In business operations, especially some start-ups or small and micro enterprises, managers and employees often agree not to pay social insurance, and discount the payable expenses into subsidies. This approach is often seen as a "flexible way" to reduce labor costs. However, a recent final judgment on a labor dispute that lasted 30 years has revealed the extreme risk of this choice at a heavy cost: instead of "saving", it may lead to huge compensation far exceeding social security costs, and even affect long-term stable operations.

1. Retrospective of the case: An invalid agreement that lasted for 30 years

In March 1992, Li joined a company, and the two parties did not sign a written contract until January 2007. The contract contains a clause that "Party B shall not enjoy three gold during the working period". In October 2022, when Li left his job at the age of 60, he was unable to enjoy pension insurance benefits due to long-term failure to pay social insurance, and the two parties went to court.

After trial, the court clearly defined that social security payment is an unexempted mandatory obligation. Any form of "voluntary waiver" statement or contractual agreement is invalid from the beginning due to violation of mandatory legal provisions. Due to the company's long-term non-payment, employees cannot reapply for social security and receive pensions when they retire, and the company must bear the liability for compensation. When supplementary payment is no longer possible, the court has the discretion to pay the corresponding pension loss by the enterprise according to multiple factors such as wage level, local standards, and average life expectancy.

The judgment of this case sends a clear signal: evading social security payment obligations is by no means an "old account" that can be written off with the employee's resignation. When an employee retires, it is the time when the "debt" buried for many years is due and liquidated.

2. The risk of enterprises not purchasing social security for employees

First, the rigid constraints of supplementary payment obligations and late payment fees. Paying social security premiums on time and in full is a mandatory legal obligation of employers and cannot be exempted by agreement. According to the Social Insurance Law, if an employer fails to register for social security, it will face a fine of one to three times the amount payable if it fails to make corrections within the time limit. From the date of non-payment, a late fee of 5/10,000 will be charged per day, and if the payment is still not made within the time limit, the person will face a fine of one to three times the amount of the arrears.

Second, the full compensation liability for the lack of treatment of core insurance types. In terms of work-related injury insurance, if an uninsured employee suffers a work-related injury, the enterprise needs to pay the full amount according to the work-related injury insurance treatment items and standards, and in case of serious disability or death, the compensation can reach hundreds of thousands or even millions of yuan. In terms of medical insurance, the medical expenses that cannot be reimbursed by employees due to non-payment must be borne by the enterprise. In terms of maternity insurance, enterprises are required to compensate for maternity medical expenses and maternity allowances that female employees cannot enjoy. In terms of unemployment insurance, the unemployment insurance benefits that employees cannot receive because they are not insured are also borne by the enterprise.

Third, credit depreciation and long-term restrictions on business development. The "Measures for the Administration of Tax Payment Credit", which will come into effect on July 1, 2025, will include the payment of social security premiums in the tax payment credit evaluation system for the first time. Failure to participate in insurance in accordance with the law will directly lower the credit rating of enterprises, which in turn will cause chain reactions: financial institutions may raise the loan threshold or refuse to grant credit; Government bidding, government procurement and other projects often use high credit ratings as access conditions, and untrustworthy enterprises will be restricted from participating; It may also face the impact of industrial and commercial supervision and the cancellation of qualifications for evaluation and evaluation, forming a credit punishment pattern of "one violation and multiple restrictions".

3. Compliance path: transform mandatory obligations into normative guarantees

The risks revealed by the above cases warn us that social security payment is not an option, but a firewall that must be built for the sustainable development of enterprises.

First of all, enterprises need to establish a correct understanding. Managers must completely change their concepts, treat social security expenditure as the same legal rigid cost as salary and taxation, and incorporate it into the standardized financial budgeting and management process. Any "trick" that tries to circumvent is futile and risky before the law.

Secondly, it is necessary to standardize the entry process and take insurance as an absolute prerequisite. Enterprises must take "signing labor contracts" and "handling social security increases" as mandatory steps for employees to join the company inseparable and completed simultaneously, and put an end to the operation space of "work first and then handle" or "negotiate and do not pay" from the source.

Finally, an early warning and review mechanism should be established. Regularly check the social security payment to ensure that all employees participate in the insurance in full and in a timely manner. For historical uninsured issues, we should take the initiative to seek professional legal advice, assess risks and formulate compliance solutions, rather than passively avoiding them.

Epilogue

Paying social insurance for employees is not only the bottom line responsibility of the law for enterprises, but also an important guarantee for them to diversify their own business risks and build harmonious and stable labor relations. In the aforementioned case, the company finally assumed the liability for compensation for pension losses for employees for 30 years due to an invalid agreement, and the lesson is profound. It once again confirms that in the field of labor and employment, any "shortcut" that tries to replace legal obligations with illegal agreements will eventually lead to a more costly end.