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.

Vietnam - Russia Hotel currently has 3/8 employees who 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 the provincial Social Insurance working group. Photo: PA

Similarly, at Binh Phuong Trading Company Limited, the actual number of employees working is 42 people, but only 10 people have participated in social insurance, the remaining 32 people have not participated. The business owner explained that these are seasonal workers, 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 10 actual 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%, and employees will 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 had come to work at 1,363/2,302 enterprises; the remaining 939 enterprises were unable to operate. 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 used their home address, rented a house...), they did not see the company sign; or the company address was registered in one place but the actual headquarters was in another place; some units had unclear addresses, and they could not find them even after searching directly; or some units found the address but it was not the company they were 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 again and again but still did not cooperate to work. Or Hong Quang Trading Joint Stock Company, the provincial Social Insurance officer 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, according to preliminary statistics, out of a total of 939 enterprises with tax codes but not yet participating in social insurance that Social Insurance officers cannot meet, meet, and work with, there are up to 449 enterprises whose addresses cannot be found/missing; 82 enterprises are evading, not cooperating; 376 enterprises have stopped or temporarily stopped operations; 21 units registered with the tax authority but actually operate in other locations... Mr. Thanh said that these are the main reasons leading to the situation where the number of enterprises with tax codes is large, but participation in social insurance is limited.

Regarding solutions to develop social insurance participants in the coming time, the Head of the Exploitation and Debt Collection Department, Provincial Social Insurance said that the industry will step up propaganda and mobilization work for 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 commits fraud or other tricks to not pay or not fully pay social insurance, health insurance, 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 fined from 50 to 200 million VND; be subject to non-custodial reform for up to 1 year or be imprisoned from 3 months to 1 year:

- Avoid paying insurance 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 between 200 and 500 million VND or imprisonment from 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;

- Failure to pay the insurance premium 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 between 500 million and 1 billion VND or imprisonment from 2 to 7 years:

- Evading insurance payment of one billion VND or more.

- Avoid paying insurance for 200 people or more.

- Failure to pay the insurance premium 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.