Can a Company Opt Out of Mandatory Social Insurance? What Are the Penalties for Non-compliance with Mandatory Social Insurance Regulations?
Can Employers Not Participate in Mandatory Social Insurance?
According to Clause 1, Article 168 of the Labor Code 2019 on participation in social insurance, health insurance, and unemployment insurance as follows:
Participation in Social Insurance, Health Insurance, Unemployment Insurance
1. Employers and employees must participate in mandatory social insurance, health insurance, and unemployment insurance; employees are entitled to benefits as prescribed by law on social insurance, health insurance, and unemployment insurance.
Encouragement for employers and employees to participate in other forms of insurance for employees.
Thus, according to regulations, employers and employees must participate in mandatory social insurance, health insurance, and unemployment insurance.
Can companies not participate in mandatory social insurance? How are companies penalized for violating the regulation of paying mandatory social insurance? (Image from Internet)
How Much Are Companies Fined for Violating Mandatory Social Insurance and Unemployment Insurance Regulations?
Based on Article 39 of Decree 12/2022/ND-CP, the regulations are as follows:
Violations of Regulations on Paying Mandatory Social Insurance and Unemployment Insurance
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2. A fine ranging from 1,000,000 VND to 3,000,000 VND shall be imposed on employers for the following acts:
a) Annually failing to publicly post information on the payment of social insurance of employees provided by the social insurance agency as prescribed in Clause 7, Article 23 of the Social Insurance Law;
b) Failing to provide or inadequately providing information on the payment of mandatory social insurance, unemployment insurance of employees when requested by employees or labor unions.
3. A fine ranging from 1,000,000 VND to 3,000,000 VND per employee but not exceeding 75,000,000 VND shall be imposed on employers who fail to complete the procedures for confirming the payment of unemployment insurance for employees to complete their unemployment insurance benefits dossiers as prescribed.
4. A fine ranging from 5,000,000 VND to 10,000,000 VND shall be imposed on employers who fail to provide accurate, complete, promptly information, documents related to the payment and enjoyment of mandatory social insurance, unemployment insurance as required by competent state agencies and social insurance agencies.
5. A fine from 12% to 15% of the total unpaid mandatory social insurance, unemployment insurance at the time of making the administrative violation record but not exceeding 75,000,000 VND shall be imposed on employers for the following acts:
a) Late payment of mandatory social insurance, unemployment insurance;
b) Payment of social insurance, unemployment insurance at incorrect levels as prescribed without evasion;
c) Underpayment of social insurance and unemployment insurance for the eligible number of employees participating in mandatory social insurance and unemployment insurance without evasion;
d) Appropriating the payment of social insurance and unemployment insurance of employees.
6. A fine from 18% to 20% of the total unpaid mandatory social insurance, unemployment insurance at the time of making the administrative violation record but not exceeding 75,000,000 VND shall be imposed on employers who fail to pay mandatory social insurance, unemployment insurance for all employees eligible to participate in mandatory social insurance and unemployment insurance but not to the extent of criminal responsibility.
7. A fine ranging from 50,000,000 VND to 75,000,000 VND shall be imposed on employers for the following acts:
a) Evading payment of mandatory social insurance, unemployment insurance but not to the extent of criminal responsibility;
b) Falsifying documents, altering documents in the dossier proposing to apply a lower payment rate than the normal rate to the Occupational Accident and Occupational Disease Insurance Fund but not to the extent of criminal responsibility.
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Thus, depending on the act of violating the regulations on paying mandatory social insurance and unemployment insurance, employers may be fined administratively up to 75,000,000 VND.
The fine for organizations is twice the fine of individuals.
Besides Administrative Penalties, What Must Companies Do?
According to Clause 10, Article 39 of Decree 12/2022/ND-CP, the regulations on remedial measures for violations of mandatory social insurance and unemployment insurance are as follows:
Violations of Regulations on Paying Mandatory Social Insurance and Unemployment Insurance
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10. Remedial Measures
a) Employers are required to pay the full amount of mandatory social insurance and unemployment insurance to the social insurance agency for violations stipulated in Clauses 5, 6, 7 of this Article;
b) Employers are required to pay an interest amount equal to twice the average fund investment interest rate of the preceding year on the unpaid amounts, late payments, evasive payments, or misappropriated payments; if not complied with, the competent authority, banks, other credit institutions, and the state treasury must deduct from the employers' deposit accounts the unpaid amounts, late payments and the interest on these amounts calculated at the highest non-term deposit interest rate of state commercial banks announced at the time of penalty into the account of the social insurance agency for violations stipulated in Clauses 5, 6, and 7 of this Article for 30 days or more.
Thus, besides being administratively fined, companies are required to implement remedial measures as prescribed above.
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