Enterprises subject to criminal liability if not paying insurance for employees

According to the Penal Code 2015 coming into effect in the coming time, enterprises that do not pay insurance for employees may be prosecuted for criminal liability.

WHY MUST EMPLOYEES PARTICIPATE IN COMPULSORY SOCIAL INSURANCE?

According to Clause 1, Article 3 of the Law on Social Insurance 2014, social insurance means the guarantee to fully or partially offset an employee’s income that is reduced or lost due to his/her sickness, maternity, labour accident, occupational disease, retirement or death, on the basis of his/her contributions to the social insurance fund. It can be understood that social insurance fund is an independent financial fund from the state budget set up by contributions from employees and employers and with the State’s support.

There are two types of social insurance: compulsory social insurance and voluntary social insurance. For voluntary insurance, only Vietnamese citizens aged 15 and above will be eligible. Compulsory social insurance is compulsory for employees and employers must pay insurance for employees. Participants include:

• Persons working under indefinite-term labour contracts, definite-term labour contracts, seasonal labour contracts or contracts for given jobs with a term of between full 3 months and under 12 months, including also labour contracts signed between employers and at-law representatives of persons aged under 15 years in accordance with the labour law.
• Persons working under labour contracts with a term of between full 1 month and under 3 months; Vietnamese workers working abroad under the labour contracts defined in the Law on Vietnamese Workers working abroad under the labour contract.
• Salaried managers of enterprises and cooperatives.

EVADING OF PAYMENT OF INSURANCE FOR EMPLOYEES SHALL BE SUBJECT TO CRIMINAL LIABILITY

The obligation to pay insurance becomes one of the compulsory obligations and the act of delaying or shirking the obligation to pay insurance premiums for laborers is a prohibited act prescribed in Articles 17 and 21 of the Law on Social Insurance. Penal Code 2015 has added a new crime: “Evading payment of social insurance, health insurance, unemployment insurance for workers”.

According to Article 216, apart from individuals, enterprises may be prosecuted for criminal liability if evading the obligation to pay insurance premiums for laborers. Specifically, a person or organization who is responsible for paying social insurance, health insurance, and unemployment insurance for his/her workers but fails to pay or pays insufficiently for 06 months or more in any of the following cases despite the fact that he/she previously incurred a civil penalty for the same offence shall be liable to a fine of from VND 50,000,000 to VND 200,000,000 or face a penalty of up to 01 year’s community sentence or 03 – 12 months’ imprisonment:

• The amount of insurance contribution evaded is from VND 50,000,000 to under VND 300,000,000;
• The offender evades paying pay insurance for 10 – 49 workers.

This offence committed in any of the following cases shall carry a fine of from VND 200,000,000 to VND 500,000,000 or a penalty of 06 – 36 months’ imprisonment:

• The offence has been committed more than once;
• The amount of insurance contribution evaded is from VND 300,000,000 to under VND 1,000,000,000;
• The offender fails to pay insurance for 50 – 199 workers;
• The offenders collects or deducts insurance contribution from the workers as prescribed in Point a or Point b Clause 1 of this Article but fails to pay insurance.

In addition, the new Penal Code specifies higher penalties for acts violating the obligation to pay insurance for employees. Clause 2, Article 75 of the Penal Code 2015 clearly states that “The fact that corporate legal entity has criminal responsibility does not exempt criminal responsibility of individuals”. Therefore, when the legal entity directly benefiting from the evasion of payment of insurance premiums for employees has been subject to fines due to criminal prosecution, the individuals directly involved in committing the offenses shall be subject to criminal prosecution with a fine up to VND 1 billion, ban from holding certain positions, ban from practicing or doing certain jobs from 01 to 05 years.

Paying insurance for employees is the duty and obligation of employers in accordance with current law. The completion of this insurance helps to ensure timely and full benefits of participants. Thus, employers and workers should show a sense of responsibility to comply with the law on the fulfillment of insurance obligations. 

PHAN LAW VIETNAM

Hotline: 1900.599.995 – 0794.80.88888

Email: info@phan.vn