Celergo would like for Employers doing business in Vietnam to keep in mind that, as an Employer, you may have an obligation to pay a Trade Union Fee. The Trade Union Fee is most often processed outside of payroll, by the Employer, directly to the Trade Union Authorities. That being said, many might assume that it is a payroll function that is being managed by the payroll provider. The payroll provider must be specifically engaged to manage this if they have the capability to do so. Unfortunately, the management of this fee can be easily overlooked if the payroll provider is not engaged to handle this and the Employer is not aware of this obligation.
In regards to the Trade Union Fee, please note the following:
1. The Trade Union Fee is most often paid outside of payroll by the Employer (the HR Dept. or the Trade Union Dept.). It can be managed by a payroll provider if engaged to do so.
2. It can be paid on a monthly or annual basis.
3. The Fee is a compulsory contribution of the company to the Trade Union. The law related to the Trade Union Fee took effect from January 2013. The Trade Union fee equals 2% of total SI (Social Insurance) salary of all employees per month.
4. Until now, there has not been any regulation punishment if a company does not contribute to the Trade Union. That being said, if the Labor Department were to send an inspector, they would ask for a retro Trade Union contribution from the effective date of the regulation. The Vietnam Government has just issued the decree no. 88/2015/ ND-CP regulating a penalty for the violation on Trade Union contribution. This decree has taken effective from 25th November 2015.
If you are currently not managing the payment of the Trade Union Fee, make sure your payroll provider can handle the retro and ongoing calculation and payment of the Trade Union Fees and engage them for this service.
Kira Rubiano, Sr. Partner Management Specialist – Europe/Asia Pac, provides Celergo alerts
**This article is for informational purposes only. It is not intended to constitute legal advice.