labour – Duane Morris Vietnam

May 27, 2016May 27, 2016 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann ALERT IMPRISONMENT/JAIL for Labour Law violation – New Penal Code sanctions – Unprecedented !

On 27 November 2015, the National Assembly adopted a new Criminal Code No. 100/2015/QH13, which takes effective from 01 July 2016. This new Criminal Code will replace the old Criminal Code in 1999 and its amending / guiding documents.
Notably, the new Criminal Code provides new sanctions for violations in employment sector. Details of these sanctions are set out below:

Illegal dismissal of employees
In particular, if a person for his/ her own sake conducts one of the following behaviours that make dismissed employees or their families fall into difficult situations or go on strike, he/ she will be subject to monetary fine of VND10 million – VND100 million, non-custodial reform of up to 1 year or IMPRISONMENT/JAIL of 3 months to 1 year:
• Illegal dismissal of employees;
• Illegal issuance of decision on dismissing public servants; or
• Forcing, threatening the employees or public servants to quit their jobs.
The violating person will be subject to VND100 million – VND 200 million monetary fine or 1-3 year IMPRISONMENT/JAIL if he / she commits the crimes in either of the following situations:
• Dismissing 2 employees and more;
• Dismissing pregnant employees;
• Dismissing mothers of less than 12-month old baby; or
• Causing the dismissed employees commit suicide.
At the same time, the violating person may also be prohibited from holding certain professional positions within 1- 5 years.

Employment of employees under 16
Anyone who employs a person under 16 to do hard or dangerous work or work that involves contact with harmful substances in any of the following cases will be subject to a fine of VND 30 million – VND 200 million or up to 03-year non-custodial reform or 06 – 36 month imprisonment:
• The offender previously incurred a civil penalty or has a previous conviction for the same offence which has not been expunged;
• The offence results in bodily harm to 01 people who suffers from 31% – 60% physical disability;
• The offence results in bodily harm to 02 people or more who suffer from a total physical disability of 31% – 60%.
A sanction of 03 – 07 year imprisonment applies in the following cases:
• The offence has been committed more than once;
• The offence involves 02 workers or more under 16;
• The offence results in the death of 01 person or bodily harm to 01 person who suffers from over 61% physical disability;
• The offence results in bodily harm to 02 people, each of whom suffers from 31% – 60% physical disability;
• The offence results in bodily harm to 03 people or more who suffer from a total physical disability of over 61%.
A sanction of 05 – 10 year imprisonment applies in the following cases:
a) The offence results in the death of 02 people or more;
b) The offence results in bodily harm to 02 people or more, each of whom suffers from over 61% physical disability;
c) The offence results in bodily harm to 03 people or more who suffer from a total physical disability of over 122%.
The offender might also be subject to a monetary fine of VND 10 million to VND 50 million.

Evading payment of social insurance, health insurance, unemployment insurance for employees
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 200 million to VND 500 million:
• The amount of insurance contribution evaded is VND 50 million to under VND 300 million;
• The offender fails to pay insurance for 10 – 49 employees.
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 500 million to VND 1 billion:
• The offence has been committed more than once;
• The amount of insurance contribution evaded is VND 300 million to under VND 1 billion;
• The offender fails to pay insurance for 50 – 199 employees;
• The offender collects or deducts insurance contribution from the employees at the amount of VND 50 million to under VND 300 million or from 10 -49 employees but fails to pay insurance [to the authority].
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 1 billion to VND 3 billion:
• The amount of insurance contribution evaded is VND 1 billion or more;
• The offender fails to pay insurance for 200 employees or more;
• The offender collects or deducts insurance contribution from the employees at the amount of VND 300 million to under VND 1 billion or from 50 – 199 employees but fails to pay insurance [to the authority].

Coercive labour
Any person that uses violence or threat of violence or other methods to force a person to work against his/her will, depending on each case, be subject to monetary fine of VND30 million – VND200 million, 06-month to 12-year imprisonment, or prohibited from holding certain positions or doing certain jobs within 01 – 05 years.

Action plan
What we recommend to you now:
• You should update your Internal Labour Rules
• You should inform your managing team about these new rules !
We are fully qualified to assist you with this work. Kindly let us know if you require our assistance.

—o0o—

Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above or should you request our assistance. Mr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

April 21, 2016 by Dr. Oliver Massmann

The TPP: A Win for Vietnam’s Workers

“The Trans-Pacific Partnership (TPP) is the first trade agreement to subject Vietnam to enforceable labor commitments.”
By Oliver Massmann for The Diplomat
April 20, 2016

In the last decade, free trade agreements (FTAs) have expanded to cover more than traditional commercial matters like tariff reductions. Recent FTAs have increasingly included labor requirements to protect workers, especially in countries where companies pursue low-cost production through depressed wages, poor working conditions, and other subpar labor standards. This has dramatic effects on countries like Vietnam, where I have practiced law for 20 years. But even though FTAs regulating labor matters have increased dramatically in recent years, from four agreements in 1995 to 72 by 2015, Vietnam has refused to commit to labor requirements in FTAs — until now.
The Trans-Pacific Partnership (TPP) is the first trade agreement to subject Vietnam to enforceable labor commitments like freedom of association, collective bargaining, and minimum work conditions. Additionally, Vietnam signed a labor implementation plan with the United States that identifies specific actions needed to comply with TPP and which are subject to an additional layer of enforcement. It is clear TPP lives up to its name as a “21st century agreement,” enacting the strongest labor provisions of any trade deal, giving the opportunity to improve living standards and the quality of work for Vietnam’s people. These advances range across a number of different areas:
Freedom of Association
The most far-reaching change to Vietnam’s labor landscape is on freedom of association. Currently, Vietnam only recognizes a limited right to organize. Vietnam’s Trade Union Law states that a trade union is a “socio-political organization of the working class and laborers… part of the political system of the Vietnamese society, placed under the leadership of the Communist Party of Vietnam.” As such, Vietnam does not have a pluralistic union regime. In other words, workers are not allowed to establish more than one trade union focused on protecting their interests regarding their employment. Instead, the only option is to join the one trade union available, Vietnam’s General Confederation of Labor (VGCL), under the direction of the Communist Party.
The VGCL has poorly represented and protected the rights and legitimate interests of its members and workers. In my time here, we have barely seen the presence of VGCL in demonstrations and strikes for social insurance or payment of backwages to hundred of workers when enterprises close down. This inaction is due to the lack of independence and representation in trade union leadership. Essentially, members of VGCL from the district level all the way to the top are government officials instead of workers. This will change with the TPP.
Article 19.3 requires all TPP parties to adopt and maintain regulations that comply with the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, including freedom of association. This broad requirement is detailed in the U.S.-Vietnam Plan for the Enhancement of Trade and Labor Relations, which lays out the statutes and language for Vietnam to come into compliance with the TPP. Key reforms include provisions that ensure all workers be permitted to “form a grassroots labor union of their own choosing … without prior authorization” and with the right to “autonomously elect its representatives.” This means that workers can finally organize unions independent from the VGCL that are run by workers. This is significant because it empowers employees to protect their own interest — particularly when it comes to collective bargaining.
Collective Bargaining
Collective bargaining is the negotiation between the representatives of the labor collective and the employer to establish working conditions formalized in a collective labor agreement (CLA). As a result, a CLA between employees and employer will define working conditions, labor usage, and obligations of each party in their employment relationship. The CLA serves as the basic document detailing legal requirements in each enterprise and grants workers the chance to negotiate with their employer for labor terms better than statutorily required. As such, a CLA is critical in an employment relationship.
Given their importance, many enterprises in Vietnam have prepared and implemented CLAs. However, many enterprises often use CLAs to temporarily deal with pressure from authorities and include terms contrary to or less favorable than statutorily required. The reason for such low-quality CLAs range from a lack of awareness of procedure to government influence on self-selected union leaders. Given the wide range of issues preventing high-quality CLAs in Vietnam, the TPP makes a number of important reforms.
Article 19.3 requires all TPP parties to adopt and maintain regulations for the “effective recognition of the right to collective bargaining.” Moreover, the TPP supports better negotiating outcomes by ensuring unions can consult “international worker organizations” regarding labor union activities like collective bargaining and securing autonomy of grassroots labor unions from upper-level unions. Combined with the protection for independent association, the TPP gets to the heart of the system plaguing collective bargaining from adequately serving worker’s interests in Vietnam–setting the regulatory framework for improved labor conditions.
Enforcement
Vietnam is held accountable to these labor commitments through TPP’s enforcement mechanism. Like all TPP partners, Vietnam is subject to dispute settlement with the weight of trade sanctions if it systematically fails to uphold its commitments under the Labor Chapter. More significantly, the details in the implementation plan must be completed before any benefits of the trade agreement can flow to Vietnam. Therefore, there are two layers of enforcement specifically for labor obligations: one to facilitate rapid regulatory reform, and another to maintain compliance.
With this comprehensive approach, I am optimistic the TPP will bring positive changes to the labor environment in Vietnam over the next five years. When labor unions finally speak with the voices of workers, there will be improvement in living standards and individual rights. This is exactly what the TPP promises. As such, both the United States and Vietnam must urgently take action to pass the TPP and seize the opportunity for a better civil society in Vietnam.
***
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

April 13, 2016 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Trans Pacific Partnership Impact on labor environment – Asia Pacific Economic Review Interview:

1. How do you evaluate the impact of TPP on labor environment of Vietnam?

Answer: Being touted as the 21st century trade agreement, the Trans-Pacific Partnership (TPP) also includes the strongest provisions on labour in history. In total 14 FTAs to which Vietnam is a party, the TPP is also its first FTA including labour provisions. If TPP is implemented fully, it will help improve on-the-ground labour conditions in its member countries by adopting binding and fully enforceable obligations to, among other, freely form unions and bargain collectively. The TPP is also the chance for member countries, especially Vietnam, to improve living standards and work quality for its own employees.

2. If TPP is fully implemented, does it help improve the labor conditions in its member in general and in Vietnam in particular?

Answer: Please see my answer also to Question 1 above.

3. According to you, how will TPP transform Vietnam Labour’s practices?

Answer: In the TPP, Vietnam has made a critical commitment, i.e., establishment of organization representing employees at grass-root level being independent of the Vietnam General Confederation of Labour. Differently speaking, TPP has laid a foundation for pluralism in trade union area. If independent TUs are established in Vietnam, employees’ living standards and rights will be much more improved as their TU will be one which can speak their voice.

Notably, in the side agreement mentioned above with the United States, a separate enforcement mechanism independent of the TPP if the United States is dissatisfied with Vietnam’s implementation.

Therefore, Vietnam must amend the current TU regulations towards international labour standards, despite the fear that rights of employees may be made political, resulting in instability of the country. The schedule for Vietnam to amend its legal system to materialize its commitments is already indicated in the side agreement with the United States as follows:

Principle 1: Right of workers to freely form and joint a labour union of their choice

Principle 2: Ability of labour unions to administer their affairs with autonomy

Principle 3: Worker representation in non-unionized workplaces

Principle 4: Representability in Selection of union officials

Principle 5: Non-interference of employers in organizational activity of labour unions.

4. Do you have any advice for Vietnam regarding to law on trade union to make the best use of TPP (export to its members, especially the US)?

Answer:

In addition to my answer in Question 3 above, the Law on Trade Union must be amended:

(i) to allow workers to freely form and joint a labour union of their choice.

(ii) to protect workers from discrimination, especially in the use of trade union’s fee.

(iii) to ensure the right to go on strike of workers (remove cases where workers are not allowed to go on strike or go on strike outside their working place, etc.)

***

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

THANK YOU

March 18, 2016 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann Labour requirements in the Trans-Pacific Partnership Agreement and their impact on Vietnam’s legal system

Together with the globalization process, content and coverage of free trade agreements (FTAs) have been further expanded to not only include traditional commercial matters such as reduction of tariff barriers (tariffs, quota, customs) but also include labour and environment which are not directly related to traditional trade.
Regarding labour, many recent FTAs include labour requirements as they view globalization has certain negative impacts on labour environment, especially in countries in pursuing of low production cost by maintaining low labour standards, wages and working conditions, thus resulting in unfair competition among parties in their commercial relations. This is an approach taken by many recent concluded trade agreements. The number of FTAs regulating labour matters has been increasing from 4 in 1995 to 72 up to January 2015.
Being touted as the 21st century trade agreement, the Trans-Pacific Partnership (TPP) includes the strongest provisions on labour in history. In total 14 FTAs to which Vietnam is a party, the TPP is also its first FTA including labour provisions. If TPP is fully implemented, it will help improve on-the-ground labour conditions in its member countries by adopting binding and fully enforceable obligations to, among other, freely form unions and bargain collectively. The TPP also creates a chance for member countries, especially Vietnam, to improve living standards and work quality for its own workers. The following section assesses the current situation in Vietnam on the right of collective labour bargaining, freedom of association as well as analyses how the TPP transforms Vietnam’s labour practices.
Current collective labour bargaining and freedom of association situation in Vietnam
Collective labour bargaining
Collective bargaining means debate and negotiation between the labour collective representative and the employer to (i) formulate a harmonious, stable and progressive labour relationship; (ii) establish new working conditions to provide the basis for signing a collective labour agreement; and (iii) resolve problems and difficulties in exercise of rights and implementation of obligations of each party to the labour relationship.[1]
Periodic collective bargaining is conducted once a year and the time lapse between two collective bargaining sessions must not exceed 12 months.[2]
One result of collective bargaining process is a collective labour agreement (“CLA”), which is defined as an agreement between the labour collective and the employer on working conditions, labour usage, rights and obligations of each party in their employment relationship.[3] The agreement must be reached based on voluntary, fair and transparent basis. It must include more favourable provisions for workers than what are required in the law but not in violation of labour related documents.[4] It serves as the basic document detailing legal requirements in accordance with business nature of each enterprise and grants workers the chance to negotiate with their employer better labour terms than statutory terms. As such, a CLA is legally critical in an employment relationship to ensure lawful rights and obligations of each party.
Trade Union (TU) plays the role of representing and protecting the rights and legitimate interests of trade union members and employees; participate in negotiating, signing and supervising the implementation of CLA, wage scales and wage tables, labour norms, wage payment regulations and bonus regulations, internal labour regulations, democracy regulations in an enterprise; participates in and assists the settlement of labour disputes; holds dialogues and cooperates with an enterprise to build harmonious, stable and progressive industrial relations in an enterprise.
Given the importance of a CLA, most enterprises in Vietnam have prepared and implemented it. Content of such agreement all ensures justifiable rights and obligations for workers, some agreements even include better treatment for workers than that in laws. However, some enterprises have such document in place only to temporarily deal with pressure from the authorities and include terms contrary to or less favourable than statutory requirements. Reasons are leader of the workers as well as the workers themselves lack awareness of procedures, understanding of legal requirements and weak negotiation skills.
Freedom of association
Vietnam is not a party to Convention No. 87 of the International Labour Organization on freedom of association but has acceded to the 1966 International Covenant on Civil and Political Rights, in which mentions the right of freedom of association.
Vietnam also agreed with the United States in a TPP side agreement called consistency plan where Vietnam is required to remove its ban on independent unions and allow all independent unions the same rights as those affiliated with the government. These independent unions must also be allowed to affiliate with each other to form a broader national federation. This process is called “cross-affiliation.” This consistency plan must be passed before Vietnam may export to the United States under the terms of the TPP.
However, the current Law on Trade Union in Vietnam has not ensured the right to freely establish and join TU of the workers. For example, Article 1 of the Law on Trade Union states that “a TU is a socio-political organization of working class and labourers, […], a member in a political system of Vietnam, under the direction of Vietnam’s Communist Party, […].” As such, Vietnam has not recognized TU pluralism regime. In other words, Vietnam has not allowed workers to establish, or join a TU that they think could benefit and protect their interests during their employment. Instead, they can only join the only TU in the Vietnam’s TU system and under the direction of Vietnam’s Communist Party. Meanwhile, TU has not played its role well as an organization representing and protecting the rights and legitimate interests of trade union members and workers. We have barely seen the presence of TU in demonstrations and strikes for social insurance or payment when an enterprise is closed. Due to the lack of representability, operation of a TU is very limited. In essence, members of the Vietnam General Confederation of Labour from district levels onwards are all government officials instead of workers. Therefore, an independent TU with representability and without association is what workers really need.
How TPP transforms Vietnam’s labour practices
In the TPP, Vietnam has made a critical commitment, i.e., establishment of organization representing workers at grass-root level being independent of the Vietnam General Confederation of Labour. Differently speaking, the TPP has laid a foundation for TU pluralism. If independent TUs are established in Vietnam, workers’ living standards and rights will be much more improved as their TU will be one which can speak their voice.
Notably, in the side agreement mentioned above with the United States, a separate enforcement mechanism independent of the TPP will apply if the United States is dissatisfied with Vietnam’s implementation.
Therefore, Vietnam must amend the current TU regulations towards international labour standards. The principles, which are in nature the schedule for Vietnam to materialize its commitments are already indicated in the side agreement with the United States as follows:
Principle 1: Right of workers to freely form and joint a labour union of their choosing
Principle 2: Ability of labour unions to administer their affairs with autonomy
Principle 3: Worker representation in non-unionized workplaces
Principle 4: Representability in selection of union officials
Principle 5: Non-interference of employers in organizational activity of labour unions.
We are optimistic to say the TPP will definitely bring positive changes to the labour environment in Vietnam in the next five years. Again, to really grasp such benefits, Vietnam must urgently take actions to reform the current domestic system, for a better civil society.

***
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

THANK YOU VERY MUCH!

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[1] Article 66, Labour Code 2012.
[2] Article 3, Circular No. 29/2015/TT-BLDTBXH.
[3] Article 73.1, Labour Code 2012.
[4] Article 73.2, Labour Code 2012.