Hanoi to Resolutely Sue Companies Owing Employee Insurance

The Hanoi Social Insurance Agency said Hanoi City collected an estimated VND4,600 billion of insurance premiums in the first six months of 2011, equal to 45 percent of the full-year target. The collection of social insurance, health insurance, and voluntary insurance is facing difficulties owing to complex economic problems.

 

Mr Nguyen Duc Hoa, Deputy Director of the Hanoi Social Insurance Agency, said: To complete the target of over VND10,300 billion assigned by the Vietnam Social Insurance Agency, the city has to take resolute action against companies yet to pay social insurance for their workers.

 

The Hanoi Social Insurance Agency added that companies had not paid VND542.6 billion of overdue insurance premiums in the year to May 15, accounting for 5.2 percent of total targeted collection in 2011. Of the sum, insurance debts overdue 12 months were VND245.3 billion. Before this situation, following repeated examinations and recommendations, the Hanoi Social Insurance Agency filed lawsuits against 11 companies owing their workers' social insurance fees totalling VND7.3 billion, of which over VND3.8 billion has been collected.

 

However, the action is just one of ‘deterrent’ measures from management agencies but some plaintiffs do not show signs of ‘fearing’ this measure and they deliberately evaded social insurance for workers. The administrative fine of VND30 million (less than US$1,500) seems too light for them to change their behaviours. Daily interest rate on overdue fees at only 0.05 percent on total debts is too small in relation to bank rates and many choose to deposit money at banks for higher margins and pay fines rather paying insurance fees. Although the amended Law on Social Insurance provides that overdue insurance fees will be extracted from bank accounts of violating companies but this is very difficult to do this because all banks must protect their corporate customers which will bring in big earnings for them in return, Deputy Director Hoa said. In fact, the rise in overdue insurance fees is partly resulted from unfavourable business operations due to tightened credit policy, he noted.

 

Therefore, to protect legitimate interests of workers, the Hanoi Social Insurance Agency will bring to court companies owing social insurance fees for more than 12 months in a bid to take back overdue debts quickly. It will conduct inspections and impose sanctions on other firms in order to put the overdue social insurance fees to an end.

 

To fill up the remaining 55 percent of the target in the last six months, the Hanoi Social Insurance Agency will need to develop the scope of beneficiaries of social insurance, health insurance and unemployment insurance obligatory to non-State business entities. Besides, it will continue applying one-stop-shop administrative mechanism to facilitate for insurance participation and fee settlement.