In the dynamic business landscape of Vietnam, labor disputes can present significant challenges to organizations of all sizes. The complexities surrounding labor disputes often stem from various factors, including differing interpretations of labor laws, cultural nuances, and evolving employment practices. These disputes can disrupt operations, damage employer-employee relationships, and result in financial losses.

At Viettonkin, we recognize the importance of resolving labor disputes swiftly and efficiently. With years of experience in providing dispute resolution services in Vietnam, we have developed a deep understanding of the local labor landscape and legal framework. In this article, we explore common causes of labor disputes, the legal framework, and our approach to handling labor disputes in Vietnam. 

Understanding labor disputes in Vietnam

Under Article 179, Clause 1 of the Labor Code 2019, labor disputes involve 

• a dispute over rights, obligations and interests among the parties during the establishment, execution or termination of labor relations; 
• a dispute between the representative organizations of employees; 
• a dispute over a relationship that is directly relevant to the labor relation.

Labor disputes are a common occurrence in Vietnam. In 2022, the whole country had 157 collective work stoppages stemming from labor disputes between enterprises and their employees (an increase of 50 compared to the same period in 2021) with a total number of over 102,540 workers participating.

Some issues that often lead to labor disputes in Vietnam are:

• Benefits of the employee (salary, bonus, social insurance): These disputes are typically over unpaid wages, overtime pay, or bonuses.
• Unilateral termination of labor contract: These disputes are typically over the unilateral termination of employment, the main point is whether the termination was justified or whether the employee was properly compensated in case the employer illegally terminates the labor contract.
• Discrimination: These disputes are typically over discrimination on the basis of race, gender, religion, or other protected characteristics.

There are a number of ways to resolve labor disputes in Vietnam. These methods include:

• Direct negotiations: This is the most common way to resolve labor disputes. In direct negotiations, the employer and employee or their representatives meet to try to reach an agreement.
• Mediation: Mediation is a process where a neutral third party helps the employer and employee or their representatives reach an agreement.
• Arbitration: Arbitration is a process where a neutral third party hears the case and makes a decision that is binding on both parties.
• Court: The process of resolving disputes in court in front of a judge or court officials follows the procedures and legal provisions prescribed by law.

If compulsory mediation fails, the involved parties can opt for either a Labour Arbitration Committee or an authorized Court, but not both at the same time, and within 6 to 12 months. The procedure for establishing an Arbitration Committee takes around 7 to 30 days and involves three steps: 

• Submitting a dispute resolution request to the Labour Arbitration Committee, 
• Establishing a Labour Arbitration Board, 
• Making a final judgment to settle the labor disputes.

Labor disputes can have a significant impact on businesses in Vietnam, both financially and operationally. According to the Supreme People’s Court of Vietnam, the fee for settling labor disputes is variable, from only 9 USD to over 2000 USD depending on the dispute value. While a labor dispute case can last 6 months to arrive at a resolution under the method of mediation, it often takes 9 months to a year for a resolution in Court. Some of the most common impacts of labor disputes include:

• Lost productivity: When employees are involved in a labor dispute, they are distracted from their work, leading to lost productivity and increased costs.
• High legal fees: Businesses may have to pay for legal fees, mediation fees, or arbitration fees to resolve a labor dispute, which can be significant, especially for small businesses.
• Damage to reputation: A labor dispute can damage a business’s reputation if it is seen as being unfair to its employees. This can lead to lost customers and investors.
• Increased turnover: Employees who are involved in a labor dispute may be more likely to leave their jobs, leading to increased turnover for businesses.

Effective approaches for handling labor disputes in Vietnam

Resolving labor disputes requires a strategic and proactive approach. In Vietnam’s dynamic business environment, understanding the most effective methods for handling labor disputes is essential.

Under Viettonkin’s perspectives, effective approaches involve clear communication, negotiation, and mediation. Open dialogue can often lead to mutually beneficial solutions, preserving employer-employee relationships. Mediation, facilitated by experienced professionals, provides a neutral platform for parties to discuss and find resolutions.

However, the latest Labor Code has specified six labor dispute cases that do not require mediation, unlike the Labor Code 2012:

• Dismissal or unilateral termination of the labor contract;
• Compensation for damage and allowance upon termination of the labor contract;
• Disputes between domestic workers and their employers;
• Disputes related to social insurance, health insurance, unemployment insurance, and insurance against occupational accidents and diseases as per the respective applicable laws of Vietnam;
• Compensation for damage between employees being sent to work abroad under contracts and their company; and
• Disputes between the outsourced employee and the outsourced employer.

Moreover, understanding the local culture and labor laws governing labor relations in Vietnam is crucial for employers. Compliance with regulations ensures a solid foundation for dispute resolution. 

In collaboration with experienced legal professionals, Viettonkin offers guidance on adhering to the legal framework. Our expertise in labor dispute resolution services ensures that businesses meet the necessary legal requirements when addressing labor disputes in Vietnam. Through mediation, negotiation, and compliance with Vietnamese labor laws, we help businesses navigate complex situations and maintain a harmonious work environment.

Practical advices in minimizing dispute resolution from Viettonkin

In prevalent practice, labor disputes result from various factors or reasons. When conflicts occur, first and foremost, the employer needs to double-check all personnel records and documentation pertaining to the employee in question and attempt to identify the root cause of the issues. Then a dialogue should be set up between the company and the employee in such a way that the issue is acknowledged, negotiations are made and both parties might reach an amicable agreement.

In case the direct negotiation between both parties fails, conciliation by labor conciliator or arbitration might be the next step. With over a decade of hands-on experience in the HR industry, Viettonkin has gathered some best practices that might be helpful to enterprises and investors doing business in Vietnam.  

Consider the role of trade unions

If the company and its employees have agreed to establish a grassroots trade union, it is important to consider the role of the union when labor disputes arise. Employees may seek the opinion of the trade union prior to negotiating with the company regarding any disputes. By working effectively with trade unions, companies can build trust with their employees and promote a positive work environment.

Understand the role of trade unions before the establishment

Before establishing a trade union, companies should clearly understand the role of one. This can ensure that relevant agreements or documents are made between the trade union and the company. Understanding the role of a trade union can also help companies comply with the labor laws and regulations in Vietnam, which can ultimately enhance their reputation and legal compliance.

Consult with a labor lawyer or counsel

Consulting with a labor lawyer or counsel is essential for companies to prevent and resolve labor disputes. The labor laws and regulations in Vietnam are complex, and seeking legal guidance can help companies understand their legal rights and obligations. By developing effective strategies, companies can avoid disputes and potential legal or reputational damage.

Client’s benefits: Viettonkin’s labor dispute resolution services

Our clients benefit significantly from Viettonkin’s labor dispute resolution services. Here are some key advantages:

• Time and Cost Savings: Our efficient conflict resolution methods often lead to quicker resolutions, reducing legal expenses and minimizing operational disruptions.
• Preservation of Relationships: We prioritize maintaining positive employer-employee relationships, ensuring that both parties can continue working together effectively.
• Compliance with Regulations: Our in-depth knowledge of labor laws and HR regulations  in Vietnam ensures that all resolutions align with legal requirements, mitigating future risks.
• Tailored Solutions: We customize our approach to suit each client’s unique needs, addressing the specific challenges they face.
• Peace of Mind: Clients can focus on their core business activities while we handle the intricacies of labor dispute resolution.

These benefits demonstrate the value that Viettonkin brings to businesses handling labor disputes in Vietnam. Our client-centric approach set us apart in the field of conflict resolution.

Final Thoughts

In the dynamic business landscape of Vietnam, resolving labor disputes swiftly and effectively is paramount. Viettonkin stands as a trusted partner, offering specialized labor dispute resolution services tailored to your needs.

Our proven expertise and methods underscore our commitment to safeguarding your business interests. We understand the challenges you face, and our expertise in handling labor disputes in Vietnam ensures that you can navigate these challenges with confidence.Don’t let labor disputes disrupt your operations or jeopardize your business. Contact Viettonkin today for expert assistance in resolvinglabor disputes in Vietnam, and experience the peace of mind that comes with having a dedicated and experienced partner by your side.