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Vietnam: New draft Law on Trade Union

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In brief

The Vietnam General Confederation of Labor (VGCL) recently released a draft of the new Law on Trade Union (“Draft“), which is expected to replace the current Law on Trade Union 2012. Further details on the changes provided under the Draft are detailed below.

Recommended actions

The Draft has introduced various amendments, which could have a significant impact if eventually adopted. Enterprises should review changes proposed under the Draft to adequately prepare for upcoming legislative updates.

We will continue to monitor developments in the Draft’s adoption and provide relevant updates. In the meantime, please do not hesitate to contact us if you have any questions.

In more detail

Below is a summary of key takeaways from the Draft:

  1. Recognition of the existence and operation of employees’ organizations (alongside the traditional VGCL trade union system)

The concept of “employees’ organizations at enterprises,” as first introduced in the Labor Code 2019, has now been explicitly addressed in the Draft, which grants employees’ organizations the right to join the trade union system.

  1. Option to allow foreign employees to join trade unions

This is still an unresolved issue that may be subject to further consideration by the National Assembly.

  1. Expanded trade union supervision rights

This right is already provided for in the current Law on Trade Union 2012, which refers to trade union rights to join the inspection, examination and supervision activities of state authorities. However, the Draft proposes to separate content relating to the trade union supervision function into a new article, with novel guidance points added.

Specifically, the Draft states that trade union supervision can be implemented in coordination with relevant state authorities, or if requested by the Vietnam Fatherland Front Committee. Further, trade unions can request enterprises or organizations to provide information and documents during supervisions, and request that relevant state authorities consider sanctioning enterprises or organizations that have committed violations.

  1. Cases where employer trade union fees may be waived or reduced

Specifically, trade union fee contributions can be waived or reduced if an employer encounters difficulties due to a natural disaster, fire or epidemic, which causes a temporary cessation of production or business.

  1. Two added options for the management and use of trade union finances 

The first option states that trade union fees will be fully allocated to grassroots employees’ representative organizations (i.e., a trade union or employees’ organization at an enterprise), if any. Although the Draft does not elaborate on this point, we understand that the intention is that if there is no grassroots employees’ representative organization, the upper-level trade union will then manage the fees.

The second option provides that 25% of trade union fees will be managed and used by the upper-level trade union, while the remaining 75% will be distributed between an enterprise’s trade union and employees’ organization at the enterprise, according to the following four scenarios:

  1. If there is only a trade union: the trade union can receive the remaining 75% in full.
  2. If there is only an employees’ organization: the organization can receive fees corresponding to the number of its members in proportion to the number of employees from whom fees are collected.
  3. If there are both: the trade union can receive the remaining 75%, minus the fees distributed to the employees’ organization as per item (ii) above.
  4. If neither of them are in place: the upper-level trade union can keep all fees, and will return any unused amounts to the grassroots trade union or employees’ organization upon establishment, in accordance with the above.
  5. Introduction of “industrial unions” as grassroots-level organizations under the VGCL system

Industrial unions involve employees working in the same sector, the same occupation, or other specific employees. However, the Draft has not yet provided any governing regulations for industrial unions.

  1. Updates to prohibited acts

Notable examples of added prohibitions [for employers] include: (i) clarified acts discriminating against or disadvantaging employees due to trade union establishment, participation or operation; and (ii) acts relating to insufficient payment of trade union fees.

  1. Further additions

The Draft has also proposes further provisions in relation to the ability of trade unions to comment on draft laws or policies relating to the rights of trade union members and employees (via a social feedback function), as well as trade union obligations to publicize finances.

As these practices have already been implemented, the inclusion of these provisions can merely be seen as an official acknowledgement of such practices. 

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Author

Thuy Hang Nguyen is a partner in Baker McKenzie's Ho Chi Minh City office and the head of the Employment and Labor, and Compliance and Investigations practices in Vietnam.
Her diverse working experience, broad knowledge in various areas of law, and business management qualifications allows her to provide clients with practical and commercially savvy legal advice, and to create effective, strategic and innovative solutions for her clients to navigate around the ever-changing legal landscape of Vietnam.
As head of Baker McKenzie Vietnam’s Employment and Labor practice, Hang is in charge of developing and providing strategy for the practice, training and coaching team members and coordinating the global and regional employment practices when related to Vietnam. She is a member of the Steering Committees for the Firm's JAO and Asia Pacific Employment Practice Groups, and the Global Immigration and Mobility Group. Hang is also a leading authority and frequent speaker on employment and labor law in Vietnam and the Asia Pacific region.

Author

Trung started his career in 2000 as an adviser on foreign investment in Vietnam. His expertise covers a broad range of practices, including corporate, foreign direct investment, labor and employment.
Since joining Baker McKenzie, Trung has specialized in labor and employment law. He has been extensively involved in numerous areas, including employment, labor, compensation and immigration.
Trung has vast experience working on equity award plans for employees. He is the main contact point for Baker McKenzie in Vietnam on this matter.
Trung has also been involved in various development projects sponsored by foreign NGOs and international organizations, which means he has extensive knowledge and insight in both the private and public sectors, as well as regulatory and development issues.

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