Higher Democratic Standards in the Workplace under Labour Code 2019

The Labour Code 2019 in Vietnam took effect on January 01, 2021.  One of the stated purposes of the new Labour Code was to meet the commitments of Vietnam concerning labour standards in recent new-generation free trade agreements, including the EU-Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.  As a result, the Labour Code 2019 and its implementing provisions provide higher standards of democracy compared to the Vietnamese labour regulations prior to January 01, 2021, specifically regarding its requirements on dialogues at the workplace and issuance of democratic regulations.

This executive brief provides corporate leaders with details and analysis concerning the democratic-based amendments in the working environment under Labour Code 2019 and its implementing provisions, specifically Decree 145/2020/ND-CP, which may impact their business and management of the workforce.

Dialogues at the workplace

Dialogues at the workplace is defined as sharing information, consulting, discussing, and exchanging opinions between the company and its employees or the organization representing the employees on issues relevant to their rights, benefits, and interests in the workplace.  These dialogues are carried out to strengthen understanding, cooperation, and mutual effort to achieve win-win solutions for the company and its employees.

Previously, companies were required to organize periodical dialogues with the employees every three months or ad-hoc dialogues at the request of the company or its employees.  Under the new Labour Code, periodical dialogues are only required to be held once a year.  Furthermore, the Labour Code 2019 now specifies additional circumstances that require the company to organize ad-hoc dialogues with employees, including issuance of a regulation to assess the level of work completion for unilateral termination of labour contracts due to employees’ poor performance; restructuring; issuance of a labor usage plan; formulation of the pay scale, payroll and labour rate; issuance of a bonus scheme; issuance of internal labor rules; and temporary suspension of work.  Further, under the Labour Code 2019, the company may still be required to organize dialogues with the employees even if the company restructuring adversely affects the employment of only one employee.

Moreover, in contrast to the labour regulations before January 01, 2021, employees who are not members of the grassroots trade union or any other internal employee organization of the company are now entitled to nominate representatives to participate in the dialogues.  The minimum number of members representing the employees participating in the dialogues are varied from three to 24, based on the number of employees of the company.

Democratic regulations

Democratic labour regulations are not a new feature under the Labour Code 2019.  Currently, companies having more than ten employees are required to issue democratic regulations to implement dialogues at the workplace.  Specifically, the Labour Code 2019 and its implementing provisions require that the democratic regulations provide details on procedures to organize dialogues at the workplace, e.g., number and composition of participants, responsibilities of participants in the dialogues, etc.

The democratic regulations must be created in consultation with the grassroots trade union and the representative group and be made publicly available to all employees.

Key legal implications

As a result of the greater number of democratic features in the workplace under the Labour Code 2019, the company is required to issue democratic regulations and organize ad-hoc dialogues at the workplace with the employees under a number of circumstances.  These include the issuance of internal labour regulations, company restructuring, and issuance of a regulation to assess the level of work completion for unilateral termination of labour contracts due to employees’ poor performance.  Failure to carry out such procedural steps may place at risk the legitimacy of internal labour regulations, company restructuring, or unilateral termination of labour contracts due to employees’ poor performance and their legal validity may be challenged by the competent authorities.

Generally, the above democratic features under the Labour Code 2019 and its implementing provisions provide greater protection to employees; whereas, companies are required to expend greater time and effort to fully comply.

If you have any questions or concerns about the labour regulations in Vietnam, our experienced labour and employment lawyers are always available at info@corporate.letranlaw.com.