Recently, Ms. Pham Thi Thanh Thuy, a worker at a garment company in Hoc Mon District, Ho Chi Minh City, was involved in a traffic accident on her way to work. When she went to the hospital for examination, the doctor advised her to take a five-day leave to recover, during which she would be entitled to social insurance benefits.
Unwilling to Take Sick Leave
Despite being bruised and sore after the accident, Ms. Thuy decided to return to work instead of taking sick leave and claiming her social insurance benefits.
According to Ms. Thuy, her monthly income is around VND 7 million if she doesn’t work overtime. However, according to her labor contract, her basic salary is just over VND 5.3 million (minimum regional wage plus 7% for skilled workers). The remaining amount consists of various allowances for punctuality, transportation, accommodation, and childcare.
Incorrect salary declaration for social insurance leads to disadvantages for employees when claiming benefits.
The company calculates social insurance contributions based on the salary specified in the labor contract. If Ms. Thuy were to take sick leave, she would receive 75% of her contribution base. She estimates that for each day of sick leave, she would lose about VND 165,000, and for the full five days, she would lose VND 625,000. In addition, she would also forfeit a punctuality allowance of VND 500,000 for the month. “In October, I took almost a week off to take care of my child. If I take another leave now, my income for this month will not be enough to cover my living expenses. But if I go to work, I can not only maintain my actual income but also earn extra by working overtime,” Ms. Thuy confided.
Similarly, Mr. Vo Quoc Quan, a mechanical worker at an enterprise in Nha Be District, Ho Chi Minh City, only dares to take time off when he needs to be hospitalized or faces other dire circumstances. According to his monthly pay slip, Mr. Quan’s salary consists of two parts: a basic salary of VND 5.7 million per month (as stated in the labor contract and for social insurance contributions) and a total salary of VND 15 million per month (based on actual working days). In addition, depending on productivity and punctuality, he also receives a performance bonus of VND 2-5 million per month. If he takes a day off, he won’t be eligible for the performance bonus. The significant discrepancy between his actual salary and the salary used for social insurance contributions forces him to think twice about taking any time off.
According to Mr. Nguyen Quoc Thanh, Deputy Director of Ho Chi Minh City Social Insurance, many enterprises deliberately find loopholes to reduce their contributions to social insurance, health insurance, and unemployment insurance. The contribution base for these insurances is mainly based on the minimum wage. Moreover, some enterprises intentionally exclude certain items from the contribution base to evade their obligations, resulting in lower social insurance contributions for their employees.
On the other hand, employees, facing employment pressures and lacking a full understanding of the policies, are reluctant to raise objections with their employers and even agree to forgo social insurance, unemployment insurance, and health insurance. From 2020 to June 2024, through inspections and audits, the social insurance agency has required enterprises to additionally insure over 4,000 employees who were previously uninsured or underinsured and to correct the contribution base for over 3,349 employees who were previously insured based on an incorrect salary level.
Lessons from Practice
When there is a discrepancy between the salary agreed upon in the labor contract and the actual salary received, employees bear the brunt of the consequences. Lower salaries lead to lower social insurance contributions and, consequently, lower benefits when claiming social insurance. Moreover, in the event of a dispute, employees may find it challenging to protect their rights.
According to Lawyer Tran Huu Tin, Head of the Law Office of Tin and Associates, when signing labor contracts, employees often prefer to have their social insurance contributions based on a lower salary. However, in the event of a dispute, they expect to receive benefits based on their actual higher salary. Nonetheless, according to legal regulations, the court’s decision will be based on the salary specified in the labor contract. Therefore, employees need to understand that their social insurance contributions will determine the level of benefits and compensation they receive in case of a dispute; there is no such thing as contributing less and receiving more.
The case of Mr. V.V.T, a team leader at a garment company in Binh Duong Province, illustrates this point. Previously, Mr. T. signed a one-year fixed-term labor contract with the company (from December 1, 2021, to November 30, 2022). According to the contract, his basic salary was VND 6 million per month, with various allowances for punctuality, transportation, phone bills, housing, and productivity bonuses totaling VND 10 million per month. His actual monthly income was VND 16 million.
On December 2, 2022, the company notified Mr. T. of the termination of his labor contract. Believing that the company had unilaterally terminated the contract in violation of regulations, Mr. T. filed a lawsuit demanding a total compensation of VND 308 million (based on his actual income).
In the recent appellate trial held by the Binh Duong Provincial People’s Court, the judges acknowledged that the company had unlawfully terminated the labor contract. However, they found that using a salary of VND 16 million as the basis for compensation was inappropriate. This is because the labor contract stipulated that only the basic salary of VND 6 million was fixed and subject to social insurance contributions, while the other allowances and bonuses were variable and not included in the social insurance contribution base. Since Mr. T. was aware of the company’s social insurance declarations and accepted them, the court ruled that the company should pay him compensation of over VND 83 million based on his basic salary.
Enhanced Inspection and Verification
Moving forward, the Ho Chi Minh City Social Insurance agency will interconnect and share data on enterprises and employees with relevant agencies (Tax, Planning and Investment, Public Security, etc.) to accurately identify entities and individuals subject to mandatory social insurance, health insurance, and unemployment insurance. This will ensure full compliance with contribution requirements.
Additionally, the agency will enhance on-site verification and strict management of insured individuals, contribution rates, and payment methods. By doing so, they can also monitor the business situation of enterprises to ensure accurate and sufficient collection of contributions.
Ho Chi Minh City Social Insurance is also coordinating with functional units to strengthen labor inspections, labor contracts, salary scales, and data cross-checking with tax data at enterprises. These measures aim to promptly rectify and resolutely handle violations, thereby protecting the rights and interests of employees.
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