Striking the right balance in the Labour Code

The Labour Code of Viet Nam has been undergoing considerable debate and re-drafting. With the participation of the International Labour Organisation (ILO), Vietnamese lawmakers have attempted to standardise certain provisions of domestic law to be consistent with the conventions of the ILO, attempting to balance social needs and domestic development with international integration. Through the drafting process, however, a stark and vigorous divergence of opinions has emerged.

The latest draft, is widely although not unanimously held to provide protections for workers to the disadvantage of employers. Dissenters to this view argue that the draft strengthens the position of employers who already enjoy the upper hand over workers.

Those who argue that the draft is overprotective of workers point to several specific articles. For instance, Article 10 of the draft would provide for six acts which employers are prohibited from committing, while no similar provision places restrictions on workers.

Some assert that the draft is not strong enough to prevent workers from damaging the assets or property of employers. Specifically, Article 142.1 states: “an employee damaging tools, equipment or commits other acts causing damage to the assets of the enterprise shall have to pay compensation in accordance with the law for the damage so caused. In case of carelessness and the damage is no more than 10 months of the regional minimum wage stipulated by the Government, the employee shall have to make compensation up to 3 months of wage which shall be deducted from his/her wage.”

The argument is that such low compensation fails to adequately protect employers who place their assets in the hands of employees.

An additional problem found in the current law is that it allows workers working under indefinite term labour contracts to unilaterally terminate their employment without reimbursing their employers for training costs. Article 72 of the draft would fail to remedy this shortcoming.

Article 36.2 of the draft also provides that “the employer shall not require probation for seasonal labour contracts.” Based on this provision, employers must turn a blind eye to a newly-hired seasonal worker who fails to meet the performance expectations of the job.

Regarding unilateral termination of employment, current law allows workers to unilaterally terminate an indefinite-term labour contract by giving a 45-day advance notice. Employers, meanwhile, cannot unilaterally terminate a labour contract without a rational reason for such termination and must seek consent from a grassroots trade union or provisional executive committee of a trade union at the enterprise before termination.

In contrast to the arguments that the draft is overprotective of workers, many argue that it favours employers.

With regard to the right to unilaterally terminate a labour contract by the employer, Article 48.3 of the draft allows employers to lay off workers on the grounds of “changes in the organisational structure or technology or due to economic reasons, the employer, though having tried all efforts to overcome, having had to scale down production and reduce the workforce.” This provision could be abused by employers since, at any time, an employer could argue that it has “an economic reason” to reduce staff and terminate employees.

A particularly troubling provision of the draft is its provisions on strikes. Article 238 provides that “where a strike poses potential jeopardy to the national economy or public interest, chairpersons of provincial People’s Committees shall decide to postpone or stop such strike and assign competent agencies and organisations to resolve the dispute.” Since, in many cases, employers enjoy a certain level of relationship with local government authorities and have a financial position far exceeding that of workers, employers enjoy a potential and significant advantage over workers in persuading local governmental entities to postpone or stop a labour strike.

Aside from the differences of opinion on whether the draft favours workers or employers, many are questioning the feasibility of certain of its provisions. Article 213 provides that an enterprise’s grassroots labour conciliatory council shall have the authority to resolve individual labour disputes at the request of the enterprise. However, the composition of such council consists of an equal number of representatives of the employer and the employees. Given that employees receive compensation from the employer, questions arise as to whether they can act independently and objectively in resolving labour disputes.

The draft also perpetuates the confusion in the existing law on strikes. There are simply too many conditions and procedures for lawfully organising a strike. According to Article 226 of the draft, a lawfully-organised strike must: (1) arise from an interest-based collective dispute; (2) be organised by workers in one enterprise, or by workers in one industry in cases of dispute over collective industry-wide agreements; (3) occur only when the dispute is not being dealt with or has not been dealt with by authorised agencies; (4) be held with prior consultation with the workers under certain procedures; (5) be organised or led by a representative of a labour collective; (6) occur in an enterprise in which strikes are allowed; and (7) not be subject to a decision to delay or stop the strike.

Article 226 therefore creates a very difficult set of requirements for a lawful strike. It is not realistic to expect workers to fully understand these requirements, much less be able to fully comply. A skeptic might even argue that this article was designed to create an impossible hurdle for workers to lawfully strike. The draft would perpetuate this situation.

Article 162 of the draft also goes beyond the pale of reality by providing that employers are responsible for “designing a room at the enterprise for female employees to shower or change clothes,” or “assist in making arrangement for day care centres and kindergartens, or in covering part of the expenses incurred by female employees having children in such centres or kindergartens.” Needless to say, such provisions would be beneficial to female workers and families and, if implemented, would greatly enhance their job security and availability to focus on work. However, the provision does not appear to take into account the cost to employers of complying with such requirements, and actual implementation seems doubtful. If enforcement were to be vigorously applied, employers might simply decline to hire female workers. In such case, the law would have the unintended consequence of advancing inequality in the workplace. This article appears to seek to improve working conditions for women, but then fails to fund it.

Developing a Labour Code which maintains a balance between the rights and responsibilities of both employers and workers is no easy mission. Simply drafting provisions which promise new rights to workers, without considering the costs of implementation and the difficulties imposed on employers, will not achieve the desired results. Likewise, provisions which allow employers and workers to reach agreement on working conditions if they choose are essentially meaningless, as they do not include any requirement that either party reach such agreement. Such provisions are nothing more than an acknowledgement that private parties have the right to enter into contracts with each other. On the issue of strikes, lawmakers should frankly answer the simple question of whether they truly believe workers should have the right to strike, and if so, reduce the complexity of the process.

Tags: Vietnam Labour Code