The Vietnam Government has foreshadowed stronger enforcement actions for compliance and increased penalties for non-payment of compulsory Trade Union fees for companies.
At present, all companies in Vietnam must, on a monthly basis, contribute to their local Trade Union at a rate of 2% of total salary costs. If the employees seek to create an internal Trade Union, employees will contribute an additional 1% of their salary to this Internal Trade Union (with a portion of the employer’s 2% directed there as well). Decree No.191/2013/ND-CP
The authorities have indicated that they will be stepping up review and enforcement of compliance with the compulsory Trade Union payments. Decree No.191/2013/ND-CP (“Decree 88”), which took effect from 25 November has increased penalties for non-compliance to:
- Maximum penalty of VND 75million for non-payment of Trade Union fees
- Interest payable on all unpaid Trade Union fees at commercial bank interest rates
- Plus repayment of all amounts of unpaid Trade Union fees
We are yet to see how the new enforcement action will take shape, and how stringent with historic unpaid Trade Union fees, however we suggest that all employers seek to comply with the Trade Union requirements moving forward.