In 2019, Is Productivity Salary (KPI) Subject to Social Insurance Contributions?

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According to provisions in Clause 2, Article 30 of Circular 59/2015/TT-BLDTBXH and Clause 2.2, Article 6 of Decision 595/QD-BHXH from January 1, 2018 onwards, the monthly salary used for social insurance contributions for employees whose wages are determined by the employer's salary policy includes:

- The salary specified in the labor contract (LD) includes the time-based salary of the job or position according to the wage scale and payroll developed by the employer as per labor laws agreed upon by both parties.

For employees paid by product or contract salary, the time-based salary to determine the product price or contract salary shall be recorded.

- Salary allowances, including allowances agreed upon by both parties, specifically: Allowances to cover factors related to working conditions, job complexity, living conditions, labor attraction rate which the agreed salary in the labor contract has yet to fully or partially include, such as position allowances; responsibility allowances; hazardous, toxic, dangerous allowances; seniority allowances; regional allowances; mobility allowances; attraction allowances, and allowances of a similar nature.

- Additional amounts that can be specifically determined along with the agreed salary in the labor contract and paid regularly in each pay period.

According to Clause 3, Article 30 of Circular 59, Clause 2.3, Article 6 of Decision 595, and Point b, Clause 3, Article 4 of Circular 47/2015/TT-BLDTBXH the mandatory monthly salary for social insurance contributions does not include:

- Additional amounts that cannot be specifically determined along with the agreed salary in the labor contract, whether paid regularly or irregularly in each pay period, associated with the employee’s working process and job performance.

- Other policies and benefits, such as bonuses as per Article 103 of the Labor Code, initiative bonuses; meal allowances; transportation, phone, housing, childcare, and small children allowances; support in cases where employees' relatives die, employees have relatives getting married, employees' birthdays, assistance for employees facing difficulties due to work accidents, occupational diseases, and other supports, benefits specified as separate items in the labor contract according to Clause 11, Article 4 of Decree 05/2015/ND-CP.

Thus, from the above provisions, it can be seen that for KPI salary items, if the contract explicitly specifies the amount and it is paid regularly, it is subject to social insurance contributions. If it is not specifically determined and not paid regularly in each pay period, it is not subject to social insurance contributions.

- Nguyen Trinh -

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