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. This fee is most often processed outside of payroll by the employer direct 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 it has 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 regard to the trade union fee, please note the following:
- The trade union fee is most often paid outside of payroll by the employer (the HR department or the trade union department). It can be managed by a payroll provider if engaged to do so.
- It can be paid over a monthly or annual basis.
- This is the compulsory contribution of a company to the trade union. The law related to the trade union fee took effect in January 2013. The trade union fee equals 2% of total SI (Social Insurance) salary of all employees per month.
- Until now, there has not been any regulation on punishment if a company does not contribute to the trade union. That being said, if the Labor Department were to send an inspector, it will ask for a retroactive trade union contribution from the effective date of regulation. The Vietnam government has just issued decree No. 88/2015/ ND-CP regulating the penalty for violation on Trade Union contribution. This decree took effect on November 25, 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.