1.Are Employers entitled to unilaterally terminate the CLA if they no longer afford to pay Employees benefits according to the CLA?
Pursuant to Article 73.1 of the Labor Code, a CLA is a written agreement between the labour collective and any Employer on labour conditions that the parties have achieved through collective bargaining in which the CLA contents must be more beneficial than required by the labour law. After the effective date of the CLA, Employers and Employees (including Employees who work after the effective date of the CLA) are responsible for sufficiently implementing the CLA.
At present, Article 77 of the Labor Code allows the parties to request the amendment and supplement of the CLA within 3 months after implementation of the CLA with a duration of less than 1 year and within 6 months of after implementation for the CLA with a duration from 1 year to 3 years. However, the Labor Code and its relevant written guidelines do not allow Employers or Employees to unilaterally terminate the CLA in any case.
Therefore, if after signing the CLA, Employers have no financial capacity anymore to pay for benefits agreed upon by the parties in the CLA and they must not 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, provided that the CLA has experienced 3 months of implementation (for CLA term under 1 year) and 6 months of implementation (for CLA term from 1 to 3 years) as aforesaid. 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 benefit regimes, the Employer are required to continue to pay benefit regimes for Employees until the CLA expires in accordance with the law. Upon the CLA expiry, specifically within 3 months prior to its expiry, new Employers have the right to renegotiate with the labour collective to sign a new and more appropriate CLA it should be noted that Employers are still required to ensure the CLA contents must be more beneficial to Employees than required by the current labour law.
2. If Employers are not entitled to unilaterally terminate the CLA and have no money to pay the benefits, how are they sanctioned?
The labour law does not directly regulate Employers’ failure to comply with the obligations already agreed in CLAs, namely, failure to pay Employees benefits in this case. However, pursuant to Decree No. 95/2013/ND-CP and Decree No. 88/2015/ ND-CP, if Employers commits such acts as paying salaries behind schedule, paying salaries lower than the level prescribed in the salary scales and payrolls, failing to pay or failing to fully pay salaries for overtime working, night working and layoff in favour of Employees in accordance with law, paying salaries in contravention of regulations when temporarily transferring their Employees to jobs outside LCs, during temporary work suspension, Employees’ untaken annual leave days etc., Employers may be fined from 10,000,000 to VND 100,000,000 depending on the number of involved Employees for administrative violations against the said acts in accordance with Article 13.3 of Decree No. 95/2013/ND-CP. In essence, the items listed in the said acts are considered Employees’ benefits paid by Employers. Therefore, if Employers do not comply with the regulations on benefit regimes stated in CLAs, they might also suffer legal consequences, e.g. fines as aforesaid.
In addition, under Article 84.3 of the Labor Code, where either party contends that the other party insufficiently or violates the CLA, that party has the right to request compliance with the CLA and the parties shall jointly consider settling it; in case of no resolution, each party has the right to request the settlement of collective labour disputes in accordance with the labour law. Accordingly, if the labour collective contends that enterprises have not fully complied with CLAs and the parties still cannot reach any agreement on settlement, enterprises then may face the risk of encountering a collective labour dispute based on the right of the labour collective allowed by law.