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Legal Update

New Decree Provides Guidance on Trade Union Fees in Vietnam

27 December 2013
Mayer Brown JSM Legal Update

To provide guidance on the provisions of the Trade Union Law regarding fees payable to trade unions, the government issued Decree No. 191/2013/ND-CP (Decree 191) on 21 November 2013, providing details concerning trade union financial matters. Effective from 10 January 2014, Decree 191 clarifies the status of businesses at which a trade union has not been set up regarding their obligation to pay trade union fees.

Under Article 26(2) of the Trade Union Law, an employer is obliged to pay trade union fees equivalent to 2 percent of the total payroll used to pay statutory social insurances for its employees. The Law is not clear as to whether or not a business at which a trade union has not been established has to pay the fee.

Under Decree 191 it is now clear that all businesses, including foreign-invested enterprises, must pay the fees even if no trade union is operating at the business. It is expected that further guidelines from the Vietnam Trade Union will explain how such fees should be paid in cases where there is no trade union. We note that by law, the setting up of a trade union rests with the employees. The employer only has an obligation to facilitate the setting up process.

Along with the increase in minimum salaries, the mandatory payment of trade union fees, it has been claimed, will place a burden on businesses and will cause high costs for local businesses.

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