Consulting on Trade Union contributions

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Question: Currently our Phu Tho Trade Union allows our Company to pay TU fees & member fees based on the minimum regional based salary for all TU members. The Company is paying all the TU contribution including the employee part

Please help advise the effectiveness of the regulations and how the company can minimize the cost (if possible).

Answer: According to Item 2, Article No. 26, Trade Union Law No.12/2012/QH13 dated 20 June 2012, Employer must pay 2% salary funds based to pay social insurance for employees.

- Employees who are members of Trade Union shall be responsible to pay 1% salary as stipulated in the Employment Contract (the salary not yet been deducted the amounts payable for social insurance, medical insurance, unemployment insurance of members) (Point 1.1, Item 1, Section II, Instruction No.1803/HD-TLD dated 29 November 2013 of Vietnam General Trade Union providing guidance on the contribution of trade union dues.

Generally, many enterprises state and register salary used as base for contributing social insurance for employees equivalent to minimum wages under Vietnam Law. However, from 1st January 2016, this way shall be no longer helpful as the Government stipulates that wage registered as basis for contributing social insurance shall include basic salary and allowance. Right now, several companies consider cutting down cost by utilizing fund of grass root trade union to cover benefits payable to employees (for example, paying bonus, expense for celebrating parties etc...). You should note that according to the Item 1, Article 6 of the Decision No. 270/QD-LTD dated 7th March 2014 of the General Vietnam Trade Union promulgating regulation on decentralized collection of trade union fee, grass root trade union is entitled to 65% of trade union fund, 60% of trade union member fees and 100% of other resources.



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