Understanding regulations on salary for compulsory social insurance contributions
In the context of constantly updated labor laws, accurately determining the income subject to compulsory social insurance (SI) contributions poses a significant challenge for businesses. Errors in this area not only lead to risks of administrative penalties but also directly affect the benefits of employees. To gain the most comprehensive overview of employee payments, businesses should refer to the article Allowances & Benefits Under New Labor Law: A Detailed Guide for HR Professionals.
Understanding which allowances are subject to SI contributions and which are exempt will help the HR department optimize the payroll fund and ensure compliance with State regulations. According to current regulations, the salary used as the basis for compulsory SI contributions includes not only the salary stated in the contract but also salary allowances of a stable and regular nature.
This article will analyze in depth how to calculate salary allowances for compulsory SI contributions according to the latest legal documents, helping businesses avoid unnecessary trouble with management agencies.
Salary allowances subject to compulsory social insurance
According to Circular 47/2015/TT-BLDTBXH and the Law on Social Insurance, the salary for SI contributions includes the salary level, salary allowances, and other additional payments. Specifically, the salary allowances subject to SI contributions include:
- Position and title allowance: Payments for employees holding management positions or having high professional qualifications.
- Responsibility allowance: A payment for employees with high responsibilities in their work or those managing important tools and equipment.
- Heavy, hazardous, or dangerous work allowance: Compensation for harsh working conditions.
- Seniority allowance: Based on the long-term working duration of the employee at the enterprise.
- Regional allowance: Applicable to employees working in areas with difficult socio-economic conditions.
- Mobile allowance: For employees who frequently change their workplace.
- Attraction allowance: Applicable in especially difficult areas to encourage personnel.
- Similar allowances: Allowances associated with the work process and work results of the employee.
Payments not subject to compulsory social insurance
Not every payment a business makes to its employees must be included in the SI contribution calculation. According to Article 30 of Circular 59/2015/TT-BLDTBXH, the following payments are not included in the salary for SI contributions:
- Bonuses as prescribed in Article 104 of the Labor Code (year-end bonuses, initiative bonuses, performance-based bonuses).
- Mid-shift meal allowances.
- Support for gasoline, telephone, travel, housing, childcare, and infant care.
- Support when employees have deceased relatives or relatives getting married.
- Other support payments not related to salary or not of a stable nature.
How to calculate salary for social insurance contributions accurately
To calculate the compulsory SI contribution level, businesses need to follow this formula:
Salary for SI contribution = Salary level + Salary allowances + Other additional payments (with specific amounts determined alongside the salary agreed upon in the labor contract).
Process for the HR department:
- Review labor contracts: Check if allowances have been clearly separated in the contract. If not separated, the insurance agency may require contributions based on total income.
- Determine stability: Evaluate whether that allowance is paid regularly every month. If yes, it is highly likely that it is subject to SI contributions.
- Update regional minimum wage: The salary for SI contributions must not be lower than the regional minimum wage at the time of contribution.
- Register for adjustments: When there is a change in allowances that alters the salary for SI contributions, the business needs to perform procedures to report the increase/decrease to the SI agency within the prescribed time limit.
Important notes to avoid errors
Intentionally “splitting” income or misnaming allowances to avoid SI contributions is a violation of the law. The SI agency currently conducts very thorough thematic inspections of payrolls.
Businesses should note that if allowances are not specifically stipulated in the labor contract or collective labor agreement, it is very difficult to prove that they are “not subject to SI contributions.” Therefore, all payments must be documented transparently and clearly.
In addition, for enterprises with foreign investment or large enterprises, monitoring changes in salary policy is extremely important. Ensure that the accounting and HR departments always coordinate closely to reconcile the monthly payroll before performing SI deductions and payments.
Conclusion
Calculating salary allowances for compulsory SI contributions is not only a legal obligation but also a way for businesses to build trust with employees. A transparent salary and bonus policy that complies with the law will help businesses stabilize personnel and develop sustainably. Hopefully, the above sharing has helped you gain a clearer view of how to calculate salary allowances according to current regulations. Always update the latest information from competent authorities to ensure the business always operates in compliance with the law.