- Is an Employer entitled to unilaterally terminate a CLA if the Employer no longer affords to pay the Employees the employment benefits according to the CLA?
According to Article 75.2 of the Labour Code, CLA is an agreement that the parties have achieved through collective bargaining and signing in writing, in which the CLA content is encouraged to be more beneficial for the Employees than required by the Labour Code. After the effective date of the CLA, the Employer and the Employees (including the Employees who work after the effective date of the CLA) are responsible for sufficiently implementing the CLA.
Article 82 of the Labour Code allows the parties to request amendment and supplement to the CLA according to the voluntary agreement of the parties, through collective bargaining. The amendment and supplement of the CLA are conducted as bargaining and signing the CLA. However, the Labour Code and its relevant written guidelines do not allow the Employer or the Employees to unilaterally terminate the CLA in any case.
Therefore, if after signing the CLA, the Employer has no financial capacity anymore to pay for the employment benefits agreed upon by the parties in the CLA, the Employer shall not be entitled to unilaterally terminate the CLA. In this case, they may only negotiate with the representative of the labour collective to amend and supplement the signed CLA. If through the process of negotiation, the representative of the labour collective still disagrees with the Employer’s request for amendment and supplementation of the agreed employment benefit regimes, the Employer is required to continue to pay the agreed employment benefit regime to the Employees until the CLA expires in accordance with the law. Upon the CLA’s expiry, specifically within 3 months prior to its expiry, the Employer has the right to renegotiate with the labour collective to sign a new and more appropriate CLA that is not contrary to the labour law.
2. If the Employer is not entitled to unilaterally terminate the CLA but has no money to pay the employment benefits to the Employee, how is the Employer sanctioned?
The Labour Code does not directly regulate Employer’ failure to comply with the obligation already agreed in CLA, specifically, failure to pay the Employees employment benefits as committed to the Employees, how will the Employer be sanctioned. However, pursuant to Decree No. 28/2020/NĐ-CP of the Government, if the Employer has acts as follows: paying salaries behind schedule; failing to pay or failing to fully pay salaries to the Employees as agreed in the LCs; failing to pay or failing to pay fully to the Employees who have heavy, toxic and dangerous work or extremely heavy, toxic, dangerous work, the work requires trained or apprenticeship according to the law; paying salaries lower than the level prescribed in the wage scale and wage tables, failing to pay or failing to fully pay salaries for overtime working, night working and layoff in favour of the Employees in accordance with law, deducting the salary of the Employees not in accordance with the law, paying salaries in contravention of regulations when temporarily transferring their Employees to jobs outside LCs, during temporary work suspension, during strike, the Employees’ untaken annual leave days etc., the Employer may be fined for administrative violations against the said acts in accordance with Article 16.2 of Decree No. 28/2020/NĐ-CP of the Government with the administrative fine of from VND10,000,000 to VND100,000,000, depending on the number of involved Employees for violations. In essence, the items listed in the said acts may be referred to as employment benefit regimes that the Employer paid to the Employees, therefore if the Employer does not comply with the regulations on employment benefits regimes as stated in the CLA, they might also be fined for administrative violations as acts as aforesaid.
In addition, according to Article 79.3 of the Labour Code, where either party contends that the other party insufficiently conducts or violates the CLA, that party has the right to request the other party’s compliance with the CLA and the parties shall jointly consider settling it; in case of no resolution, each party will have the right to request the settlement of collective labour disputes in accordance with the Labour Code. Accordingly, if the labour collective contends that the enterprise has not fully complied with the CLA and the parties still cannot reach any agreements on a settlement, the enterprise may face the risk of encountering a collective labour dispute based on the right of the labour collective as allowed by the Labour Code.