In order to avoid legal issues that might be raised due to violation in paying social insurance, retaining a law firm in Vietnam (“Law firm Vietnam”) as regular legal consultant is a solution that should be prioritized by enterprises.
One of the most common issues that the major enterprises interested in related to social insurance, health insurance, unemployment insurance. In recent years, due to the business difficulties as a result of the impact of the economic downturn on the operation of many businesses and other causes, the rate of non-performing and delayed social insurance, health insurance, unemployment insurance amount of the enterprises remain high.
Currently, social insurance is regulated by the Law on Social Insurance No. 58/2014/QH13 and the corresponding guiding documents. Failure to follow regulations on social insurance may subject the enterprises to administrative penalties, and even criminal liabilities under the Criminal Code 2015 which shall be in full force and effect as of July 01, 2016. Notable regulations on violations in social insurance, unemployment insurance payment are as bellow.
Regulations on penalties for administrative offences in social insurance
Under the current regulations, a fine, compulsory payment of contributions to delay and non-payment and compulsory payment of interest on the delay and non-payment may be issued to enterprises failing comply with the regulations on payment of social insurance, unemployment insurance.
Law firm Vietnam shall support businesses in determine the level of penalties and remedying consequences applied to them depending on nature, time and levels of penalties on specific cases.
General principles for calculating the interest on the delayed payment of social insurance, health insurance, unemployment insurance
The interest on the delay and non-payment shall be calculated as follows: (i) with respect to delayed payment of social insurance for 30 days or more, the interest on the delayed amount is 02 times of the interbank market rate with 9 month-period issued by State Bank of Vietnam in the preceding year, interest rate of the preceding 9-month-period shall be applied to non-9-month-period interbank market interest of the preceding year; (ii) with respect to non-payment, delayed payment, appropriation of the social insurance, health insurance amount for 30 days or more, the applied interest rate is 02 times the average of the interest for investment of social insurance and health insurance funds in the preceding years.
Calculating the interest on the delayed payment of social insurance, health insurance, unemployment insurance
The interest on the delayed payment applied to the businesses shall be calculated as follows:
The payable interest in the month (n) = the delayed amount accumulated to the end of this month (n-2) x the interest rate for delayed payment (%/month)
In which: (i) (n) is the month in which the payable interest for delayed payment incurred; (ii) (n-2) is the month which is 02 months prior to (n); (iii) the interest rate for delayed payment (%/month) is the average interest calculated on a monthly basis issued by the Vietnam Social Insurance in the beginning of the year in which the enterprise delay to, and/or avoid to pay the social insurance, health insurance and unemployment insurance.
Actual violations and role of Law firm Vietnam
In 2015, the Social Insurance Department of Ho Chi Minh City cooperated with the competent Court to sue nearly 2,000 local enterprises with the total amount of Social Insurance Fund liabilities of VND 500 billion. Currently, the recovered amount is nearly VND 200 billion, for the outstanding amount, the Social Insurance Department of Ho Chi Minh City will continue to collect in 2016.
In general, competent authorities are starting to focus on enterprises’s violations. Besides, the Law on Social Insurance which has recently taken effect earlier this year will lead to the promulgation of revised and replaced regulations upon the current regulations.
Therefore, in order to get the support from Law firm Vietnam in timely updating and effectively applying the new regulations, limiting the economic risks that enterprises may have as well as effectively assisting competent authorities during inspection, assessment and issuance of punitive decision, the enterprises should select a reputable Law firm Vietnam for regular supports.