
Of which, according to Clause 26, Article 1 of Circular 06/2021/TT-BLDTBXH, the salary used as the basis for social insurance payment of employees includes:
– The salary according to the job or position.
– Allowances for compensating for working conditions, complexity of work, living conditions, and level of labor attraction that the salary in the contract has not been calculated or is calculated but not yet full.
– Supplements that determine a specific amount of money and are paid regularly in each salary payment period.
For example: Mr. A continues to work for Company X after retirement with a salary according to the job in the contract of VND 8 million/month.
Each month, in addition to paying Mr. A VND 8 million for salary, Company X must also pay an additional: 21.5% x VND 8 million = VND 1.72 million.
Thus, the total amount that Mr. A receives each month = VND 8 million + VND 1.72 million = VND 9.72 million.
