Proposing 3 solutions to resolve social insurance debt of bankrupt enterprises

(Baonghean) - The Ministry of Labor, Invalids and Social Affairs is drafting a proposal for three options to protect the social insurance (SI) benefits of employees in dissolved, bankrupt enterprises that owe SI contributions.

According to the latest data from Vietnam Social Security, the current social insurance debt is more than 9,550 billion VND, of which the social insurance debt of 3 months or more is 6,869 billion VND, accounting for 72% of the social insurance debt. In particular, enterprises that owe social insurance but have been dissolved or bankrupt and cannot collect their debts are affecting the rights of employees.

The Ministry of Labor, Invalids and Social Affairs said that current regulations allow businesses that are still operating and owe social insurance contributions to resolve benefits for employees who are eligible for social insurance or who quit their jobs and transferred to other units or businesses.

However, for dissolved, bankrupt or absconding enterprises, there are no regulations to resolve social insurance benefits for employees in these units and enterprises.

Officers of the Collection Management Department (Provincial Social Insurance) consult on social insurance regime at Matrix Vinh Company Limited (Photo courtesy).

On that basis, the Ministry of Labor, Invalids and Social Affairs proposed 3 options to resolve workers' rights.

Option one,The Social Insurance agency confirms the social insurance payment period for employees up to the time the employee leaves the job to serve as a basis for settling social insurance regimes, or closes the social insurance book for employees to transfer to another unit.

The State budget guarantees the social insurance debt of dissolved or bankrupt enterprises that, after handling the assets of the enterprise, are not enough to pay the social insurance debt.

With this option, the social insurance benefits of employees are guaranteed and follow the principles of contribution and benefit as prescribed by the Social Insurance Law. However, the State budget must allocate a budget to guarantee the social insurance debt of dissolved and bankrupt enterprises (as of December 31, 2015, it was 220.5 billion VND).

To implement this plan, the Government needs to submit to the National Assembly for approval a budget to guarantee social insurance contributions for dissolved or bankrupt enterprises that still owe social insurance contributions, with an accumulated amount of VND220.5 billion as of December 31, 2015.

Option two,The Social Insurance agency confirms the social insurance payment period for employees up to the time the employee leaves the job to serve as a basis for settling social insurance regimes, or closing the social insurance book so that the employee can transfer to another unit. After handling the assets of a dissolved or bankrupt enterprise that is not enough to pay the social insurance debt, the Social Insurance Fund will bear the irrecoverable social insurance debt.

This option, in addition to ensuring the social insurance benefits of employees, also has an advantage over option 1 in that the State budget does not have to allocate a fund to guarantee the social insurance debt of dissolved or bankrupt enterprises.

However, this option does not ensure the correct payment-benefit principle as prescribed by the Law on Social Insurance (in essence, the period of unpaid social insurance contributions is not paid into the social insurance fund, but the social insurance benefits are still enjoyed). Similar to option one, this option will also encourage enterprises to deliberately delay, evade, and owe social insurance contributions.

To implement this plan, the Government must submit to the National Assembly (specific regulations or amendments and supplements to the Social Insurance Law), which stipulates that for dissolved or bankrupt enterprises that still owe social insurance contributions, employees will have their working time recorded to resolve social insurance benefits.

Production workers at Minh Anh Kim Lien Garment Joint Stock Company. (Illustration photo).

Option three,The Social Insurance Agency confirms the period of social insurance payment for employees up to the time of full social insurance payment; later, if it is recovered when handling the enterprise's assets, it will confirm additional payments for the employee. Amend a number of related laws in the direction that when liquidating assets of dissolved or bankrupt enterprises, social insurance payments will be given priority before other payments.

For this option, the principle of contribution and benefit will be ensured according to the provisions of the Law on Social Insurance. The State budget does not have to allocate a fund to guarantee the social insurance debt of dissolved and bankrupt enterprises.

However, employees' social insurance benefits are not guaranteed; in many cases, employers have deducted social insurance contributions from employees but not paid them to the social insurance agency.

This is the current plan that localities are implementing, so there is no need to amend or supplement legal documents on social insurance. Therefore, to implement this plan, Vietnam Social Security issued a document directing and guiding localities to unify implementation; amend a number of related laws such as the Bankruptcy Law, the Law on Civil Judgment Enforcement, etc.

Of the three options above, the Ministry of Labor, Invalids and Social Affairs said it will synthesize the opinions of relevant ministries and branches to propose a plan to submit to the Government.

Based on the selected plan, propose the Government to amend, supplement or issue legal documents within its authority to implement the proposed plan.

Thanh Hien

(Synthetic)