Is it legal when a company separate the employee’s income into the one for insurance payment and the one not for insurance payment?

Legal situation:

Hello, I would like to ask if my company is allowed to separate the income of employees into which portion will be subject to social insurance contributions and which portion will not be subject to social insurance contributions? I sincerely thank you.

FDVN Opinion:

Thank you for concerning and sending your question to FDVN Law Firm (“FDVN”). After studying the relevant legal provisions, we would like to present our opinion as follows:

According to Article 3 of Circular No. 10/2020/TT-BLĐTBXH, the monthly salary subject to Social Insurance (SI) contributions DOES NOT MANDATORILY COVER the following regimes and benefits:

1. Bonus (Article 104 of Labor Code 2019)

• A bonus means an amount of money, a piece of property or item that is provided by an employer for his/her employees on the basis of the business performance or the employees’ performance.
• A bonus regulation shall be decided and publicly announced at the workplace by the employer after consultation with the representative organization of employees (if any).

2. Initiative allowances;
3. Mid-shift meal allowances;
4. Support for fuel, phone, transportation, housing, childcare, and raising young children;
5. Support for situations such as the death of a family member, marriage of the employee, the employee’s birthday, assistance for employees facing difficulties due to work-related accidents, occupational diseases, and other support and allowances, are recorded separately in the labor contract.;
6. Other support and allowance items, which do not specify a specific amount, along with the agreed-upon salary in the labor contract, are paid regularly or irregularly in each pay period based on the work process and performance of the employee. These support and allowance items are recorded separately in the labor contract. In practice, there may be items such as support for tuition fees to improve qualifications, rewards for academic achievements, etc., which fall under this category.

Accordingly, all income of the employee is not included in the salary for calculating social insurance contributions. Additionally, income portions not included in the salary for social insurance contributions must fall into the specified cases and meet the mentioned conditions.

Tran Ha – FDVN Law Firm

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