Many businesses but few participate in social insurance: What is the reason?

Viet - Nga Trading and Service Company Limited registered its business license in 2008 with the business line of short-term accommodation services. Viet - Nga Hotel in Vinh City is the company's business address, currently has 8 employees working, of which 3 employees are subject to social insurance but the company has not yet fulfilled its obligation to pay social insurance for employees.

Currently, 3/8 employees of the Vietnam - Russia Hotel are subject to compulsory social insurance but have not participated. Photo: PA

According to Ms. Nguyen Thi Kim Chung - Deputy Director of the Company, these 3 workers are all seasonal workers, usually working short-term for about 3 months, 6 months or more than 1 year. Through the mass media, Ms. Chung learned about the regulation that workers from 1 month to less than 3 months must participate in compulsory social insurance, but according to this Deputy Director, the reason the company does not comply is because the workers do not want to participate!

“The hotel workers are all relatives and acquaintances in the family. The company has reminded them many times about the benefits of participating in social insurance, but they do not listen,” said Ms. Chung.

Business owner records working minutes with provincial Social Insurance working group. Photo: PA

Similarly, at Binh Phuong Trading Company Limited, there are 42 employees actually working, but only 10 have participated in social insurance, the remaining 32 have not participated. The business owner explained that these are seasonal workers, and the employees do not want to participate in social insurance even though the unit has also promoted it.

For the same reason as above, Hai Chau Tourism and Trade Company Limited has an actual number of 10 employees, but only 2 people have participated in social insurance, the remaining 8 people have not participated.

Many businesses use the excuse that employees refuse to participate in social insurance, however, when asked whether the business informed employees about the regulation that the business will pay 21.5%, while employees only pay 10.5% of the total 32% of the insurance contribution, many business owners did not answer! Some businesses responded by citing difficulties in production, business, and reduced revenue...

In order to find the cause of the difference between the number of enterprises participating in social insurance and the actual number of enterprises registering for tax codes, the provincial Social Insurance has just launched a peak period to develop social insurance participants in enterprises. Accordingly, many working groups at the provincial and local levels have been established and assigned to directly visit each enterprise according to the list of enterprises that have registered for tax codes provided by the Tax Department but have not yet participated in social insurance.

Provincial Social Insurance Inspectorate officers conduct specialized inspections at enterprises. Photo: PA

As of August 17, 2018, Social Insurance officers have worked at 1,363/2,302 enterprises; the remaining 939 enterprises are unable to work. Ms. Hoang Thi Quynh Chau - Deputy Chief of the Provincial Social Insurance Office said that in reality, when going to the address on the business license (mostly these enterprises use their home address, rent a house...), they do not see the company sign; or the company address is registered in one place but the actual headquarters is in another place; some units have unclear addresses, and cannot be found even when searching directly; or some units find the address but it is not the company they are looking for but another company...

In addition, some businesses have shown signs of avoidance and non-cooperation. For example, Bao Tin Nghe An Financial Services Company Limited in Trung Do Ward, Vinh City, when the provincial Social Insurance working group came to work, the business owner was not at home, asked for a phone number to contact, made appointments over and over again but still did not cooperate to work. Or Hong Quang Trading Joint Stock Company, the provincial Social Insurance staff said that they had worked and signed the minutes but could not stamp the company seal because the company owner said he did not know where to put the seal!

Mr. Ngo Ngoc Thanh - Head of Debt Exploitation and Collection Department, Provincial Social Insurance said that according to preliminary statistics, out of a total of 939 enterprises with tax codes but not participating in social insurance that social insurance officers could not contact, meet and work with, there were up to 449 enterprises whose addresses could not be found/missing; 82 enterprises were evasive and uncooperative; 376 enterprises had stopped or temporarily stopped operations; 21 units registered with the tax authority but actually operated in other locations... Mr. Thanh said that these were the main reasons leading to the situation where the number of enterprises with tax codes was large but their participation in social insurance was limited.

Regarding solutions to develop social insurance participants in the coming time, the Head of the Exploitation and Debt Collection Department of the provincial Social Insurance Department said that the industry will step up propaganda and mobilization of business owners and employees about the contents of the Social Insurance Law.

In case the enterprise fails to fulfill its obligations, the Social Insurance will conduct a specialized inspection, coordinate with the Provincial Police to investigate and prosecute criminally according to the provisions of the amended Penal Code. It is known that the Provincial Social Insurance has just completed the file to transfer to the police agency the case of a business that has outstanding debts, has not paid social insurance for employees for many years and has a procrastinating attitude and does not cooperate in work.

Article 216 of the 2015 Penal Code on the crime of Evading payment of social insurance, health insurance, and unemployment insurance for employees stipulates:

1. Anyone who fraudulently or by other means fails to pay or fails to fully pay social insurance, health insurance, and unemployment insurance for employees as prescribed for 6 months or more in one of the following cases (having been administratively sanctioned for this act but still violating) shall be subject to a fine of 50 to 200 million VND; non-custodial reform for up to 1 year or imprisonment from 3 months to 1 year:

- Evading insurance payment from 50 million to under 300 million VND.

- Evading insurance payment for 10 to less than 50 employees.

If a commercial legal entity commits a crime, it will be fined from 200 million to 500 million VND.

2. Committing a crime in one of the following cases shall be subject to a fine of 200 to 500 million VND or imprisonment of 6 months to 3 years:

- Committing the crime 2 times or more;

- Evading insurance payment from 300 million VND to less than one billion VND;

- Evading insurance payment for 50 to less than 200 people;

- Not paying the insurance amount collected or deducted from employees as prescribed in Point a or Point b, Clause 1, Article 216 of the 2015 Penal Code.

If a commercial legal entity commits a crime, it will be fined from 500 million to one billion VND.

3. Committing a crime in one of the following cases shall be subject to a fine of from 500 million to 1 billion VND or imprisonment from 2 to 7 years:

- Evading insurance payment of one billion VND or more.

- Evading insurance payment for 200 people or more.

- Not paying the insurance amount collected or deducted from employees as prescribed in Point b or Point c, Clause 2, Article 216 of the 2015 Penal Code.

If a commercial legal entity commits a crime, it will be fined from one billion to three billion VND.

According to the 2015 Penal Code, offenders can also be fined from 20 million to 100 million VND, banned from holding positions, practicing a profession or doing certain jobs from 1 to 5 years.