Question 163: Are amounts equivalent to payments for SI, HI, UI and annual leave, paid as additional amounts in the same salary period of elderly Employees on pension, subject to PIT?

716

Under Article 186.3 of the Labor Code, for Employees who are not covered by compulsory SI, HI and UI, in addition to salary payment, Employers shall simultaneously pay Employees in their same salary period an amount equivalent to the level of payments for compulsory SI, HI and UI, and annual leave in accordance with the law. Since elderly Employees on pension are not subject to compulsory SI[1], HI[2] and UI[3], Employers, upon hiring them, shall pay elderly Employees on pension and working in enterprises, amounts equivalent to payments of these mandatory insurance types plus annual leave payment in the same salary period in accordance with the law.

In terms of PIT related to Employees as resident individuals signing LCs with a term of 3 months or more, the additional payments in the said same salary period are regarded as incomes from salaries, wages liable to PIT. Employers shall make tax deductions under the partially progressive tax tariff pursuant to the PIT Law [4].

Additionally, relating to annual leave payment for elderly Employees on pension, in practice, enterprises normally apply the same annual leave to ordinary Employees as well as to elderly Employees instead of paying them annual leave payments in the same salary period as stipulated in Article 186.3 of the Labor Code. Accordingly, annual leave days for elderly Employees who have worked for a period of 12 months or more under ordinary working conditions, will be counted as 12 working days. Employees working less than 12 months will have annual leave days in proportion to actual working time. If Employees have not taken annual leave, they will get paid for the untaken leave days. Thus, if Employers apply annual leave days for elderly Employees and they have used up the annual leave days as regulated, then Employers shall not pay elderly Employees any additional amounts for annual leave days in their same salary period and elderly Employees are not subject to arising PIT from such annual leave payments.


[1]Article 123.9 Law on SI

[2]Article 12.2.a HI Law 2008, amended in 2014

[3]Article 43.2 Law on employment

[4]Article 25.1 (b) Circular 111/2013/TT-BTC dated 15/8/2013