Dialogue in the workplace & democracy regulations

GV Lawyers would like to introduce our valued readers an article by Lawyer Dinh Quang Thuan and Lawyer Hoang Phuoc titled “Dialogue in the workplace & democracy regulations” posted Saigon Economic Times (No 1.641) on 26 May 2022.

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According to current law, “Dialogue in the workplace” is a must-have procedure in enterprises to build labor relationships, helping employees and employers understand and trust each other. In fact, not all businesses strictly follow this supposedly helpful procedure.

After two years of struggling with the Covid-19 epidemic and witnessing the revenue chart gradually decline without any means of reversing it, a large enterprise in province D decided to restructure its business organization to restore operational efficiency and enhance competitiveness in the market.

The competent authority reminded the enterprise to conduct the “dialogue at work” procedure on workplace-related issues only after the enterprise sent a notice to the local Department of Labor, War Invalids, and Social Affairs by regulations. Until they consult a law firm, businesses in province D still do not comprehend where they are lacking and what they must do.

So, what is “Dialogue in the workplace” that the local labor-management agency reminds businesses to do? Not only large enterprises like D, but indeed many other small and medium-sized businesses, suffer from this shortcoming.

What is the “Dialogue in the workplace”?

“Dialogue in the workplace” is a term defined for the first time in the Labor Code 2012 (“LC 2012”). Accordingly, the Dialogue in the workplace is carried out through direct exchange between employees and employers, or between representatives of the labor collective and employers, in order to share information, enhance understanding between employers and employees to build labor relationships in the workplace.

LC 2012 stipulates that the Dialogue in the workplace is conducted every 3 months, or whenever there is a request from either party. The statutory contents may be brought into dialogue on a wide range, including the employers’ production and business situations, performance of labor contracts, collective labor agreement, internal rules, regulations and other commitments and agreements in the workplace, working conditions, employees’ or labor collectives’ requirements on employers, employers’ requirements on employees and labor collectives, and other matters of interest to the two parties.

The Dialogue in the workplace has been believed to become a useful activity, facilitating exchange and understanding between employers and employees, whereby helping to strike a better balance of the interests of the two parties and avoid conflicts caused by excessive tension. However, the course of implementing LC 2012 (from May 1, 2013 until January 1, 2021 upon its expiry) did not make impressions on or mark the significant results of the Dialogue in the workplace. Perhaps that is why one of the new key points of Labor Code 2019 is the very changes related to the regulations on the activities of the Dialogue in the workplace.

Changes in the Labor Code 2019

First of all, the activities under LC 2012 on the regulation on conducting the Dialogue in the workplace every 3 months are considered too much, costly for employers and may make a dialogue informal with a lack of substance. The Labor Code 2019 (“LC 2019”) was amended by only stipulating that the Dialogue in the workplace is held periodically at least once a year.

In addition to maintaining the Dialogue in the workplace periodically and at the request of either party, LC 2019 supplemented a new regulation on the mandatory organization of the Dialogue in the workplace for the following cases: develop the regulations on assessing the extent of job completion (Article 36); downsize employees in case of any change in structure, technology or economic reasons (Article 42); develop a labor usage plan (Article 44); formulate salary scale, salary table and labor norms (Article 93); decide on bonus regulations (Article 104); promulgate internal labor regulations (Article 118); suspend the employee’s work (Article 128).

Dialogue cannot be separated from Democracy Regulations

In addition to the aforesaid dialogue contents, Decree 145/2020/ND-CP dated December 14, 2020 of the Government detailing and guiding the implementation of a number of articles of the Labor Code on working conditions and labor relationships encourages the parties to dialogue on other matters agreed upon by the parties and specified in the grassroots democracy regulations in the workplace. This is considered a new and key regulation which may change the importance of the Dialogue in the workplace fundamentally. Such change may lead employers to go through more procedures (in order to hold a dialogue in the workplace) before promulgating the regulations on assessing the extent of the job completion by employees across departments, which the company will then rely on to exercise its right to unilaterally terminate the labor contract with employees.

Similarly, the development of a labor usage plan, the retrenchment of employees in the event of a change in structure, technology or for economic reasons, and the issuance of bonus regulations will also have to go through many procedures and are more structured than before.

However, businesses will have to accept following these regulations to ensure compliance and avoid legal risks in the future; for example, if the company unilaterally terminates the labor contract with the employee because the employee regularly fails to complete the work according to the labor contract, but the company has not held the Dialogue in the workplace beforehand in order to exchange opinions with the grassroots representative organization of employees upon developing the regulations on assessing the extent of work completion, such retrenchment may be considered illegal.

The role of Democracy Regulations in conducting dialogue in the workplace

The next issue is how will the employer organize the Dialogue in the workplace, in a manner that he considers appropriate, or must comply with the law?

According to Decree 145/2020, the Dialogue in the workplace must be conducted in accordance with the Democracy Regulations promulgated by the employer himself, which must contain the following main contents: principles of the Dialogue in the workplace; number and dialogue participants of each party; number of times and time to hold an annual dialogue; how to organize a periodical dialogue, a dialogue at the request of either party or the parties, an ad-hoc dialogue; responsibilities of the parties upon participating in the dialogue; application of Article 176 of the Labor Code to the representative members of employees participating in the dialogue, but not members of the leadership of the grassroots representative organization of employees; other content (if any).

Decree 145/2020 also stipulates that upon formulating, amending and supplementing the Democracy Regulations, the employer must consult the grassroots representative organization of employees (if any) and dialogue representative group of employees (if any.) The Democracy Regulations must be publicly communicated to employees.

As such, the Democracy Regulations is the very document that defines the manner in which employers and employees carry out the Dialogue in the workplace, in the cases provided for by law and agreed  between employers and employees (if any).

Conducting the Dialogue in the workplace in the context of absence from or inconsistency with the Democracy Regulations is likely to lead to situations where employers are seen as non-compliant with the law, and may subject to certain sanctions. Therefore, companies are advised to develop and issue the Democracy Regulations as prescribed to serve as a basis for the implementation of the Dialogue in the workplace, when necessary. During the drafting process, the contents of the Democracy Regulations need to be carefully considered and studied to ensure appropriateness for the enterprise situation, avoiding the introduction of the regulations that are not suitable with reality, causing the company and employees to face obstacles upon practical application.

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