Hanoi-based companies are obliged to make social security contributions as soon as possible, or they will face punitive measures, according to the local Department of Labor, Invalids and Social Affairs.

Records on social security were processed at the Hanoi Social Security office. Photo: The Hanoi Times

The department said that the city would encounter social issues if companies failed to contribute and ensure their employees' social welfare.

Every business is regulated by law and by labor contracts to contribute to the social security fund, which will cover the payments of social insurance, health insurance, and unemployment insurance. The amount paid to the social security fund is deducted from the employee's monthly salary.

The Hanoi agency said that companies are prohibited from delaying their contribution to the social security fund, adding that any company that does so will face administrative fines or, worse, be punished according to the criminal code.

Vu Duc Thuat, Deputy Director of the Hanoi Social Security, said that companies could not delay their social security contribution as social security aims to protect the benefits of laborers. Local authorities cannot make any advance payment of worker benefits if their companies are still in arrears in social security contributions, he said.

In recent months, several local companies in Hanoi have applied for an extension of social security contributions as they have suffered from a difficult market and downsized business operations.

Dang Tran Dung, Director of Mechanical Construction JSC 121 - Cienco 1, said the company had defaulted a total of VND21.4 billion (nearly US$861,000) in social security benefits for 94 months.

According to Hanoi Social Insurance, nearly 79,000 enterprises and organizations in the city have arrears of more than VND5.1 trillion ($212 million) in social security contributions for almost one million workers. Of the figure, more than VND1.8 trillion ($75 million) worth of social security contributions have not been paid for more than 30 days and must be charged with interest. The said figure increased by VND205.8 billion year-to-date.

Of the said figure, more than 3,500 companies and organizations had not paid social security contributions for more than two years, with total debt being worth more than VND1.45 trillion ($60 million), up 9% year-to-date.