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DRAFT
February, 2001
REFERENCE PAPER ON
WORKER’S RIGHTS IN VIETNAM
In some respects, Vietnamese workers enjoy an even
higher standard of legal protection than their American counterparts.
Encouraging more U.S. investment in Vietnam is the best way to ensure that these
rights became reality.
Vietnam is a socialist country and workers’ rights
are central to its legal system. Vietnamese
workers are entitled to a relatively high minimum wage, health care, protection
against layoffs, and generous maternity leave.
Of course, in a poor country such as Vietnam, these legal rights are
sometimes merely aspirational until such time as Vietnamese employers develop
the economic wherewithal to make them a practical reality.
In the meantime, American investors, who do have the financial capacity
to implement these rights, are held to a strict standard of compliance.
The 1992 Constitution of Vietnam gives every Vietnamese
citizen the right to work and other basic civil and economic rights.
(Articles 55, 56, 63 and 67). The
1995 Labor Code of Vietnam institutionalised these basic rights.
Specifically, under the Labor Code, every Vietnamese worker enjoys the
following basic rights:
Workers
have the right to chose their employer, and to enter into one or more labor
contracts with one or more employers (Art. 30)
The
standard work week is 8 hours a day or 48 hours/week (less 30 minutes rest
time each day) (Art. 68). Working
hours have been reduced to 40 hours/week for the State administrative sector.
Other sectors are expected eventually to follow suit.
Workers
may not be required to work more than 200 hours overtime per year or four
hours overtime in any given day. These
limits are among the lowest in South East Asia.
For overtime work, workers are entitled to be paid :
Workers
are entitled to:
Workers
are entitled to receive a minimum wage, plus statutory allowances, benefits
and bonuses. When the cost of
living rises, the Government may readjust the level of the minimum wage in
order to guarantee real wages (Art 55 & 56).
In most provinces, the local labor authorities set multipliers that
increase this minimum wage according to the worker’s seniority and skill
level, so for practical purposes almost all workers enjoy a basic wage that is
higher than the minimum.
Comparables:
US Wage Standards
The
minimum wage for employees of foreign-invested companies in Vietnam is
actually higher than the minimum wage in the US if cost of living differences
and the relative poverty levels are taken into account.
Specifically, The poverty level in Vietnam is US$180/year, so the
minimum wage at foreign-invested companies is two times above the poverty line
even before statutory bonuses, allowances and benefits.
In contrast, a worker earning the minimum wage of US$5.15/hour in the
U.S. would barely reach the poverty line of US$8,240/annum there.
Comparables:
Vietnamese Government Wages
Moreover,
the minimum wage for an employee of a foreign-invested company is more than
double the starting salary of a government official.
Specifically, the Vietnamese worker earns at least US$35/month plus
allowances and benefits for basic manufacturing in rural areas, while the
government official is entitled to only US$14/month.
At
the management level, the gap increases in favor of the employees of
foreign-invested enterprises, so that a deputy general manager with a salary
of US$500/month makes more than five times as much as a high-ranking
government official.
Workers
are entitled to a minimum annual bonus equal to one month’s pay if he/she
has worked in the business for one year or more (Art. 64).
Piece work and incentive bonuses may supplement this statutory bonus,
but they may not replace it.
In
addition to their basic salary and bonuses, workers are entitled to statutory
allowances including clothing and transportation subsidies, among others.
(Art. 77, 193 and implementing regulations).
The
social insurance regime to which the employer bears the larger part of the
burden is compulsorily applied to employers using 10 workers or more. The
social insurance regime provides compensation and/or allowances for cases
where the worker is ill, pregnant, retired, dies, is the victim of a labor
accident or work-related diseases or illnesses, meets with other hardships
(Art. 140).
Workers
are entitled to health examinations at least once a year (Art. 102).
Employers
are required to contribute an amount equal to 15% of payroll to health
insurance, to which workers contribute 5% of their salary.
Workers are issued health insurance cards and may select the health
examination and treatment facility of their choice. With the health insurance,
workers may be reimbursed up to 100% of hospitalisation fee by the health
insurance system (implementing regulations).
The
employer must bear all of the medical costs of first-aid and rescue until the
medical treatment is complete and pay full wages for the time during which the
worker is on leave for treatment for a labor accident or work-related illness.
In addition, the worker is entitled to labor accident allowances which shall
be paid by the social insurance system (Point 2, Art. 107). In case a worker
who dies or his/her working capacity is diminished by 81% or more due to a
labor accident, the employer must compensate him/her at least 30 months of
wages (Point 3, Art. 107).
Female
workers are entitled to four months’ maternity leave with full pay for their
first two children. They are also
entitled to an extra hour of rest each day for the first full year after
giving birth. (Art. 114 &
144).
Probationary
periods for employees may not exceed 2 months, and compensation during such
time may not be less than 70% of the standard salary (Art. 32).
A worker
may unilaterally terminate a labor contract without cause.
The employer may not (Art. 30 and Art. 37).
Even with cause, the employer may not terminate a worker if:
The
worker is ill or has been in a labor accident, or has a work-related disease
for which he/she is undergoing medical treatment;
The
worker is taking annual vacation, personal leave and other cases of leave
permitted by the employer; and
The
worker is taking leave because of marriage, pregnancy, maternity leave or
raising a child under 12 months of age. (Art. 39)
In
cases where the employer is allowed to terminate a worker, the worker is
entitled to severance payments equal to:
Even
when workers unilaterally terminate labor contracts, they still enjoy the
above severance pay entitlement.
The
Labor Code gives workers the rights to workplace that meets high standards of
space, ventilation, lighting, dust clean, air, and freedom from hazardous
gases, radiation, electronic fields, heat, humidity, noise, vibration and
other hazardous elements (Art. 97). In
dangerous and harmful workplaces, workers must be fully equipped with
appropriate means of labor protection (Art. 100).
The
working age is 15 and above. It
is prohibited to accept children under this age for work, except in few
occupations such as theatrical artists, craftsmen and athletes (Art. 120).
Working time of workers who are minors may not exceed seven hours in a day or
42 hours in a week (Art. 122).
Workers
have the right to establish and join the national trade union in their
company, and to elect their representative to the same, wherever there are 10
or more employees working for one employer (Art. 7.2).
Workers
have the right to strike. (Art.
7.4). There have been 39 strikes
in Vietnam in the first half of this year, 20 at foreign-invested enterprises,
four at state-owned enterprises and the remainder at private companies.
The Labor Code and its implementing regulations protect
special categories of workers such as women, minors, elderly, handicapped and
those doing work with heavy, harmful or hazardous elements.
In addition to the foregoing basic rights, workers belonging to these
groups are entitled to additional protection.
The International Labor Organization currently has some
two dozen programs in Vietnam designed to raise awareness and implementation of
workers’ rights. Other foreign
organizations including numerous NGOs are involved as well.
But, given the high standard of legal compliance American investors are
held to in Vietnam, and given the fact that foreign-invested employers typically
offer benefits such as training and subsidies above and beyond what the law
requires, the best way to ensure that Vietnamese workers actually enjoy the
rights to which they are entitled is to encourage more American investment in
Vietnam. This can be done by
supporting the Bilateral Trade Agreement and increasing the foreign commercial
presence in Vietnam.
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