Vietnam: How will companies that do not pay compulsory social insurance premiums to employees be sanctioned under the latest regulations?
Correct understanding of compulsory social insurance under the latest Vietnamese regulations?
Pursuant to Clause 2, Article 3 of the 2014 Law on Social Insurance provides for compulsory social insurance as follows:
2. Compulsory social insurance means a form of social insurance organized by the State in which employees and employers are required to participate.
Pursuant to Article 2 of the Law on Social Insurance 2014, the subjects of the application are as follows:
Article 2. Subjects of application
1. Employees being Vietnamese citizens shall be covered by compulsory social insurance, including:
a/ Persons working under indefinite-term labor contracts, definite-term labor contracts, seasonal labor contracts or contracts for given jobs with a term of between full 3 months and under 12 months, including also labor contracts signed between employers and at-law representatives of persons aged under 15 years in accordance with the labor law;
b/ Persons working under labor contracts with a term of between full 1 month and under 3 months;
c/ Cadres, civil servants and public employees;
d/ Defense workers, public security workers and persons doing other jobs in cipher organizations;
dd/ Officers and professional army men of the people's army; officers and professional non-commissioned officers and officers and technical non- commissioned officers of the people's public security; and persons engaged in cipher work and enjoying salaries like army men;
e/ Non-commissioned officers and soldiers of the people’s army; non- commissioned officers and soldiers on definite-term service in the people’s public security; army, public security and cipher cadets who are entitled to cost- of-living allowance;
g/ Vietnamese guest workers defined in the Law on Vietnamese Guest Workers;
h/ Salaried managers of enterprises and cooperatives;
i/ Part-time staffs in communes, wards and townships.
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3. Employers covered by compulsory social insurance include state agencies, non-business units and people's armed forces units; political organizations, socio-political organizations, socio-politico-professional organizations, socio-professional organizations and other social organizations; foreign agencies and organizations, and international organizations operating in the Vietnamese territory; enterprises, cooperatives, individual business households, cooperative groups, and other organizations and individuals that hire or employ employees under labor contracts.
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Accordingly, compulsory social insurance is a type of social insurance organized by the State that employees and employers must participate in. Subjects subject to compulsory social insurance contributions are those specified in Article 2 above, including employers.
Vietnam: How will companies that do not pay compulsory social insurance premiums to employees be sanctioned under the latest regulations?
What acts are strictly prohibited in the field of social insurance in Vietnam?
Pursuant to Article 17 of the Law on Social Insurance 2014, the following prohibited acts are provided:
Article 17. Prohibited acts
1. Shirking the payment of compulsory social insurance or unemployment insurance premiums.
2. Delaying the payment of social insurance or unemployment insurance premiums.
3. Appropriating social insurance or unemployment insurance premiums or allowances.
4. Falsifying or forging dossiers in the implementation of social insurance or unemployment insurance.
5. Illegally using the social insurance fund or unemployment insurance fund.
6. Causing obstacles or troubles to, or harming the lawful and legitimate rights and interests of, employees or employers.
7. Illegally accessing or exploiting the database on social insurance or unemployment insurance.
8. Making untruthful reports or providing inaccurate information or data on social insurance or unemployment insurance.
Accordingly, the acts specified in Article 17 above are prohibited acts in the field of social insurance, including the act of evading compulsory social insurance contributions.
How will companies that do not pay compulsory social insurance to employees be sanctioned in Vietnam?
Pursuant to Clause 6,10 Article 39 of Decree 12/2022/ND-CP on violations of regulations on compulsory social insurance contributions and unemployment insurance as follows:
Article 39. Violations against regulations on payment of compulsory social insurance and unemployment insurance premiums
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6. A fine equal to 18% to 20% of total amount of compulsory social insurance and unemployment insurance premiums payable at the date of issuance of violation record, but not exceeding VND 75.000.000 shall be imposed upon an employer for failing to pay compulsory social insurance and unemployment insurance premiums for total number of employees eligible for participation in compulsory social insurance and unemployment insurance, if not liable to criminal prosecution.
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10. Remedial measures
a) The employer that commits any of the violations in Clauses 5, 6, 7 of this Article is compelled to pay total amount of compulsory social insurance and unemployment insurance premiums payable to social insurance authorities;
b) The employer that commits any of the violations in Clauses 5, 6, 7 of this Article for a duration of at least 30 days is compelled to pay an amount of interest charged on insurance premiums accrued due to late payment, non-payment, evasion of payment or appropriation of payments, which is calculated by using the interest rate that is 02 times higher than the average interest rate of investment made by the social insurance fund in the previous year. If not doing so, at the request of competent persons, banks, other credit institutions or state treasuries shall withdraw money from the violating employer’s deposit accounts to transfer deferred amounts or outstanding amounts of insurance premiums plus the interest on such amounts, which is calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to the account of the relevant social insurance authority.
Pursuant to Article 6 of Decree 12/2022/ND-CP stipulating fines, sanctioning authority and principles applicable to repeated administrative violations as follows:
Article 6. Fines, power to impose penalties, and rules for imposing penalties for repeated violations
1. The fines for administrative violations prescribed in Chapter II, Chapter III and Chapter IV of this Decree shall be imposed upon violating individuals, except the fines in Clauses 1, 2, 3, 5 Article 7, Clauses 3, 4, 6 Article 13, Clause 2 Article 25, Clause 1 Article 26, Clauses 1, 5, 6, 7 Article 27, Clause 8 Article 39, Clause 5 Article 41, Clauses 1 through 12 Article 42, Clauses 1 through 8 Article 43, Clauses 1 through 6 Article 45, Clause 3 Article 46 of this Decree. The fine imposed upon an organization is twice as much as that imposed upon an individual for committing the same administrative violation.
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Accordingly, if the company does not pay compulsory social insurance premiums to employees, it will commit administrative violations with a fine of 36% to 40% of the total amount required to pay compulsory social insurance premiums at the time of making a record of administrative violations but not exceeding VND 150,000,000 (the fine of the organization is 02 times the fine of the fish). multiplication)
In addition, this company is also forced to pay the full amount of social insurance required to pay to the social insurance agency. If violating for 30 days or more, this company is also forced to pay an interest equal to 02 times the average social insurance fund investment interest rate of the previous year calculated on the amount and time of evading payment.
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