Lately, our Mongolian lawyers have assisted the client to establish a company, and which has led to the next inquiry about what responsibilities the company (an employer) will have after the company establishment. One of the considerations is the employer’s duty to pay insurance premiums of its employees.
Mongolian Social Security system provides benefits such as the retirement, health, disability, and unemployment for every single person who are currently employed within Mongolian territory including citizens of Mongolia, foreign employees and stateless persons. Social Security contribution is the premium levied on both employers and employees to fund the Social Security program.
The Social Insurance Law of Mongolia has determined the social insurance premium rates that both employers and employees are required to pay. As of 2023, depending on the industry, rate of premium payable by employer’s payroll is between 12.5% to 14.5%. Employee premium rate is fixed at 11.5% from salary and similar income but employee monthly contributions are capped at the minimum wage MNT 550,000.
An employer should be registered to the General authority for social insurance and responsible for withholding social insurance premiums and transferring them to the authorities on a monthly basis. Also, the employer is required to submit a report on the monthly social insurance premium payment to the social insurance within the 5the of the following month. Primary and accounting records and balance statement related to social insurance should be kept in accordance with the relevant procedure.