Fines for foreign-invested enterprises for failing to pay social insurance premiums have been specified in Decree No.28/2020/ND-CP released in March 2020 on providing penalties for admin violations in the fields of labor, social insurance, and overseas manpower supply under contract.
|Pham Duy Khuong - Managing director, ASL LAW |
Decree 28 details that in the case of failing to pay compulsory social insurance premiums on schedule, insufficiently but unintentionally, and completely, violating foreign-invested enterprises (FIEs) may be fined 12-15 per cent of the total amount of the compulsory social insurance. If an FIE fails to pay compulsory social insurance but not to the extent of criminal prosecution, the violating FIE may be fined 18-20 per cent of the total social insurance payment. If companies are evading these contributions but not to the extent of criminal prosecution, the violating FIE may be fined from $2,100-$3,200.
Moreover, FIEs can be prosecuted for criminal liability if they commit acts of social insurance fraud or evade payments as prescribed in Articles 214 and 216 of the Penal Code 2015, revised in 2017.
Some enterprises have unintentionally paid slowly or underpay social insurance premiums for their employees, which has led to administrative fines. Thus, to avoid these fines, FIEs should actively publicise the amount of social insurance they have paid and coordinate with trade unions and their employees to resolve any employee’s outstanding premiums for a quick and timely settlement.
In addition, FIEs should promote and foster the Law on Social Insurance, as well as institutions like health and unemployment insurance to protect employees’ rights on social insurance.
On the employees’ side, when finding that one’s employer is avoiding paying social insurance, the employee needs to actively exercise their right to complain to the company and it to pay any outstanding premiums or even sue their employer to the competent court to request a settlement of the dispute.
In addition, employees must also actively follow up with their participation in social insurance. Accordingly, they should take the time to pay attention to payments through the social insurance information channel of the district, province, or city. At the same time, it is possible to request grassroots trade unions to contact the authorities to provide for the premium payments.
However, although the regulations on administrative sanctions and criminal prosecution have covered most cases of social insurance debts of FIEs, many of them are willing to pay fines and are not even afraid to be criminally prosecuted. That is because the level of punishment for such debts remains low and not enough to deter and prevent this violation.
Also, prosecuting acts of unpaid social insurance premiums is extremely difficult as there is often insufficient legal ground, or it is difficult for employees and their representative organisations to exercise their rights due to the ambiguity of the law on this issue.
Therefore, in the coming time, competent authorities should consider giving a more deterrent penalty to FIEs on social insurance debts.
In addition, state agencies need to issue legal regulations guiding the procedures for social insurance agencies and employee representative organisations to participate in the proceedings according to the provisions of the Labour Code 2019 to prevent and combat crimes and protect the interests of employees.