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1. Evasion of Social Insurance Contributions: Enterprises May Face Heavy Fines
Enterprises are obligated to contribute to social insurance and unemployment insurance for all employees who are subject to mandatory social insurance (SI) and unemployment insurance (UI) schemes. The contribution amount is based on the salary agreed upon between the employee and the employer. Enterprises must make these contributions in a timely and complete manner.
If an enterprise evades, fails to make, or makes insufficient contributions to mandatory social insurance or unemployment insurance for employees, it may face significant administrative penalties.
2. Penalties for Evasion of Social Insurance and Unemployment Insurance Contributions
Penalties for administrative violations related to evasion of social insurance contributions are stipulated in Article 6 and Clauses 6, 7, 9, and 10 of Article 39 of Decree 12/2022/NĐ-CP, which regulates administrative penalties in the fields of labor, social insurance, and Vietnamese workers working abroad under contracts. Specifically, Article 6 states that the fines specified in Chapters II, III, and IV of this Decree apply to individuals, while fines for organizations are twice the amount imposed on individuals.
- Clause 6: A fine ranging from 18% to 20% of the total amount of mandatory SI and UI contributions due at the time of the administrative violation record, with a maximum fine of VND 75,000,000, shall be imposed on an employer who fails to make mandatory SI or UI contributions for all employees subject to these schemes, provided the violation does not warrant criminal prosecution.
- Clause 7: A fine ranging from VND 50,000,000 to VND 75,000,000 shall be imposed on an employer who evades mandatory SI or UI contributions, provided the violation does not warrant criminal prosecution.
- Clause 9: Additional penalties include a suspension of occupational safety and hygiene assessment activities for 1 to 3 months for organizations that violate the provisions in Clause 8 of this Article.
- Clause 10: Remedial measures include:
- Requiring the employer to fully pay the outstanding mandatory SI and UI contributions to the social insurance authority for violations specified in Clauses 5, 6, and 7 of this Article.
- Requiring the employer to pay interest equal to twice the average investment interest rate of the social insurance fund for the previous year, calculated on the amount and duration of delayed, non-contributed, evaded, or misappropriated contributions.
- If the employer fails to comply, banks, other credit institutions, or the State Treasury, upon request from the competent authority, must deduct the outstanding contributions, delayed contributions, and interest from the employer’s deposit account, calculated at the highest non-term deposit interest rate announced by state-owned commercial banks at the time of the penalty, for violations specified in Clauses 5, 6, and 7 of this Article lasting 30 days or more.
Evasion of Social Insurance Contributions Violates Legal Regulations
Evasion of mandatory social insurance contributions for employees violates the legal provisions on social insurance as stipulated in Clause 1, Article 17 of the Social Insurance Law 2014. Specifically, Article 17 prohibits the following acts: evading mandatory SI or UI contributions and delaying SI or UI contributions.
Article 122 of this Law further stipulates that employers who violate Clauses 1, 2, or 3 of Article 17 for 30 days or more must, in addition to paying the full amount of outstanding or delayed contributions and facing legal penalties, pay interest equal to twice the average investment interest rate of the social insurance fund for the previous year, calculated on the amount and duration of delayed contributions. If the employer fails to comply, banks, other credit institutions, or the State Treasury, upon request from the competent authority, must deduct the outstanding contributions, delayed contributions, and interest from the employer’s deposit account to transfer to the social insurance authority.
Thus, if an enterprise evades mandatory SI contributions for 30 days or more, it must pay the full amount of outstanding or delayed contributions and interest equal to twice the average investment interest rate of the social insurance fund for the previous year, calculated on the amount and duration of delayed contributions.
Disclaimer:
This article is intended for informational purposes only and does not constitute legal advice from HTH & Partners. The content represents the views of HTH & Partners and is subject to change without prior notice.
The legal provisions referenced in this article were valid at the time of publication but may have been amended or repealed by the time of reading. We strongly recommend consulting a qualified legal professional before applying any information contained herein.
