VietNamNet Bridge – Kwang Nam Shoes Company yesterday became the first organisation in Vietnam to be taken to court for non-payment of social insurance, when it faced the Phu Nhuan District’s People’s Court in HCM City.

The South Korean-funded company is being sued for failing to pay the city more than VND7 billion (US$411,700) in social insurance contributions from 2003 to the end of May this year.

Minutes for the third session of mediation between the company and the insurance agency earlier this month record the Kwang Nam Company admitting to the insurance debt and agreeing to pay the money owed within three months.

However, the company rejected the minutes last week, saying it wanted to pay the debt by instalments. This action by the company has led to the lawsuit.

The Kwang Nam Company was established in 1996 and has employed 2,000 workers since. However, it has consistently failed to pay all its social insurance obligations.

The company is one of five HCM City enterprises being sued by the city’s Social Insurance agency. The other four are waiting for writs to be issued by the local court.

Debtors in the capital

Four Ha Noi organisations are to face court for not paying their employees’ social and health insurance.

The four organisations are the Bach Dang 8 Investment and Construction Joint Stock Company, the Transport Constructions 228 Joint Stock Company, the Chien Thang Garment Company and the Orion Hanel Company. The highest debt accrued of these four is VND4.5 billion ($264,700).

The State-owned Ha Noi Mechanical Company would also be brought to trial if it could not pay its outstanding insurance payments, said Dao Van Giap, director of Ha Noi Social Insurance.

The Ha Noi Social Insurance’s budget was becoming increasingly unbalanced as more enterprises failed to meet their required insurance payments while the agency continued to pay retired workers’ pensions, Giap said.

At the end of May, 166 enterprises had employee social and health insurance debts of VND126.6 billion ($7.4 million) and which were late by more than three months, Ha Noi Social Insurance statistics show.

Half of these organisations were in the construction sector, Giap said. "The reason is that most employees of these companies are seasonal workers from rural areas; they haven’t had social insurance payments before," he said. "As a result, their employers often fail to make the insurance payments for them."

Chasing late insurance payments often proves fruitless as many of the enterprises can’t even afford to pay for their employees’ salaries.

Giap fears that his agency’s budget will be negative by 2020, meaning there won’t be enough money for pensions. "If enterprises continue to delay their payments, we will have to take them to court, one by one," he said.

(Source: Viet Nam News)