Vietnam: Labor Law Revamp Would Expand Union Rights, Narrow Women's

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By Lien Hoang

Vietnam is preparing a labor law overhaul that raises overtime caps, rescinds benefits for female workers and—in a sign that the Trans-Pacific Partnership is still kicking—permits unions independent of the ruling communist party. HR practitioners also expect changes to labor rules in the coming year that would see foreign employees pay unemployment and pension insurance, file documents online and lengthen their contracts less often.

Vietnam already agreed to give workers more freedom to form their own unions in one of its most dramatic promises under the TPP, a trade deal ditched by the U.S. in January but still being discussed by 11 remaining members. With new unions included in pending revisions to the 2012 Labor Code, the Vietnam Communist Party is indicating it would relinquish its monopoly on association, no matter what happens with the trade pact.

“For anyone who said TPP didn’t do anything, even though it’s dead, that’s a TPP result,” Matthew Lourey, managing partner at consultancy Domicile Corporate Services, said last month at a seminar hosted by the Australian Chamber of Commerce.

Gains for Employers, Setbacks for Women

The revamped labor code, which could get parliamentary review as early as this month, marks some gains for employers, especially as factories push to keep costs low, siphon business from neighboring China and enlarge their pivotal role in the export-based $200 billion economy. If approved, the draft revisions would triple the maximum overtime hours in a year to 600 and let companies fire employees who lie on their applications.

The updated labor code would also change employers’ options to renew or extend work contracts. At the moment, definite-term and seasonal contracts automatically convert to indefinite-term and 24-month contracts, respectively, once they expire. Under the proposal, those contracts would instead be renewed on their original terms. Employees also would have one chance, rather than two, to extend their fixed-term contracts before being employed indefinitely.

In addition, the retirement age would rise to 62 for men (now 60) and 60 for women (now 55), at which point employers would be able to dismiss people even if they haven’t paid into social insurance for 20 years, as now required.

The changes Vietnam is weighing also would roll back recent advances for women, whose 73-percent workforce participation rate is 50 percent higher than the global average. Benefits that would be sacrificed under the revised labor code include daily breaks of 30 minutes during menstruation and one hour during the 12-month nursing period and immunity from discipline while pregnant, on maternity leave or nursing.

“On behalf of the drafting team, I’ll say sorry to some of the ladies here,” Duane Morris associate Le Trung Nhan said at the seminar in Ho Chi Minh City, predicting that the revised labor code will take effect in early 2018.

Other Initiatives

Unconnected to the labor code revisions, plans are underway for foreigners to contribute part of their salaries to insurance schemes for unemployment and social security, starting Jan. 1, 2018. Lourey said it’s unclear whether the rules will make the payments optional or obligatory, but estimated they will raise salary deductions 30 percent.

In addition, Vietnam is piloting a service that would allow people to obtain work permits online, shortening the application process. If the website goes live July 1 as hoped, applicants can start making accounts at www.dvc.vieclamvietnam.gov.vn.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Vietnamese HR law and regulation, see the Vietnam primer.

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