IS A CHAIRMAN OF THE BOARD OF DIRECTORS WHO DOES NOT RECEIVE A SALARY REQUIRED TO PAY COMPULSORY SOCIAL INSURANCE? IF SO, WHAT IS THE CONTRIBUTION RATE?

Is a Chairman of the Board of Directors who does not receive a salary required to pay compulsory social insurance? If so, what is the contribution rate? Let’s find out more with Pham Consult!

Is a Chairman of the Board of Directors who does not receive a salary required to pay compulsory social insurance?

According to the Law on Social Insurance, a Chairman of the Board of Directors who does not receive a salary is still subject to compulsory social insurance participation and contribution requirements.

Specifically, Point n, Clause 1, Article 2 of the 2024 Law on Social Insurance stipulates:

Subjects participating in compulsory social insurance and voluntary social insurance

1. Employees who are Vietnamese citizens subject to compulsory social insurance participation include:
2. n) Enterprise managers, controllers, representatives of state capital, representatives of enterprise capital as prescribed by law; members of the Board of Directors, General Directors, Directors, members of the Supervisory Board or controllers, and other elected managerial positions of cooperatives or unions of cooperatives as prescribed by the Law on Cooperatives, who do not receive a salary.

Clause 24, Article 4 of the 2020 Law on Enterprises stipulates:

An enterprise manager is a manager of a private enterprise or a company manager, including the private enterprise owner, general partner, Chairperson of the Board of Members, member of the Board of Members, Company President, Chairperson of the Board of Directors, member of the Board of Directors, Director or General Director, and individuals holding other managerial titles as prescribed in the company’s Charter.

Thus, a Chairman of the Board of Directors who does not receive a salary is still subject to compulsory social insurance participation and contribution requirements. At what rate must a Chairman of the Board of Directors who does not receive a salary pay compulsory social insurance?

According to Clause 4, Article 33 of the 2024 Law on Social Insurance, which stipulates the contribution rates, methods, and deadlines for compulsory social insurance for employees:

Contribution rates, methods, and deadlines for compulsory social insurance for employees

1. The contribution rates and methods for the subjects specified in Points a, b, c, d, i, k, and l of Clause 1 and Clause 2, Article 2 of this Law are prescribed as follows:
2. a) The monthly contribution rate is 8% of the salary serving as the basis for compulsory social insurance contributions to the retirement and survivorship fund;
3. b) Contributions shall be made to the social insurance agency on a monthly basis.

In cases where the subjects specified in Point a, Clause 1, Article 2 of this Law receive wages based on output or lump-sum contracts at enterprises, cooperative groups, cooperatives, unions of cooperatives, or business households operating in the fields of agriculture, forestry, fishery, or salt production, contributions may be made on a monthly, quarterly (every 3 months), or semi-annual (every 6 months) basis.

4. The contribution rates, methods, and deadlines for the subjects specified in Points m and n, Clause 1, Article 2 of this Law are prescribed as follows:
5. a) The monthly contribution rate is 3% of the salary serving as the basis for compulsory social insurance contributions to the sickness and maternity fund, and 22% of the salary serving as the basis for compulsory social insurance contributions to the retirement and survivorship fund;
6. b) Contributions shall be made directly to the social insurance agency or through the business household, enterprise, cooperative, or union of cooperatives involved in management, on a monthly, quarterly (every 3 months), or semi-annual (every 6 months) basis; the deadline for contribution is the last day of the month immediately following the contribution cycle. As previously stated, a Chairperson of the Board of Directors who does not receive a salary falls under the category of persons subject to compulsory social insurance participation pursuant to Point n, Clause 1, Article 2 of the 2024 Law on Social Insurance.

The contribution rates for the subjects specified in Point n, Clause 1, Article 2 of the 2024 Law on Social Insurance are stipulated as follows:

The monthly contribution rate is 3% of the salary serving as the basis for compulsory social insurance contributions to the sickness and maternity fund, and 22% of the salary serving as the basis for compulsory social insurance contributions to the retirement and survivorship fund.

Thus, a Chairperson of the Board of Directors who does not receive a salary must make monthly compulsory social insurance contributions equal to 3% of the salary serving as the basis for compulsory social insurance contributions to the sickness and maternity fund, and 22% of the salary serving as the basis for compulsory social insurance contributions to the retirement and survivorship fund.

How is the salary used as the basis for compulsory social insurance contributions determined for a Chairman of the Board of Directors who does not receive a salary?

According to Point d, Clause 1, Article 31 of the 2024 Law on Social Insurance regarding the basis for social insurance contributions:

Basis for social insurance contributions

1. The salary serving as the basis for compulsory social insurance contributions is prescribed as follows:
2. d) Subjects specified in Points g, h, m, and n, Clause 1, Article 2 of this Law may select the salary serving as the basis for compulsory social insurance contributions, provided that it is at least equal to the reference level and at most equal to 20 times the reference level at the time of contribution.

After making social insurance contributions based on the selected salary for at least 12 months, the employee may re-select the salary serving as the basis for social insurance contributions;

Accordingly, such a Chairman of the Board of Directors (who does not receive a salary) may select the salary serving as the basis for compulsory social insurance contributions, provided that it is at least equal to the reference level and at most equal to 20 times the reference level at the time of contribution.

After making social insurance contributions based on the selected salary for at least 12 months, the Chairman of the Board of Directors may re-select the salary serving as the basis for social insurance contributions.

The current reference level is the base salary level prescribed in Decree 161/2026/ND-CP, which is 2,530,000 VND/month.