Issue 201125 – Collective bargaining (principles, issues, representatives, procedures, sectoral collective bargaining, multi‑enterprise collective bargaining, collective bargaining council)

Dear Value Client,

In the context of increasingly diverse labor relations in Vietnam, the establishment of dialogue mechanisms and collective bargaining has become an important tool to harmonize the interests of employees and employers. This is not only the foundation for building a harmonious and stable working environment but also contributes to enhancing the competitiveness and sustainable development of enterprises.

Currently, collective bargaining activities are directly governed by the 2019 Labor Code (“Labor Code”), which provides specific regulations on the rights and obligations of the parties, as well as the procedures and processes to be followed. A clear understanding and strict compliance with these provisions are essential conditions for enterprises and employee representative organizations at the grassroots level to conduct collective bargaining in a lawful and effective manner.

This article has been prepared to provide our valued customers and employee representative organizations at the grassroots level with a comprehensive overview of the legal framework and procedures for collective bargaining, thereby supporting the practical implementation in accordance with current legal regulations.

1. Legal basis for collective bargaining

a. Definition and principles of collective bargaining

According to Article 65 of the Labor Code, collective bargaining is the negotiation and agreement between one party consisting of one or several representative organizations of employees[1] and another party consisting of one or several employers or employer representative organizations. The objective of this process is to establish working conditions, regulate the relationship between the parties, and at the same time build progressive, harmonious, and stable labor relations.

From this definition, it can be seen that collective bargaining is not only a legal procedure but also an important mechanism of social dialogue. This process must be conducted on the basis of fundamental principles, including voluntariness, cooperation, good faith, equality, openness, and transparency. These principles ensure that collective bargaining takes place fairly, effectively, and in a way that reflects the spirit of the current labor law.

b. Entities entitled to request collective bargaining

To clarify, the Labor Code also provides specific regulations on the entities entitled to request collective bargaining at an enterprise, as follows:

• The internal representative organization of employees has the right to request collective bargaining when it reaches the minimum proportion of members compared to the total number of employees in the enterprise[2].

In case the enterprise has more than one internal representative organization of employees that all meet the minimum proportion requirement, the organization with the largest number of members shall have the right to request collective bargaining. Other internal representative organizations of employees may participate in the collective bargaining if agreed by the requesting organization.

If the enterprise has more than one internal representative organization of employees but none of them meets the minimum proportion requirement, these organizations may voluntarily combine to request collective bargaining, provided that their total number of members reaches the minimum proportion as prescribed.

• The grassroots-level workers’ representative organization has the right to request the conduct of collective bargaining within the enterprise in accordance with Article 68 of the Labor Code or at the request of the employer[3].

The employer is responsible for arranging the time, venue, and necessary conditions for conducting collective bargaining sessions.

Note: When a request for collective bargaining is made by the internal representative organization of employees or by the employer, the requested party must not refuse to conduct the bargaining[4].

2. Issues and representatives of the parties to the collective bargaining

Based on Article 67 of the Labor Code, the parties to collective bargaining may choose one or several issues to be included in the bargaining. These issues directly reflect the rights and obligations of employees as well as the responsibilities of employers, including:

• Salary, bonus, allowances, pay rise, means and other benefits;
• Labor rates, working hours, rest periods, overtime work, rest breaks at work;
• Employment security for the workers;
• Occupational safety and health; implementation of the internal labor regulations;
• Conditions and equipment of the representative organization of employees; the relationship between the employer and the representative organization of employees;
• Mechanism and methods for prevention and settlement of labor disputes;
• Assurance of gender equality, maternity protection, annual leaves; actions against violence and sexual harassment in the workplace;
• Other issues of concern to either or both parties.

It can be seen that the scope of collective bargaining issues is defined quite broadly, not only limited to matters of salary and benefits but also covering factors related to working environment, occupational safety and health, gender equality, and mechanisms for dispute resolution. This demonstrates that the law has created a framework for the parties to comprehensively discuss essential matters in labor relations.

Along with the determination of issues, the matter of representatives for collective bargaining is also clearly stipulated in Article 69 of the Labor Code and adjusted in accordance with the actual situation of the enterprise. Specifically:

• The number of representatives of each party participating in the collective bargaining shall be agreed by the parties.
• The participants of each party in the collective bargaining shall be decided by that party.

In case the employees’ side has more than one representative organization participating in the collective bargaining and meeting the minimum proportion of members compared to the total number of employees in the enterprise, the representative organization that has the right to request collective bargaining shall decide the number of representatives of each organization participating in the bargaining.

In case the employees’ side has more than one representative organization participating in the collective bargaining but none of them meets the minimum proportion of members compared to the total number of employees in the enterprise, the number of representatives of each organization shall be negotiated by those organizations. If no agreement can be reached, each organization shall determine the number of its representatives based on the proportion of its members to the total number of members of all organizations.

• Each party to the collective bargaining has the right to invite its superior representative organization to appoint persons to participate as bargaining representatives, and the other party must not refuse. The number of bargaining representatives of each party must not exceed the quantity agreed in item (a) above, unless otherwise agreed by the other party.

3. Collective bargaining procedures in enterprises

To ensure transparency and effectiveness, Article 70 of the Labor Code stipulates that the collective bargaining process in enterprises shall be carried out through three main stages: proposal of request, preparation for bargaining, and conduct of bargaining.

a. Proposal of request for collective bargaining

First of all, when a request for collective bargaining is made, within 07 working days from the date of receipt of the request and the bargaining agenda, the parties must agree on the location and the starting time of the bargaining. In case one party cannot attend the bargaining session at the agreed time, it has the right to request a postponement, but the bargaining must commence no later than 30 days from the date the request is received.

If one party refuses to bargain or fails to conduct the bargaining within the prescribed time limit, the other party has the right to initiate procedures for labor dispute settlement in accordance with the law. This mechanism ensures that a bargaining request cannot be delayed or nullified due to the lack of good faith from one party.

b. Preparation for collective bargaining

In order for the bargaining to be effective, the parties must make thorough preparations. If requested by the employees’ representative organization, within 10 days from the date of receiving the request, the employer must provide information on the enterprise’s production and business operations and other matters directly related to the bargaining issues, except for business secrets and technological know‑how of the employer.

At the same time, the employees’ representative organization at the enterprise has the right to organize discussions and collect opinions from employees regarding the contents, methods, and expected outcomes of the bargaining. Such discussions must be conducted reasonably and must not affect the normal production and business operations of the enterprise.

In particular, no later than 05 working days before the bargaining session begins, the party requesting collective bargaining must notify the other party in writing of the issues expected to be discussed at the session. This is an important step to ensure adequate preparation and transparency for both sides.

c. Conducting collective bargaining

After completing the preparation stage, the parties shall enter the collective bargaining session. According to the law, the duration of the bargaining must not exceed 90 days from the starting date, unless otherwise agreed by the parties. The session shall be organized by the employer, based on the time and location mutually agreed upon by the parties.

During the bargaining process, minutes of the meeting must be taken. The minutes must clearly record the issues agreed upon by the parties, the expected time for signing the agreed contents, as well as the issues that remain controversial. The minutes must bear the signatures of the employees’ representatives, the employer, and the recorder, in order to ensure legality and transparency.

Within 15 days from the conclusion of the bargaining session, the representatives of the employees’ side must widely disseminate and make public the minutes of the collective bargaining session to all employees, and organize a vote of the employees on the agreed contents.

In case the bargaining fails, either party has the right to continue requesting bargaining or to initiate procedures for labor dispute settlement in accordance with the Labor Code.

4. Failed collective bargaining

In practice, not every bargaining process leads to an agreement. According to Article 71 of the Labor Code 2019, collective bargaining is considered failed when one of the following circumstances occurs:

a. One party refuse to bargain or does not conduct the bargaining within the time limit specified in item (a), Section 3 above.

b. The 90‑day time limit for collective bargaining has expired from the starting date without the parties reaching an agreement.

c. Before the expiration of the 90‑day time limit from the starting date, the parties jointly determine and declare that the collective bargaining has failed to reach an agreement.

In such cases, the parties must proceed to labor dispute settlement procedures in accordance with the law. It should be noted that during the dispute settlement process, the employees’ representative organization is not allowed to organize a strike, in order to avoid major disruptions to business operations.

5. Sectoral collective bargaining and multi‑enterprise collective bargaining

Beyond the enterprise level, the Labor Code also extends the mechanism of collective bargaining to the sectoral level or among multiple enterprises. The principles and contents are implemented in accordance with the principles and contents of collective bargaining as detailed in Section 1 of this article.

The procedures for conducting sectoral collective bargaining or multi‑enterprise collective bargaining shall be decided by the parties through mutual agreement, including the option of conducting collective bargaining via a collective bargaining council as provided in Section 6 of this article. Specifically:

a. In the case of sectoral collective bargaining, the bargaining representatives shall be the sectoral trade union and the sectoral employer representative organization.

b. In the case of multi‑enterprise collective bargaining, the bargaining representatives shall be determined by the parties on the basis of voluntariness and mutual agreement.

The expansion of the bargaining scope helps to improve the effectiveness of labor relations regulation on a broader scale, particularly in sectors with a high concentration of labor.

6. Multi‑enterprise collective bargaining through a collective bargaining council[5]

On the basis of consensus, the parties to multi‑enterprise collective bargaining may request the People’s Committee of the province where the enterprises participating in the bargaining are headquartered, or a province chosen by the parties in case the enterprises are headquartered in different provinces or centrally‑run cities, to establish a collective bargaining council to conduct the bargaining. The composition of the collective bargaining council includes:

a. A chairperson decided by the parties, who is responsible for coordinating the activities of the collective bargaining council and assisting the parties in the bargaining process;

b. Representatives of the parties to the collective bargaining appointed by each party. The number of representatives of each party participating in the council shall be agreed upon by the parties;

c. Representatives of the provincial People’s Committee[6].

The collective bargaining council shall conduct bargaining at the request of the parties and shall terminate its operation when a multi‑enterprise collective bargaining agreement is concluded or when termination is mutually agreed upon. This mechanism plays an important role in enhancing the effectiveness of bargaining at the multi‑enterprise level, while ensuring fair and transparent participation of all relevant parties.

Kind regards,

ENT Law LLC

[1] According to Clause 3 Article 3 of the Labor Code, representative organizations of employees include internal trade unions and internal employee organizations.

[2] Article 68 of the Labor Code

[3] Clause 1 Article 70 of the Labor Code

[4] Clause 1 Article 70 of the Labor Code

[5] The detailed provisions relating to the procedures for establishment, functions, duties, and operation of the collective bargaining council are stipulated in Chapter III of Circular No. 10/2020/TT‑BLĐTBXH dated November 12, 2020 of the Ministry of Labor, Invalids and Social Affairs, which provides detailed regulations and guidance on the implementation of certain articles of the Labor Code concerning the contents of labor contracts, collective bargaining councils, and occupations or jobs that adversely affect reproductive functions and child‑rearing.

[6] Based on Article 74 of the Labor Code, the People’s Committees of provinces have important responsibilities in supporting and promoting collective bargaining activities, specifically:

(i) Organize training and capacity‑building programs on collective bargaining skills for the parties to collective bargaining.

(ii) Develop and provide information and data on socio‑economic conditions, the labor market, and labor relations in order to support and promote collective bargaining.

(iii) On their own initiative or upon the request of both parties to collective bargaining, assist the parties in reaching agreements during the bargaining process; in the absence of a request, such proactive assistance by the provincial People’s Committee may only be carried out if agreed by the parties.

(iv) Establish a collective bargaining council when requested by the parties to multi‑enterprise collective bargaining.