1. Core risk: joint and several liability caused by the lack of qualifications of the payment entity

According to the current law, social security payment must be carried out by entities with legal qualifications. If the entrusted institution does not hold the "Human Resources Service License" or "Labor Dispatch Business License", the social security payment behavior of its agency may be deemed invalid. This means that even if the enterprise has paid the payment agency and the institution has transferred the money to the social security account, the employee's insurance status may still not be recognized by law. In the event of a dispute, the enterprise shall bear full responsibility for failing to fulfill its payment obligations in accordance with the law.

2. Legal consequences: the dual pressure of administrative punishment and economic compensation

(1) Administrative penalty risk

Articles 63 and 86 of the Social Insurance Law clearly stipulate that if an employer fails to pay social insurance premiums for employees in accordance with the law, the social insurance collection agency shall order it to make up the payment within a time limit, and impose a late payment penalty of 5/10,000 per day from the date of non-payment; if the payment is still not made within the time limit, a fine of not less than one but not more than three times the amount owed shall be imposed. If the payment behavior is invalid due to the lack of qualifications of the payment agency, the enterprise will directly face the above-mentioned administrative liability.

(2) Economic compensation risk

According to Article 38 of the Labor Contract Law, if the employer fails to pay social insurance premiums in accordance with the law, the employee has the right to unilaterally terminate the labor contract and require the enterprise to pay economic compensation. In judicial practice, if the social security payment is invalid due to the qualification of the payment agency, and the employee claims to terminate the contract and claim for compensation on this ground, the court is more likely to support the claim.

3. Case warning

Case 1: Maternity allowance cannot be received and issued for class arbitration

Company A entrusted a consulting company that did not obtain a human resources service license to pay social security for 20 employees. Two years later, an employee found that he could not receive maternity allowance when he applied for it, and it was verified that the institution had never truly declared the payment to the social security system. Subsequently, a number of employees filed labor arbitration, claiming that Company A had failed to fulfill its statutory payment obligations. The court finally ordered Company A to pay all social security expenses and pay a total of 220,000 yuan in economic compensation to the departing employees.

Case 2: The enterprise bears the full amount of work-related injury benefits if the compensation is refused

An employee of an enterprise in Zhejiang was disabled at work. Because the payment agency entrusted by the enterprise was not qualified, the social security department determined that the insurance was invalid and refused to settle the claim. According to Article 62 of the Regulations on Work-related Injury Insurance, if an employee of an employer who should participate in work-related injury insurance but does not participate in work-related injury insurance has a work-related injury, the employer shall pay all work-related injury benefits in accordance with the statutory standards. The company finally borne a total of more than 90 yuan in medical expenses, disability subsidies, disability allowances, etc., far exceeding the normal insurance cost.

4. Risk prevention suggestions

(1) Strictly review the qualifications of institutions

When choosing a payment agency, enterprises should check whether they hold a valid "Human Resources Service License", "Labor Dispatch Business License" and business license. Give priority to formal institutions with good industry reputation and long-term operating records to avoid hidden dangers due to low-price selection of unqualified "black intermediaries".

(2) Sign a detailed agreement

When signing a service agreement with the payment agency, its qualification commitment, payment obligations, data reporting responsibilities, and breach of contract compensation clauses should be clearly stipulated. In particular, it should be stated that if the employee's social security rights and interests are damaged due to the reasons of the payer, the payment agency shall bear all compensation liability.

(3) Establish a normalized supervision mechanism

Enterprises should regularly check the status of employees' social security payments, and confirm whether the payment base, insurance type, and time are accurate through the national social insurance public service platform, local human resources and social security APP or counter inquiries. Payment records should be kept for future reference to ensure that the rights and interests of employees are implemented.

Legal guidance

• Article 38 of the Labor Contract Law of the People's Republic of China (amended in 2012): "The employer may terminate the labor contract under any of the following circumstances:...... (3) Failing to pay social insurance premiums for workers in accordance with the law; ……”
• Article 63 of the Social Insurance Law of the People's Republic of China (amended in 2018): "If the employer fails to pay the social insurance premiums on time and in full, the social insurance premium collection agency shall order it to pay or make up the social insurance premiums within a time limit." If the employer fails to pay or make up the social insurance premiums within the time limit, the social insurance premium collection agency may inquire about its deposit account with banks and other financial institutions; It may also apply to the relevant administrative department at or above the county level to make a decision on the allocation of social insurance premiums, and notify the bank or other financial institutions of its account in writing to allocate social insurance premiums. If the balance of the employer's account is less than the social insurance premiums that should be paid, the social insurance premium collection agency may require the employer to provide a guarantee and sign a deferred payment agreement. If the employer fails to pay the social insurance premiums in full and fails to provide guarantees, the social insurance premium collection agency may apply to the people's court to seize, seal or auction property whose value is equivalent to the social insurance premiums payable, and use the auction proceeds to offset the social insurance premiums. ”
• Article 86 of the Social Insurance Law of the People's Republic of China (amended in 2018): "If the employer fails to pay the social insurance premiums on time and in full, the social insurance premium collection agency shall order the payment within a time limit or make up for it, and a late fee of 5/10,000 shall be charged on a daily basis from the date of non-payment; if the payment is still not made within the time limit, the relevant administrative department shall impose a fine of not less than one but not more than three times the amount of the outstanding payment. ”
• Article 62 of the Regulations on Work-related Injury Insurance (revised in 2010): "If an employer is required to participate in work-related injury insurance in accordance with the provisions of these Regulations but fails to participate, the social insurance administrative department shall order it to participate within a time limit, make up the work-related injury insurance premiums that should be paid, and impose a late payment penalty of 5/10,000 per day from the date of non-payment; if the payment is still not made within the time limit, a fine of not less than 1 but not more than 3 times the amount of the arrears shall be imposed. If an employee of an employer who should participate in work-related injury insurance in accordance with the provisions of these Regulations but has not participated in work-related injury insurance suffers a work-related injury, the employer shall pay the expenses in accordance with the work-related injury insurance treatment items and standards stipulated in these Regulations. After the employer participates in the work-related injury insurance and pays the work-related injury insurance premiums and late fees that should be paid, the work-related injury insurance fund and the employer shall pay the newly incurred expenses in accordance with the provisions of these Regulations. ”