Employers who avoid buying mandatory social and health insurance for their employees will face criminal charges rather than civil penalties, under newly proposed legislation.
“Violations related to social and health insurance have become more common,” said Minister of Justice Ha Hung Cuong.
“The violations have caused serious consequences not only to the rights and benefits of workers but also to stability and development of social welfare services,” he said.
Cuong’s ministry has drafted amendments to the Penal Code, which will be discussed at a parliamentary session this month and approved in November.
“The draft has proposed criminal charges against employers who avoid paying the insurance for workers,” he said.
Social insurance payments are collected monthly from an employee's paycheck. Employers are then supposed to send these contributions to the state pension fund regularly, but many have failed to do so.
Vietnam, like many other countries around the world, is facing difficulties making sure its state pension fund does not run out of money.
According to the state agency Vietnam Social Security, uncollected social insurance payments topped VND7,279 billion (US$336 million) at the end of 2014.
Notably, more than 8,000 companies with over 30,000 workers have closed down after delaying insurance payments.
“The problem of social insurance debt has worsened over the years and the 2014's amount was four times higher than in 2007,” said Do Van Sinh, deputy director of Vietnam Social Security.
In 2014, 50 social insurance agencies in Vietnam filed civil lawsuits against 5,832 companies, trying to recover a total of VND2.5 billion in social insurance arrears. Only VND621 billion has been collected.
According to the Vietnam Chamber of Commerce and Industry, more than 300,000 companies are operating in Vietnam, only half of them are paying social insurance premiums for their workers.