GUIDELINES ON THE OBLIGATION TO REMIT UNION FUNDS FOR ENTERPRISES PURSUANT TO THE LAW ON TRADE UNIONS

Answer: Below is the detailed consultancy regarding the regulations on the obligation of enterprises to remit union funds pursuant to the Law on Trade Unions 2024 and current guiding documents:

1. Applicable Entities and Obligation to Contribute: 

-       The establishment of a Trade Union is carried out on a voluntary basis. However, any enterprise that employs labor has an obligation to contribute union funds, regardless of whether that enterprise has or has not established a grassroots trade union organization. (Legal Basis: clause 1 Article 7 Law on Trade Unions 2024 as amended and supplemented by Law No. 97/2025/QH15; Clause 4 Article 4 of Decree 191/2013/ND-CP (effective until May 15, 2026) and replaced by Decree 105/2026/ND-CP effective from May 16, 2026).

2. Union Fund Contribution Level: 

Enterprises are required to contribute trade union funds at a rate of 2% of the salary fund used as the basis for compulsory social insurance contributions for employees. (Legal Basis: Point b Clause 1 Article 29 of the Law on Trade Unions 2024, as amended and supplemented by Law No. 97/2025/QH15).

3. Method and Receiving Authority: 

-       Enterprises shall contribute trade union funds on a monthly basis, at the same time as making compulsory social insurance contributions.

-       The receiving authority is the provincial/municipal Labor Federation or its equivalent, which may directly collect or delegate the collection to the immediate superior trade union, and notify the contributing entities accordingly. (Legal Basis: Point a Clause 1 Article 4 of Decree 105/2026/ND-CP; Clause 2 Article 26 of Decision 1408/QD-TLD).

4. Allocation Ratio and Use of Funds:

-         In case a Grassroots Trade Union has been established: The enterprise is entitled to use 75% of the collected trade union funds at the entity and must remit the remaining 25% to the immediate superior trade union.

-       In case a Grassroots Trade Union has not been established: The enterprise shall remit the trade union funds to the competent superior trade union as assigned for collection. Such superior trade union shall allocate and use the funds to care for and protect employees at the enterprise; any unused balance at year-end shall be managed, tracked, and returned to the grassroots trade union upon its establishment. (Legal Basis: Clause 1 Article 5 of Decision 4290/QD-TLD; _Clause 4 Article 28 of Decision 1408/QD-TLD).

5. Fine Levels Based on Violations:

-         A fine ranging from 12% to less than 15% of the total payable amount shall apply to acts of late payment, underpayment, or payment at an incorrect rate.

-         A fine ranging from 18% to 20% of the total payable amount shall apply for failure to contribute for all employees subject to compulsory contribution.

-         Application Principle for Organizations: The aforementioned fine levels apply to individuals; for organizations/enterprises, the fine level shall be 02 times (not exceeding a maximum of 150,000,000 VND). (Legal Basis: point b clause 3 Article 6 Decree 12/2022/ND-CP).

-         Remedial Measures: In addition to the fine, the enterprise is compelled to fully remit the arrears of the unpaid union funds and pay the arising late remittance interest as prescribed. (Legal Basis: Clause 1 Article 6 Clauses 1, 2 and 3 Article 38 of Decree 12/2022/ND-CP)

6. Notes and Recommendations for Customers

-        Promptly Rectify Non-remittance: Where the enterprise has not contributed trade union funds to date, it should promptly fulfill such obligation to avoid the risk of doubled administrative fines (up to VND 150,000,000 for organizations) and late payment interest.

-       Consider the Establishment of a Grassroots Trade Union: Although the establishment is voluntary, once a Grassroots Trade Union is established, the enterprise shall be entitled to retain 75% of the collected union funds to be used for activities at the agency, thereby optimizing costs remitted to external entities. Notably, any accumulated union funds from previous periods (if already remitted before the establishment of the grassroots trade union) may be returned by the superior trade union upon such establishment.