For businesses that stop operating and still pay salaries to their employees, will they be exempt from paying social insurance payments?

What are the components that employers must pay for social insurance?

Pursuant to Clause 3, Article 2 of the 2014 Social Insurance Law, it is stipulated as follows: following:

“3. Employers participating in compulsory social insurance include state agencies, non-business units, people’s armed units; political organizations, socio-political organizations, socio-political-professional organizations, socio-professional organizations, other social organizations; foreign agencies, organizations, international organizations operating in the territory of Vietnam; enterprises, cooperation communes, individual business households, cooperative groups, other organizations and individuals hiring and using labor under labor contracts.”

How is the temporary suspension of business operations regulated?

Pursuant to the provisions of Article 206 of the Law on Enterprises 2020, the regulations on temporary business suspension are as follows:

– Enterprises must notify the Business Registration Authority in writing at least 03 working days before the date of suspension of business or resumption of business before the notified deadline.

– The business registration authority or competent state authority requires an enterprise to temporarily suspend or suspend operations or terminate business in the following cases:

+ Temporarily suspend or terminate business in conditional business lines and conditional market access lines for foreign investors when detecting that the enterprise does not meet the corresponding conditions according to the provisions of law;

+ Temporarily suspend business at the request of relevant agencies according to the provisions of law on tax management, environment and other relevant laws;

+ Suspension of operations or termination of business in one or several lines of business or in a number of fields according to the decision of the Court.

– During the temporary suspension of business, the enterprise must pay all outstanding taxes, social insurance, health insurance, and unemployment insurance; continue to pay debts, complete the implementation of contracts signed with customers and employees, unless otherwise agreed upon by the business, creditors, customers and employees.

– The Government regulates in detail the order and procedures for coordination between the Business Registration Authority and competent state agencies in the cases specified in Clause 2 of this Article.

If a business stops operating but still pays salaries to employees, can it be exempted from paying social insurance?

(1) Pursuant to Clause 1, Article 88 of the 2014 Law on Social Insurance, regulations on temporary suspension of social insurance payments are as follows:

– Temporary suspension of contributions to the retirement and survivorship fund is prescribed as follows:

+ In case the employer encounters difficulties and has to temporarily suspend production and business, resulting in the employee and employer being unable to pay social insurance, contributions to the retirement and survivorship fund may be temporarily suspended for a period not exceeding 12 months;

+ At the end of the temporary payment suspension period specified in Point a of this Clause, the employer and employee continue to pay social insurance and make compensation for the period of temporary payment suspension. The amount of compensation payment is not subject to late payment interest according to the provisions of Clause 3, Article 122 of this Law.

– If an employee is participating in compulsory social insurance and is temporarily detained, the employee and the employer will be able to temporarily stop paying social insurance. In case the competent authority determines that the employee has been unjustly or wrongly committed, social insurance compensation for the period of detention will be made. The compensation amount is not subject to late payment interest as prescribed in Clause 3, Article 122 of this Law.

– The Government shall detail this Article and other cases of temporary suspension of compulsory social insurance payments.

(2) Pursuant to Article 16 of Decree 115/2015/ND-CP stipulating the cases and conditions for temporary suspension of social insurance contributions to the retirement and survivorship fund as follows:

– Cases of temporary suspension of contributions to the retirement and survivorship fund:

+ Suspension of production and business for 1 month or more due to difficulties in changing structure or technology or due to economic crisis or recession or implementing State policies when restructuring the economy or implementing international commitments;

+ Facing difficulties due to natural disasters, fires, epidemics, and crop failures.

– Conditions for temporary suspension of contributions to the retirement and survivorship fund:

Employers falling into one of the cases specified in Clause 1 of this Article may temporarily stop paying contributions to the retirement and survivorship fund when one of the following conditions exists:

+ Unable to arrange jobs for employees, in which the number of employees participating in social insurance must temporarily quit their jobs from 50% or more of the total number of employees present before stopping production and business;

+ Suffering damage of over 50% of total property value caused by natural disasters, fires, epidemics, and crop failures (excluding land property value).

According to the above regulations, when an enterprise temporarily suspends production and business, resulting in employees and employers being unable to pay social insurance, in this case, contributions to the retirement and survivorship fund will be temporarily suspended if the stated conditions are met, and the maternity and maternity sickness funds and labor accident and occupational disease funds must still be fully paid according to the law.

According to the provisions of Clause 3, Article 206 of the Law on Enterprises 2020, during the temporary suspension of business, the enterprise must complete the implementation of the contract signed with the employee, unless the enterprise and the employee have otherwise agreed. This means that when temporarily suspending business, the enterprise must continue to pay social insurance for employees if the enterprise has no other agreement with the employee.

Above is our advice related to the issue of social insurance payment when the business temporarily suspends operations that you are interested in.