Do representative offices of foreign traders need to register labor regulations?

Representative offices of foreign traders in Vietnam are dependent units of foreign traders, established in accordance with the provisions of Vietnamese law to study the market and carry out a number of trade promotion activities permitted by Vietnamese law[1]. The establishment of a representative office of a foreign trader in Vietnam ("Representative Office").  Unlike representative offices of Vietnamese traders, representative offices are the subjects entitled to recruit and employ laborers in accordance with Vietnamese law. Therefore, it is required that the Representative Office must comply with the provisions of Vietnamese law. In which, the issue of registration and promulgation of labor regulations is a notable factor.

Internal labor regulations play a key role in internal management and minimizing the risk of disputes with employees. Do all representative offices have to register labor regulations? The following article will clarify this issue and provide necessary notes for the Representative Office in the process of developing, registering and promulgating labor regulations.

Source: The Saigon Times

1. In what cases is it mandatory to register labor regulations?

First of all, it can be understood that the internal labor regulations are legal documents issued by the Representative Office to stipulate the principles of conduct that the parties in the labor relationship are forced to comply with. This legal document also identifies violations of labor discipline, how to handle and the level of material responsibility involved. According to current regulations, internal labor regulations must be formulated and promulgated on the basis of the provisions of labor law, and at the same time must be widely disseminated to all employees to ensure validity and compliance within the Representative Office.

Pursuant to Article 2 of the Labor Code 2019, the representative office is governed by this Code, in which, the provisions on labor regulations are also applied to the representative office at. Accordingly, the representative office must issue internal labor regulations, but the written internal labor regulations are only mandatory for representative offices with 10 or more employees. The number of employees calculated in this case includes both Vietnamese workers and foreign workers at the representative office under contracts, agreements, paid salaries and subject to the management, administration and supervision of the representative office. If the representative office employs less than 10 employees, written labor regulations are not mandatory, but the contents of labor discipline and material responsibility must be specified in each labor contract signed with the employee.

Therefore, the development of internal labor regulations is a requirement[2] for representative offices according to current regulations. The format of presentation of labor regulations (in writing or stipulated in the labor contract) will depend on whether the number of employees of the Representative Office is full 10 people or more. Once an enterprise promulgates a written labor regulation, it is required to register this internal regulation at the labor management agency where the representative office is located.

2. Some notes for Representative Offices when promulgating and registering labor regulations

The development and registration of written labor regulations is not only a legal obligation but also an effective human resource management tool. Internal Labor Regulations help the Representative Office guide, manage and handle labor issues in a transparent manner, contributing to protecting the interests of both the Representative Office and employees. In order to ensure that the internal labor regulations are promulgated and implemented in accordance with regulations, the Representative Office should note some of the following contents:

Firstly, labor regulations must not be contrary to labor laws and relevant laws[3]. The representative office wishes to use the internal labor regulations prescribed similarly to the internal rules and labor regulations of foreign traders for the representative office, it is forced to make adjustments and supplements to conform to Vietnamese law before it can be registered and applied.

Secondly, the internal labor regulations must ensure all basic contents according to current regulations[4] , including (i) working hours, rest time, (ii) order at the workplace; (iii) occupational safety and hygiene; (iv) prevention and combat of sexual harassment in the workplace; order and procedures for handling acts of sexual harassment at the workplace; (v) the protection of assets and trade secrets, technological secrets, intellectual property of employers; (vi) the case of temporary transfer of the employee to work other than the labor contract; (vii) violations of labor discipline by employees and forms of handling labor discipline; (viii) material liability; (ix) persons competent to handle labor discipline.

Thirdly, before promulgating the internal labor regulations and registering, the employer must consult with the representative organization of employees at the grassroots in case the representative office has a trade union organization[5]. At the same time, the internal labor regulations must be notified to the employees and the main contents of the internal labor regulations must be publicly posted at the necessary place of the representative office[6].

For consultation of grassroots employee representative organizations for representative offices with trade union organizations, it is conducted in the following order:

1. Send a document attached with the content to be consulted and exchanged opinions to the trade union organization.
2. After obtaining the opinions of the trade union organization, they must organize a dialogue to discuss, exchange, consult and share information. All content and developments of the dialogue must be recorded in writing and signed by the parties involved.
3. Within 03 working days from the end of the dialogue, the representative office shall be responsible for announcing and publicizing at the workplace the main contents of the dialogue[7].

The internal labor regulations will take effect 15 days after the date the competent state agency under Article 119 of the Labor Code receives a complete registration dossier. In case the representative office has less than 10 employees and promulgates the internal labor regulations in the form of a document, the effective time of the internal regulations will be decided by the representative office itself, which is specified in such internal labor regulations. This is also the deadline for the Representative Office to base on the application of the contents of the internal labor regulations when handling labor discipline, issuing internal decisions on labor or using this document to resolve arising labor disputes.

Representative offices in the case of having to register internal labor regulations should be noted, internal labor regulations must be registered at specialized labor agencies under provincial-level People's Committees within 10 days from the date of promulgation of internal regulations. After receiving the dossier, if within 7 working days it is detected that the contents of the internal regulations contain provisions contrary to the law, the specialized agency will notify and guide the representative office to amend and supplement the contents for re-registration. In addition, based on specific conditions, the specialized labor agency of the provincial-level People's Committee may authorize the specialized labor agency of the district-level People's Committee to carry out the registration of internal labor regulations.

3. Legal consequences for non-compliance with regulations on labor regulations

The current law has stipulated sanctions for violations related to the promulgation and registration of labor regulations. Accordingly, the Representative Office should note that if the Internal Labor Regulations are not notified to all employees or the main contents of the Internal Regulations are not posted at necessary positions in the workplace, the Representative Office may be fined from VND 2,000,000 to VND 6,000,000. Moreover, a fine of between VND 10,000,000 and VND 20,000,000 will be applied in case the employer violates one or more of the following: failing to promulgate written labor regulations when employing 10 or more employees; failing to register labor regulations in accordance with regulations; failing to consult the grassroots employee representative organization (if any) before promulgating or amending and supplementing the internal rules; or using labor regulations that have not yet taken effect or have expired.[8].

Practice shows that, if the internal labor regulations are not promulgated and registered in accordance with regulations, the Representative Office will lack a legal basis to handle labor discipline or issue internal decisions on labor, and at the same time, it is easy to lead to great risks such as disputes arising from improper disciplinary actions in accordance with the law and not based on labor regulations. In order to properly fulfill the obligation to promulgate and register internal labor regulations, the Representative Office should proactively perform necessary tasks such as:

1. Develop internal labor regulations in accordance with the Labor Code 2019 and related legal documents.
2. Widely disseminate labor regulations to all employees at the Representative Office, ensuring that everyone understands their rights and obligations.
3. Register labor regulations with specialized labor agencies of the provincial-level People's Committee where the representative office registers its business (for units with 10 or more employees).
4. Periodically review and update the internal labor regulations to be in line with changes in the law and the practice of operation of the Representative Office.

On the basis of the analysis and notes presented, it can be seen that the formulation, promulgation and registration of labor regulations is not only a legal obligation for the representative office of a foreign trader but also a key factor in internal management and minimizing the risk of labor disputes. Although the registration of labor regulations in writing is mandatory for units with 10 or more employees, even for representative offices employing a smaller number of employees, it is important to clearly stipulate the terms of labor discipline and material responsibility in the labor contract. The Representative Office needs to proactively take steps to develop, disseminate, register and periodically review the internal labor regulations to ensure compliance with the law and create a solid foundation for the safe and compliant operation of the Representative Office in Vietnam.