Social insurance is a statutory entitlement of employees, established by law to ensure social security and protect employees’ rights in circumstances where they lose or suffer a reduction in working capacity or upon retirement. However, in practice, many enterprises violate regulations on timely payment of social insurance contributions for employees, thereby adversely affecting their lawful rights and interests.
So how does current law regulate enterprises that delay payment of social insurance contributions? The following article by NPLaw provides a comprehensive overview of the applicable legal provisions on enterprises delaying payment of social insurance contributions.
I. Overview of enterprises delaying payment of social insurance contributions
Although the legal framework governing social insurance has been relatively well developed, with strict provisions requiring enterprises to fully and timely pay social insurance contributions for employees, violations remain prevalent.
The causes of such situations include inadequate legal awareness on the part of certain enterprises. In addition, many enterprises face difficulties in production and business operations; some operate at minimal capacity or incur losses, leading to prolonged contribution arrears, primarily among private enterprises. Another contributing factor is the limited coverage and ineffective management by social insurance authorities.
II. Legal regulations on enterprises delaying payment of social insurance contributions
1. Definition of enterprises delaying payment of social insurance contributions
Pursuant to Clause 1 Article 3 of the Law on Social Insurance 2014, social insurance is a guarantee that replaces or partially compensates employees’ income when they experience a reduction or loss of income due to illness, maternity, occupational accidents, occupational diseases, retirement, or death, based on contributions to the social insurance fund.
Social insurance comprises compulsory social insurance and voluntary social insurance, of which compulsory social insurance is a scheme jointly contributed by employees and employers in accordance with prescribed timelines and methods.
Accordingly, an enterprise delaying payment of social insurance contributions refers to a situation where the enterprise fails to fully and timely fulfill its statutory obligation to pay social insurance contributions as prescribed by law.
Pursuant to Clause 2 Article 17 of the Law on Social Insurance 2014, acts of delaying payment of social insurance contributions are strictly prohibited. Although the Law does not specifically define all cases constituting delayed payment of compulsory social insurance by enterprises, such cases may include:
- Failure to pay the required amount of compulsory social insurance contributions as registered, including lack payment, after the latest statutory deadline for payment;
- Failure to register or incomplete registration of employees subject to compulsory social insurance within 60 days from the expiry of the prescribed registration period;
- Cases that do not fall under acts deemed as evasion of compulsory social insurance contributions in accordance with the law.
2. Competent authority managing enterprises delaying payment of social insurance contributions
Pursuant to Clause 1 Article 93 of the Law on Social Insurance 2014, the social insurance authority is a State agency responsible for implementing social insurance policies and regimes, managing and using social insurance, health insurance, and unemployment insurance funds; conducting inspections of contributions to social insurance, unemployment insurance, and health insurance; and executing other duties as prescribed by law.
Accordingly, the authority responsible for managing enterprises that delay payment of social insurance contributions is the Social Insurance Authority.
3. Sanctions applicable to enterprises delaying payment of social insurance contributions
Pursuant to Clause 5 Article 39 of Decree No. 12/2022/ND-CP, a monetary fine ranging from 12% to 15% of the total compulsory social insurance contributions payable at the time of the administrative violation record, but not exceeding 75,000,000 VND, shall be imposed on employers that delay payment of compulsory social insurance contributions.
In addition, Clause 10 Article 39 of Decree No. 12/2022/ND-CP provides remedial measures, including:
- Compelling the employer to fully pay the compulsory social insurance contributions payable to the social insurance authority;
- Compelling the employer to pay interest equal to twice the average annual investment interest rate of the social insurance fund of the preceding year, calculated on the amount and duration of delayed payment, non-payment, evasion, or misappropriation of contributions.
Accordingly, enterprises that delay payment of social insurance contributions are subject to a fine ranging from 12% to 15% of the total compulsory social insurance contributions payable, capped at 75,000,000 VND, and must additionally pay the overdue contributions and late payment interest.
Note: For organizations, the fine is doubled compared to that imposed on individuals, pursuant to Clause 3 Article 6 of Decree No. 12/2022/ND-CP.
III. Questions regarding enterprises delaying payment of social insurance contributions
1. Are enterprises subject to late payment interest when delaying social insurance contributions?
Pursuant to Clause 10 Article 39 of Decree No. 12/2022/ND-CP, employers must pay interest equal to twice the average annual investment interest rate of the social insurance fund of the immediately preceding year, calculated on the amount and duration of delayed payment, non-payment, evasion, or misappropriation of social insurance contributions.
2. For how long may an enterprise owe social insurance contributions?
Pursuant to Clause 3 Article 122 of the Law on Social Insurance 2014, enterprises may delay payment of social insurance contributions for up to 29 days beyond the prescribed deadline. If the delay reaches 30 days or more, the enterprise will not only be subject to administrative sanctions but also required to pay additional interest.
Accordingly, enterprises may owe social insurance contributions after 60 days from the latest statutory deadline for compulsory social insurance contribution payment.
3. Are employees entitled to social insurance benefits when the enterprise delays payment of social insurance contributions?
When an enterprise delays payment of social insurance contributions, employees may still be entitled to social insurance benefits, provided that they satisfy the statutory conditions in accordance with applicable law.
4. Are enterprises permitted to extend the payment deadline for delayed social insurance contributions?
Currently, the law does not provide for any extension of the payment deadline for enterprises delaying social insurance contributions.
To restore employees’ social insurance benefits, enterprises are compelled to fully pay the compulsory social insurance contributions payable to the social insurance authority. If the enterprise fails to pay on time, upon request by a competent authority, banks, other credit institutions, or the State Treasury are responsible for deducting funds from the employer’s deposit account to remit the unpaid contributions and accrued interest, calculated at the highest non-term deposit interest rate announced by state-owned commercial banks at the time of sanction, to the social insurance authority’s account.
IV. Legal consulting services relating to enterprises delaying payment of social insurance contributions
The above constitutes all detailed information provided by NPLaw to assist clients with issues related to enterprises delaying payment of social insurance contributions. Should you have any questions regarding this matter or other legal issues, please contact NPLaw for direct consultation and guidance.
