[Direct answer]This is illegal. The payment base should be determined according to the employee's average monthly salary of the previous year, with a lower limit of 60% of the local average wage and an upper limit of 30% of the average wage, subject to a cap. If the employee's salary exceeds the lower limit but is declared at the minimum base, it constitutes failure to pay social insurance premiums in full. Consequences: The employer will be ordered to make up the payments within a specified period, plus a daily fine of 0.05% of the unpaid amount, and may be fined. The employee may terminate the labor contract and claim economic compensation, and the employer shall bear the difference in insurance benefits such as work-related injuries.

I. Problem Background and Typical Scenarios

The salary is 12,000 yuan, but the social insurance is paid at a rate of 5,000 yuan — this is a common practice in many companies. Employees do receive a slightly higher take-home pay, and everyone tacitly accepts it. However, these "industry norms" are not above the law: paying at the minimum base rate is a clear violation of the law. The risks include economic compensation when employees leave, differences in benefits during work-related injuries, and late payment penalties during audits, all of which are quietly accumulating.

II. Key points of contention

First, the statutory rules for determining the payment base. Second, the administrative consequences of insufficient payment: making up for the arrears, late payment penalties, and fines. Third, the employee's remedy package: forced termination plus economic compensation plus the difference in treatment. Fourth, why the "employee's voluntary consent" defense is invalid.

III. Professional analysis by Henglue Law Firm

First, establish clear rules: The Social Insurance Law establishes the principle of using an employee's actual salary as the contribution base—if the employee's salary is less than 60% of the local average wage in the previous year, it will be calculated based on 60%; if it exceeds 300%, it will be capped at 300%. The so-called "contributing at the minimum base" essentially means declaring the actual salary above the lower limit as the minimum base, with the difference corresponding to insufficient contributions. Administrative consequences include: social insurance collection agencies ordering payment within a specified period or making up the deficiency; if payments are not made within the deadline, a late payment penalty of 0.05% of the unpaid amount per day will be imposed; and if payments are still not made, a fine of not less than one but not more than three times the unpaid amount will be imposed. After social insurance fees are collected by tax authorities, cross-checks between social insurance declaration data and personal income tax declaration salaries have become increasingly stringent, and the probability of being audited for under-reporting has significantly increased. Employees' remedies include: First, forced termination with economic compensation—Article 38 of the Labor Contract Law stipulates that if an employer fails to pay social insurance premiums in accordance with the law, the employee may terminate the contract (without requiring 30-day notice) and claim economic compensation (one month's salary per year of service) according to Article 46; here, "failure to pay in accordance with the law" includes both failure to establish a social insurance relationship and insufficient contributions. Arbitration practices in Beijing are relatively cautious about supporting under-reporting cases, with most cases proceeding in the order of "audit and make up contributions first, then discuss compensation." Second, compensation for reduced benefits—if under-reporting results in reduced work injury insurance benefits, maternity allowances, or medical reimbursements, the employer must bear the difference. In work injury cases, this item often accounts for the largest amount. Third, administrative reporting—file a complaint with the social insurance audit department to request a revised contribution base and order make up payments. If the complaint is rejected, seek administrative review. Two defenses commonly used by enterprises are indefensible: "employees voluntarily waiving social insurance/agreeing to the minimum base" is invalid—social insurance contributions are mandatory legal obligations involving public interests and cannot be waived by mutual agreement; "paying part of the salary in cash and contributing at the minimum base" is also invalid, with the total salary determined according to the actual amount paid. Regulatory advice for enterprises: Full declaration of actual salaries is the only safe approach; voluntarily making up historical arrears (which often reduces late payment penalties and fines when cooperating with audits); for enterprises with high cost pressures, optimize their salary structures through compliant design rather than falsifying contribution bases.

IV. Practical suggestions and legal basis

The first step is to verify the payroll base: compare the actual pay with the declared base, and the difference represents the risk exposure. The second step is to choose a path: employees can claim compensation based on three options: severance compensation, treatment differences, and administrative audits. The third step is to make up for the differences: the compensation for differences in work-related injury and maternity benefits shall be calculated separately. The fourth step is to promote compliance: enterprises shall proactively make up for the arrears and rectify the base before the audit. The main legal basis: Articles 60, 63, and 86 of the Social Insurance Law of the People's Republic of China, and Articles 38 and 46 of the Labor Contract Law of the People's Republic of China; the specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Reminder

Three key points about low social insurance contributions: The base amount should be set according to the actual salary; it's illegal to set it below the minimum limit; the compensation for employees and the difference in payments should be calculated separately, with the difference in work-related injury payments often being the largest part; voluntary waivers and agreements with low base amounts are all invalid; there's no shortcut to compliance. For issues involving retroactive payment of social insurance and labor disputes, you can seek help through the following channels:Labor arbitration and work-related injury compensationThe service provides a comprehensive solution, and the differences in work-related injury compensation can be referred to for reference.Personal injury and medical disputesFor the section on compliance in corporate employment practices, relevant content can be incorporated here.Intellectual property protection and corporate lawFor disputes related to severance payments upon leaving a job, you can refer to the following sections for referenceSpecialised legal servicesPlate consultation.

VI. Frequently Asked Questions

Q1: Is it valid for employees to voluntarily give up their social insurance benefits?

Invalid. Social insurance is a statutory mandatory obligation. Renouncing or signing an agreement with a low base amount does not exempt the employer from liability, and employees can still claim for retroactive payment and related rights.

Q2: Can I request economic compensation if I pay according to the minimum base amount?

If the employer fails to pay the full amount of social insurance premiums in accordance with the law, which falls under the circumstances specified in Article 38 of the Labor Contract Law, the employee may terminate the contract and claim economic compensation. In practice, this is often carried out in conjunction with the audit and back-payment procedures.

Q3: Who will bear the late payment penalty for making up for the unpaid social insurance premiums?

It shall be borne by the employing unit and calculated at a rate of 0.05% per day; those who still fail to pay the contributions after the due date may also face fines of one to three times the amount of the unpaid contributions.

Q4: Does failing to pay in full affect the workers' compensation benefits?

Impact. If the work-related injury benefits calculated based on a low base are lower than the standard entitlement, the employer shall bear the compensation for the difference.

Q5: How to report if I find that the base number is incorrect?

Complain to the social security audit department and submit the payroll vouchers, demanding the verification of the base amount and ordering the employer to make up for the arrears. If the complaint is not accepted, the employee can appeal or file a lawsuit.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in other regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, so as to avoid missing the statutory time limit. →Labor arbitration legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.