Closing Social Insurance Books and SI, HI, UI Reassessment on FDI Project Termination

Illustrative scenario. An FDI company in Dong Nai was almost done with dissolution procedures: tax finalisation minuted, assets liquidated, employees fully paid their allowances. Only one seemingly simple task remained — closing social insurance (SI) books for the last 60 employees. But when the accountant went to reconcile with the SI authority, the figure appeared: the company still owed SI, health insurance (HI), unemployment insurance (UI) for the last 8 months. The dissolution dossier stood still for the next three months.

This story is not rare: insurance is usually ranked behind tax and assets, and by the time arrears are discovered it is too late. This article goes deep into the book-closing sequence, SI arrears handling, reassessment mechanisms and penalty levels, plus foreign worker specifics. For the overview of allowances and labour procedures, see handling labour on FDI project termination.

1. Sequence for closing SI books for all employees on dissolution or project termination

“Closing SI books” is the common name for confirming SI, HI, UI contribution periods for employees when they leave — the employer’s responsibility (clause 3, Article 13 of the Social Insurance Law 2024, No. 41/2024/QH15, effective 01/7/2025; clause 3, Article 48 of the Labour Code 2019). The actual sequence for closing all personnel comprises 5 steps:

Step 1 — Reviewing the list and contribution history of each person. Prepare a summary table: name, SI code, participation period, months contributed and owed; reconcile with the SI authority’s data before doing anything else. Most errors (missing persons, wrong months, forgetting employees just past probation) surface at this step — and fixing here is far cheaper than fixing after reductions are reported.

Step 2 — Reporting reductions for all employees. Prepare the reduction dossier to the SI authority, aligning the contribution-stop point with each person’s labour contract termination date. Reporting reductions earlier than the actual leaving date deprives the employee of that month’s benefits; reporting late means the company pays extra “hanging” months. With large numbers, split by actual leaving batches rather than reporting all at once.

Step 3 — Paying in full up to the last month (clause 4, Article 13 of the SI Law 2024). “Paying in full” means both principal and late-payment interest if any — missing either, the SI authority does not fully confirm (see section 2).

Step 4 — Coordinating confirmation and returning books and slips to employees. The SI authority confirms the contribution history; the company returns books and slips to each person. Under Article 25 of the SI Law 2024, SI books are now issued electronically (paper only on participant request) — but in practice many localities still require confirmed slips for UI benefit procedures; enterprises should contact the local SI authority to confirm specific requirements. Delaying this step means employees miss the UI benefit filing deadline (03 months from contract termination).

Step 5 — Keeping records. Keep all reduction dossiers, contribution confirmations, allowance payment vouchers until dissolution and tax finalisation are complete. The tax authority often cross-checks allowance and wage costs against SI data on finalisation — mismatches get questioned immediately.

2. Enterprise with SI arrears: what does “confirming to the paid point” mean?

This is the most misunderstood point. Many accountants think arrears mean books cannot be closed, so they leave them — or conversely, think filing means the SI authority will confirm everything. Both are wrong.

The official rule (per point 3.2, clause 3, Article 46 of Decision 595/QD-BHXH, consolidated in VBHN 2525/VBHN-BHXH on the collection process): with units owing contributions, if the employee qualifies for SI benefits or terminates the labour contract then the unit is responsible for paying in full, including late-payment interest, and the SI authority confirms the book for timely benefit settlement. Where not fully paid, the book is confirmed to the paid point; after recovering the owed amount, supplementary confirmation follows.

One point to clarify: the real-time settlement mechanism for owing units is directly prescribed in clause 3, Article 8 of Decree 158/2025/ND-CP — employers not fully paid settle SI benefits on the basis of paid time (for benefit-qualifying persons), confirm contribution time to the paid point (for persons leaving, terminating labour contracts); after recovering the owed amount, supplementary confirmation of contribution time and benefit level adjustment follow. This regulation applies to compulsory SI; for HI, UI, similar principles are implemented through the SI sector collection process cited above.

Practical consequences of arrears investors should anticipate:

• Employees are only confirmed to the fully-paid month. The owed portion hangs, confirmed later. If the company dissolves before arrears are fully handled, supplementary confirmation becomes very complicated — the legal entity no longer exists to pay additionally.
• During the unit’s HI arrears, employees are not entitled to HI fund benefits (official answer of Vietnam Social Security). Units not contributing or incompletely contributing HI must also reimburse all medical examination and treatment costs employees paid themselves within their HI benefit scope during the card-less period (clause 3, Article 49 of the HI Law).
• The longer arrears linger, the larger the interest. From 01/7/2025, late-payment and evasion interest for SI, UI is 0.03%/day calculated on the amount and days late (clause 1, Article 40, clause 1, Article 41 of the SI Law 2024) — replacing the old calculation. For HI, the 2024 Law amending the HI Law (effective 01/7/2025) also moves to 0.03%/day (clause 34, Article 1). Decree 274/2025/ND-CP (effective 30/11/2025) details how late/evasion amounts and days are determined.

Lesson drawn: paying SI, HI, UI arrears must be planned early, in parallel with tax finalisation — not left until the dissolution dossier is filed. Actual handling time varies by case.

3. SI, HI, UI reassessment: grounds, limitation, penalty levels

On project termination, the SI authority often reviews the enterprise’s entire contribution history. If uncontributed, under-contributed or wrongly-based contributions are found, the enterprise faces reassessment. Two acts must be distinguished: late payment (registered, amount determined but paid late) and evasion — defined in Article 39 of the SI Law 2024 with specific thresholds (e.g. not registering or under-registering headcount, registering contribution bases lower than prescribed, not paying/paying insufficiently the registered amount after 60 days from the latest payment date despite urging). For HI, evasion is similarly defined in Article 48b of the amended 2024 HI Law.

Reassessment grounds and interest: late SI, UI payment means forced payment of the full late amount and 0.03%/day interest on the amount and days late (clause 1, Article 40 of the SI Law 2024); evasion means forced payment of the full evaded amount and 0.03%/day interest on the evaded amount and days (clause 1, Article 41). For HI: forced full payment and 0.03%/day interest (clause 34, Article 1 of the amended 2024 HI Law). Determination of late/evasion amounts and days is detailed in Decree 274/2025/ND-CP (effective 30/11/2025).

Administrative penalty levels:

• For SI, UI (Article 39 of Decree 12/2022/ND-CP): fines from 12% to 15% of total payable amount at minutes-making time (max 75 million dong) for late payment, wrong bases, insufficient headcount, appropriating contributions; from 18% to 20% (max 75 million dong) for not contributing for all eligible employees; from 50 to 75 million dong for evasion. The above applies to individuals; violating organisations are fined double (Article 6). With remedial measures: forced full payment of payable amounts plus interest.
• For HI (Article 80 of Decree 117/2020/ND-CP): monetary fines by number of violating employees, from 1–3 million dong (under 10 persons) up to 30–40 million dong (1,000 persons or more), with forced reimbursement of participant losses and remittance of illegal gains into the HI fund.

Penalty limitation: under Article 6 of the Law on Handling Administrative Violations (amended 2025), the administrative penalty limitation is 01 year (02 years for some special fields). After the limitation, no penalty decision can be issued — but the make-up contribution obligation does not disappear; specific cases should be checked by lawyers.

Criminal liability: evading SI, HI, UI contributions may also be prosecuted under Article 216 of the 2015 Penal Code: persons obligated to contribute who deceive or use other tricks to not contribute or incompletely contribute for 06 months or more, having been administratively penalised and still violating, face fines from 50 to 200 million dong, non-custodial reform up to 01 year or imprisonment from 03 months to 01 year; the highest frame fines up to 1 billion dong or imprisonment from 02 to 07 years.

4. Foreign workers: no UI participation, but what about SI and allowances?

On UI: foreign workers are not UI participants. They join only two types: compulsory SI and HI — so on project termination they do not receive UI benefits from the UI fund.

On compulsory SI: under clause 2, Article 2 of the SI Law 2024, foreign citizen workers participate when working under fixed-term labour contracts of 12 months or more — except intra-company transferees, persons reaching retirement age at contracting, or international treaties providing otherwise. New from 01/7/2025: foreigners working under indefinite-term contracts are no longer compulsory SI participants (the old rule in Decree 143/2018/ND-CP included this group) — enterprises with experts in this group should review contribution obligations.

Summary contribution rates for participating foreign workers (under the SI Law 2024 and Decree 158/2025/ND-CP):

On severance and job-loss allowances: because foreign workers do not join UI, their allowance calculation has an important difference. Under Articles 46 and 47 of the Labour Code 2019, allowance calculation time equals total actual working time minus UI-participated time. Foreign workers have no period to deduct, so allowance calculation time is usually the entire working process — the amount the company pays directly is much larger than for Vietnamese workers of equal seniority. For each allowance’s calculation details, see handling labour on FDI project termination.

5. Work permits expire on project termination: 15 days to return them

For foreign experts and managers, project termination brings work permit expiry. Under clause 1, Article 30 of Decree 219/2025/ND-CP (replacing Decrees 152/2020/ND-CP and 70/2023/ND-CP), work permits expire in cases at clauses 2, 3, 4, 5, 6 and 7, Article 156 of the Labour Code 2019 — including labour contract termination and employers of foreign workers ceasing operations.

Within 15 days of permit expiry, the employer must revoke the permit for return to the issuing competent authority, with a report; where revocation is impossible the reason must be stated (clause 1, Article 31). For persons holding work-permit exemption confirmations whose enterprises cease operations, similar procedures apply within 15 days (clause 3, Article 32, clause 1, Article 33).

In parallel, foreigners’ temporary residence cards are tied to working for the sponsoring enterprise. When labour contracts terminate and the company stops operating, they need to switch to another suitable residence form or exit before documents expire. The foreign worker group should be handled earliest in the personnel plan.

6. Five mistakes getting dissolution dossiers stuck at the SI authority

Mistake 1 — Leaving SI arrears to the last minute. Struggling companies often stop SI contributions months before stopping payroll. When reconciling at dissolution, they must pay back principal, bear 0.03%/day interest, and risk penalties — while cash flow is exhausted. SI arrears must enter the payment plan as soon as the project-stopping decision is made.

Mistake 2 — Reporting reductions at the wrong time. Reporting earlier than actual leaving: employees lose that month’s benefits. Reporting late: the company pays extra “hanging” months plus interest. Each employee group needs its own reduction milestone, matching actual contract termination dates.

Mistake 3 — Not reconciling each person’s contribution history before closing. Missing one under-contributed employee, wrong SI codes, forgetting just-past-probation workers — the book-closing dossier gets returned, redo from scratch. With 100–200 employees, manual reconciliation almost certainly misses; a summary table reconciled with SI authority data is needed.

Mistake 4 — Forgetting the foreign worker group. They still join compulsory SI and HI, still need reduction reporting, book closing and history confirmation like Vietnamese workers. Work permits must be revoked and returned within 15 days — missing the deadline is an unnecessary extra administrative violation.

Mistake 5 — Not keeping payment and confirmation records. Paid allowances, each person’s history confirmations, SI payment vouchers to the last month — all need tidy keeping until dissolution completes. The tax authority on finalisation often cross-checks personnel costs against SI data; mismatches without explanatory records risk cost disallowance.

7. When to have a lawyer alongside for the insurance part?

The following situations warrant a lawyer from the start:

• The company has large SI, HI, UI arrears: needing a priority-ordered payment plan, a working roadmap with the SI authority and full 0.03%/day interest calculation to avoid cash-flow plan “breakage”.
• Signs of reassessment or penalties: e.g. SI contributed on salaries lower than actual for years, or unregistered employee groups. Need to assess the late-payment vs evasion boundary (Article 39 of the SI Law 2024) — two acts differing in both penalty levels and criminal liability risk (Article 216 of the Penal Code).
• Allowance disputes with foreign workers: allowance time calculation without a UI period to deduct, or whether they are compulsory SI participants from 01/7/2025.
• Large headcounts (dozens or more): one wrong reduction milestone or missed group, and repair costs plus interest will far exceed the cost of reviewing from the start.

The insurance part is only one link in the dissolution procedure. To arrange the full work order — from project termination, tax finalisation, tax code deactivation to company name removal — see dissolving the FDI company. If still weighing exit options — dissolution, bankruptcy or transfer — see FDI exit: bankruptcy, dissolution or transfer? to choose the right direction before going deep into each procedure.

The information in this article is for general reference only and does not replace legal advice for your company’s specific case.

Close SI books neatly before dissolving — don’t let insurance arrears jam the dossier

SI arrears, reassessment and book closing are “not hard but must not be wrong” tasks on FDI project termination: done right from the start it is smooth; left to the last minute it costs many times more. FLAT Law Firm accompanies investors through the entire exit process — from reviewing SI, HI, UI obligations and arrears handling plans, calculating allowances for Vietnamese and foreign workers, to revoking work permits and completing dissolution dossiers.

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