South Korean firm becomes first in HCMC to face criminal charges for social insurance evasion

By Tuyet Nguyen   March 21, 2018 | 01:49 am PT
It now owes $1.23 million in social insurance contributions and has been fined more than once.

Ho Chi Minh City's social insurance department has asked police to pursue criminal proceedings against a South Korean garment firm that has been holding back social insurance payments, making it the first company in the city to face such charges.

The request was made after the city’s insurance inspectors confirmed that Nam Phuong Co., Ltd in Cu Chi District owed more than VND28 billion ($1.23 million) in social insurance premiums from between September 2015 and November 2017.

Contributions to the social insurance fund are extracted from workers’ salaries to pay for their pensions and other forms of compensation when they are sick or take paternity or maternity leave.

The garment company has been fined several times for late payments.

A court in Cu Chi fined Nam Phuong and instructed the company to pay VND13 billion in social insurance and health insurance premiums in March 2016 following a lawsuit filed by the district’s social insurance department.

Around six months later, it was fined VND150 million for another late payment.

“The company has continued to make late social insurance payments and now the premiums are even bigger, which will have a serious impact on its employees,” said a representative from the city’s social insurance department.

Workers of Nam Phuong Co. Ltd in Ho Chi Minh Citys Cu Chi District go on strike in January, 2018 to demand for their salaries. Photo by VnExpress/Phu Thanh

Workers at Nam Phuong Co. Ltd in Ho Chi Minh City's Cu Chi District go on strike in January to demand their salaries. Photo by VnExpress/Phu Thanh

In January, workers at this company went on strike for more than a week and gathered in front of the factory demanding their salaries from December 2017.

A worker named Giang told VnExpress back then that the company still owed social payments, which had affected many workers, including her.

"I gave birth nine months ago now but I've still not received any maternity payment, and my ex-colleagues who quit their jobs more than a year ago have not received any unemployment benefits," she said.

Earlier this year, the city’s government instructed the department to tighten its management of companies that were late in paying social insurance or misused the fund.

Vietnam has branded social insurance and unemployment insurance payment evasion a criminal offense, and violators face a VND500 million-1 billion fine or 2-7 years in jail.

Vietnam’s social security fund has been in crisis for years due to many businesses evading payments.

The International Labor Organization has forecast that the fund will be in a deficit in 2021 and may be depleted by 2034 unless changes are made.

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