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July 29, 2013

Legal Update: Decree 43 Provides Further Guidance on the Role of Trade Unions

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On May 10, 2013, the Vietnamese government issued Decree No. 43/2013/ND-CP (Decree 43) providing detailed regulations on the implementation of Article 10 of the Law on Trade Unions. Decree 43, which took effect on July 1, 2013, focuses primarily on the role of trade unions formed within employer organizations, otherwise known as “Grassroots Trade Unions.” According to Decree 43, Grassroots Trade Unions are to protect employee interests in the following manner:

  • Providing guidance and advice on labor contracts;
  • Providing legal advice to the employees on labor, social insurance, medical insurance, and other rights and interests of the employees;
  • Gathering the opinions/positions of employees on employment policies (such as internal labor rules, salary, and bonus) and communicating them to the employer;
  • Negotiating collective labor agreements and representing the employees in collective labor disputes or litigation;
  • Participating in meetings for settlement of labor disputes and requesting state agencies and/or related agencies/organizations to settle labor disputes.

While employers are not required by law to establish a Grassroots Trade Union, Decree 43 requires employers to “provide information, cooperate, and enable the operation” of a Grassroots Trade Union should their employees desire to do so. Moreover, if a Grassroots Trade Union does not exist within the employer, then Decree 43 requires the “direct superior trade union organization” which is, most commonly, the District Level Union Federation to undertake the responsibilities that a Grassroots Trade Union would have. However, this rule would be very difficult to execute in practice because in large cities, such as Hanoi and Ho Chi Minh City, the majority of employers operate without a Grassroots Trade Union. Consequently, the District Level Union Federation in each city is unlikely to have sufficient and qualified personnel and resources to take on this new responsibility.

The rule requiring District Level Union Federation involvement when a Grassroots Trade Union does not exist is likely to make life more difficult for employers in situations where the law requires trade union opinion or sign-off as a matter of procedure. By way of illustration, the law requires a company’s internal labor rules to be reviewed by and have the “opinion” of a trade union as a precondition to approval by the labor authorities.

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