Penalization for Breaches of the Rules on Employment Contracts and Social Insurance
On 28 January 2005, MOLISA issued Circular No. 12/2005/TT-BLDTBXH Providing Guidelines for Implementing a Number of Articles of Decree No. 113/2004/ND/CP DATE 16 April 2004 of the Government Stipulating the Penalization of Administrative Violations of Labor Law.
Pursuant to Circular No. 12, acts of breaches of the rules on employment contracts includes (1) the employer does not give the employee a copy of the employment contract after execution; (2) the employer does not enter into an employment contract after the employee has worked for 12 full months or more; and (3) the employer does not enter into an employment contract after the employee has performed two fixed term contracts and continues working or does so but the third contract is a fixed term contract. These acts of offences are subject to penalties of from VND500,000 up to VND10 million, depending on the number of employees with respect to whom the employer commits the offence.
Circular 12 also specifies acts of offences on social insurance. If the employer does not pay social insurance or withholds 5% from the employee’s salary but does not contribute its part (15%) or pay it to the Social Insurance Fund on the employee’s behalf; fails to fully pay social insurance or fully declare the number of staff who are required to participate in the mandatory social insurance; fails to pay social insurance premium to the salary of the employees who are not subject to the mandatory social insurance; issues fake certificates in order to assist the employee to claim payments from the Social Insurance Fund; intentionally creates difficulties to or prevents the employee from claiming benefits from the Fund; fails to pay the insurance to the Fund in a timely manner; fails to obtain and return social insurance books to the employee, etc., the employer shall be subject to monetary fines of VND500,000 up to VND10 million, depending on the number of employees with respect to whom the employer commits the offence.
In addition to the monetary fines, the employer shall be requested to pay all outstanding social insurance. The labor inspectors may request competent persons to block the employer’s bank account and request the bank to withhold the outstanding social insurance if the employer fails to fully pay the insurance debt within the statutory time limit.
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