The Law No. 12/2012/QH13 on trade unions issued on 20 June 2012 (the “New Union Law”) includes 6 Chapters and 33 Articles.  The New Union Law will take effect from 1 January 2013 and replace the Law No. 40-LCT/HDNN8 on trade unions dated 30 June 1990 (the “Current Union Law”).

The New Union Law confirms the right of employees to establish and join trade unions and to participate in trade unions' activities; provides for the functions, rights and responsibilities of trade unions; provides for the rights and responsibilities of trade union members; outlines the responsibilities owed to trade unions by the State, State agencies, organizations, individuals and enterprises employing employees; guarantees trade unions' activities; handles dispute resolutions; and deals with breaches of the laws on trade unions.

The Vietnam General Confederation of Labor (“VGCL”) was founded on 29 July 1929.  All trade unions in Vietnam are required to affiliate with the VGCL, which is affiliated with the World Federation of Trade Unions.

The same as the Current Union Law, given Vietnam’s socialist orientation, it is worth noting that a trade union is a large and extensive social-political organization of the working class and workers, established on a voluntarily basis, being a component of the political system of Vietnamese society, under the leadership of the Vietnamese Communist Party.  The trade union represents workers, and jointly with State agencies, economic and social organizations, takes care of and protects the legitimate and lawful rights and interests of the workers.  Employers are only obliged to facilitate the formation of a trade union within their companies if so requested by their employees.

The New Union Law incorporates some major changes as summarized below that, among other things, provide more comprehensive guidance for the guarantee of financial matters for trade unions and enhance the protection of trade union officers.

1.1    Prohibition of foreign workers from establishing and joining trade unions and participating in trade unions' activities

Under the New Union Law, only Vietnamese workers may establish and join trade unions and participate in trade unions' activities, which means that the foreign workers are not allowed to establish and join trade unions and participate in trade unions' activities.  In contrast, the Current Union Law allows all workers of enterprises, whether Vietnamese or foreign, to establish and join trade unions and participate in trade unions' activities.

1.2    Enhancement of rights and obligations of the immediate upper level trade union of grassroots trade union (“Immediate Upper Level Trade Union”) to workers at the grassroots level

Upon request, the Immediate Upper Level Trade Union has the right and obligation to represent and protect the legitimate and lawful rights and interests of workers where the grassroots trade union has not been established.  However, under the new Labor Code No. 10/2012/QH13 dated 18 June 2012 (the “New Labor Code”), the right and obligation of the Immediate Upper Level Trade Union to present and protect the legitimate and lawful rights and interests of grassroots level workers is automatic and not based on the employees’ request.  Also, the Immediate Upper Level Trade Union is considered among “the representative organization of the employees” at enterprises without grassroots trade unions and employers are required to consult and sometimes reach agreement with these representative organizations for any matters related to labor regulations or employee benefits, such as issuance of Collective Labor Agreement, Internal Labor Regulations, salary schemes, labor disciplines, etc.  In practice, it was the lawmakers’ intention in drafting the New Union Law to make the right and obligation of the Immediate Upper Level Trade Union a default protection on the grassroots level workers.

1.3    Providing stronger protection for part-time trade union officers

A part-time trade union officer is not only responsible for performing an employee’s tasks under a signed employment contract but also for carrying out the functions, responsibilities and rights of a trade union officer.  A part-time trade union officer is considered by the union authority to be disadvantaged in relation to the employers.  Therefore, it is necessary to have some guarantee mechanisms to encourage workers to work as part-time trade union officers.  Consistent with the New Labor Code,  the New Union Law provides more protection to part-time trade union officers.  For example,  if the employment contract of a part-time trade union officer expires while such officer is still within the term of his or her office, then such employment contract must be extended until expiry of the term of such office. 

1.4    Requiring all employers to pay trade union fees, even if such enterprises have no grassroots trade union

The New Union Law imposes a two percent trade union levy on an employer based on the employer’s total payroll as used to determine social insurance contribution, even if the enterprise has no grassroots trade union.  Although the Current Union Law contains no requirement for such a levy, a two percent levy is introduced under Joint-Circular No. 119/2004/TTLT-BTC-TLDLDVN dated 8 December 2004 (“Joint-Circular 119”) for domestic enterprises where there is grassroots trade unions and a one percent levy is imposed under Circular No. 17/2009/TT-BTC dated 1 January 2009 (“Circular 17”) for foreign invested companies where there is grassroots trade unions.  Therefore, under the Current Union Law, both domestic and foreign invested companies without grassroots trade unions are not subject to the above trade union levy.  However, the New Union Law imposes a two percent levy on all enterprises, with or without grassroots trade unions and regardless of domestic or foreign enterprises.

1.5    Centralization of the ownership of all trade union assets under the VGCL

The Current Union Law vested the ownership of trade union assets in the individual trade union.  However, the New Union Law centralizes the ownership of all trade union assets under the VGCL.  The change in the general ownership of trade union assets originated from the guarantee of financial matters for all levels of trade union's operations and activities.  Under Joint-Circular 119 and Circular 17, the levies paid by enterprises (i.e., two percent levy paid by domestic enterprises and one percent levy paid by foreign invested enterprises) is retained by the enterprises to support the grassroots trade union’s operations and activities.  However, the two percent levy imposed under the New Union Law is explicitly used for, among others, activities of all levels of trade unions (including grassroots trade union and upper level trade unions).  Further guidance from the State agencies may still be needed regarding contribution to and use of trade union budget.  However, per confirmation with the competent authorities, this two percent fund will be paid to the upper level trade union first.  Part of the fund will then be sent to the enterprise's grassroots trade union.