A business that delays or fails to pay social insurance (BHXH) contributions for its employees may face criminal prosecution under Article 216 of the Penal Code — the offence of evading payment of social insurance, health insurance and unemployment insurance for employees. However, not every case of insurance arrears is a crime: three conditions must all be met — fraud or other deceitful tricks, evasion lasting 06 months or more, and having already been administratively sanctioned for this act and reoffending — plus a monetary or headcount threshold.
Can firms evading social insurance face prosecution under Article 216?
The answer is yes — Article 216 of the Penal Code (per consolidated document 135/VBHN-VPQH) applies to both individuals obliged to pay and commercial legal entities. Note: Law 86/2025/QH15 (effective 01/7/2025) did not amend Article 216; all figures below are current as of 14/10/2026.
A clear distinction is needed between late payment and evasion: late payment is merely overdue insurance debt, while evasion requires the element of “fraud or other tricks”. Not every insurance debt counts as “evasion”.
What counts as “evading” social insurance under Article 39 of the 2024 Law on Social Insurance?
The 2024 Law on Social Insurance (Law 41/2024/QH15, effective 01/7/2025, replacing the 2014 Law) lists 07 cases of evasion in Article 39, including:
- After 60 days from the deadline for insurance registration (Article 28), the employer fails to register or registers an incomplete number of employees;
- Registering the salary used as the contribution base lower than prescribed (Article 31);
- After 60 days from the latest payment date (Clause 4, Article 34), failing to pay or underpaying the registered amount despite being urged by the competent authority (Article 35);
- Other cases prescribed by the Government; excluding cases with legitimate reasons.
Guidance for criminal application: Resolution 05/2019/NQ-HDTP (Clause 10, Article 2) remains in force, guiding the application of Articles 214, 215 and 216 of the Penal Code.
Article 216 of the Penal Code: monetary, headcount and time thresholds, 3 penalty frames
| Frame | Conditions | Penalties |
|---|---|---|
| Clause 1 | All three: (i) fraud/tricks to avoid or underpay; (ii) duration of 06 months or more; (iii) already administratively sanctioned for this act and reoffending; and either: (a) evaded amount of VND 50 million to under 300 million, or (b) evasion for 10 to under 50 employees | Fine of VND 50–200 million; non-custodial reform up to 01 year; or imprisonment 03 months–01 year |
| Clause 2 | Reoffending; evasion of VND 300 million–under 1 billion; evasion for 50–under 200 employees; failing to remit insurance money already collected from or deducted from employees under points a, b of Clause 1 (i.e., salary deductions never remitted) | Fine of VND 200–500 million or imprisonment 06 months–03 years |
| Clause 3 | Evasion of VND 1 billion or more; evasion for 200+ employees; failing to remit collected/deducted amounts under points b, c of Clause 2 | Fine of VND 500 million–1 billion or imprisonment 02–07 years |
| Clause 4 (additional) | — | Fine of VND 20–100 million; ban from holding positions, practising or doing certain jobs for 01–05 years |
Worth noting: deducting money from employees’ salaries but never remitting it is an aggravating frame element — a common real-world scenario.
How is the business (legal entity) punished? Which individuals are liable?
Under Clause 5 of Article 216 combined with Article 76 of the Penal Code, a commercial legal entity evading social insurance faces fines of:
- Clause 1 cases: VND 200–500 million;
- Clause 2 cases: VND 500 million–1 billion;
- Clause 3 cases: VND 1–3 billion.
In parallel, the individuals obliged to pay (legal representative, chief accountant, HR manager — depending on internal assignment) may face individual criminal liability under Clauses 1–4 of Article 216.
Below the criminal threshold: administrative sanctions under Decree 283/2026/ND-CP
Decree 283/2026/ND-CP (issued 15/7/2026, effective 10/9/2026) replaced Decree 12/2022/ND-CP. Transitional rule: acts completed before 10/9/2026 are governed by the law in force at the time of violation; ongoing acts at 10/9/2026 are governed by Decree 283/2026. Common trap: most online articles still cite Article 39 of Decree 12/2022 (fines of VND 50–75 million) — that decree has expired.
| Act | Individual | Organisation/business (2x, Clause 1 Article 7) |
|---|---|---|
| Evasion of compulsory social insurance (Art. 44), unemployment insurance (Art. 46) | 18%–20% of evaded amount, max VND 75 million | 36%–40%, max VND 150 million |
| Late payment (Arts. 43, 45) | 12%–15%, max VND 75 million; only a warning if the amount is under VND 400,000 | Double the individual level |
Remedial measures: full payment of the evaded/late amount plus 0.03%/day on the amount and days of violation into the fund (Article 41 of the 2024 Law on Social Insurance).
Enforcement process: urging → recovery + 0.03%/day → administrative fine → criminal prosecution
- Urging: the social insurance agency urges payment under Article 35 of the 2024 Law on Social Insurance;
- Recovery + interest: mandatory full payment of evaded amounts plus 0.03%/day;
- Administrative sanction under Decree 283/2026/ND-CP (a first violation with no prior sanction stops here, plus remediation);
- Criminal prosecution under Article 216 of the Penal Code when already administratively sanctioned and reoffending, with all other conditions met.
Additionally, Article 41 of the 2024 Law on Social Insurance provides that violating units are excluded from emulation titles and commendations.
What should a business do when urged or inspected on social insurance?
- Immediately reconcile employee lists, contracts and contribution-base salaries against registered records;
- Pay the shortfall within the urging deadline — early remediation helps avoid sanctions and removes the “already sanctioned and reoffending” condition;
- Do not sign blank payroll sheets or declare contribution-base salaries lower than actual;
- Note: the draft to increase Article 216 penalties (proposed by the Ministry of Public Security, October 2025) is only a draft — enacted Law 86/2025 did not amend Article 216. Do not apply draft figures.
Facing social insurance urging or inspection? Contact FLAT Law Firm for guidance.
The information above is for reference only and does not constitute legal advice.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.
