In Vietnam, labor disputes are increasingly becoming a significant challenge for businesses. According to statistics from the Ministry of Labor, Invalids and Social Affairs (MOLISA), there were 726 labor dispute cases nationwide in 2022, with 80% involving wage and benefit issues. This guide aims to provide practical strategies and legal guidance for businesses by simulating the entire labor dispute mediation process.

Part One: Preparation Before Mediation

Scenario 1: Receiving a Mediation Notice

When a company receives a notice from the Ho Chi Minh City Labor Mediation Committee informing that a recently dismissed employee has applied for mediation, claiming unfair dismissal, it needs to prepare quickly and comprehensively.

The company should immediately form a dedicated response team, including the HR manager, legal personnel, and relevant department managers. This team’s primary task is to thoroughly review the case and formulate a response strategy. The HR manager is responsible for providing the employee’s work history and performance records, legal personnel ensure the legality of the company’s actions, while department managers provide specific work performance details.

Next, the company needs to comprehensively collect all documents related to the employee, including labor contracts, performance evaluation records, disciplinary documents, daily work communication records, etc. Special attention should be paid to collecting documents that can prove the reasonableness of the dismissal, such as evidence of employee misconduct, records of multiple warnings, etc. At the same time, carefully review the entire dismissal process to ensure that every step strictly complied with Vietnamese labor law regulations.

When preparing the case statement, the company should list in detail the specific reasons and process of the dismissal. The statement should be objective and comprehensive, avoiding emotional language. At the same time, prepare some possible settlement options, setting bottom lines and ideal outcomes. These options can include economic compensation, providing recommendation letters, assisting in re-employment, and other aspects to increase negotiation flexibility.

Legal Perspective:

1.According to Article 46 of the Vietnamese Labor Code (Labor Code No. 45/2019/QH14), employers must prove they have just cause to dismiss an employee and follow legal procedures.

2.Dismissal must be based on one of the reasons listed in Article 36, such as the employee repeatedly failing to perform work duties as stipulated in the labor contract, long-term inability to work due to illness, or the company needing to lay off employees due to force majeure.

3.The company must comply with the statutory advance notice period:

• Indefinite-term contracts: 45 days’ notice
• 1-3 year fixed-term contracts: 30 days’ notice
• Contracts less than 1 year: 3 days’ notice

4.Dismissal decisions must be made in writing.

When preparing for mediation, you can contact the Ho Chi Minh City Labor Mediation Committee (Address: 67 Nguyễn Thị Minh Khai, Bến Thành, Quận 1, Thành phố Hồ Chí Minh, Phone: (+84) 28 3930 7800) for more information and guidance. Understanding the mediation procedures, possible time schedules, and specific materials needed will help the company better prepare for the upcoming mediation.

Scenario 2: Proactively Applying for Mediation

When a company plans to conduct large-scale layoffs, proactively applying for mediation can effectively prevent potential collective labor disputes. In this situation, the company needs to make comprehensive preparations.

First, develop a detailed layoff plan. This plan should include the specific reasons for the layoffs (such as economic downturn, business restructuring, etc.), detailed layoff criteria, and a comprehensive compensation plan. The compensation plan should not only consider the minimum legal standards but also consider additional benefits such as extended health insurance, providing vocational training or re-employment assistance. At the same time, the company should prepare a comprehensive financial report clearly explaining the necessity of the layoffs, which helps increase the persuasiveness of the plan.

Communication with the union is crucial. Before formally applying for mediation, the company should communicate fully with union representatives to understand the main concerns of employees. This can be achieved through a series of informal meetings. In these meetings, the company should honestly explain the reasons for the layoffs and listen to the union’s opinions and suggestions. This advance communication can help the company adjust its plans and reduce potential conflicts.

When designing the compensation plan, the company should reserve some negotiation space. Multiple options can be prepared, from basic to more generous plans, to allow for flexibility during the mediation process. At the same time, consider some innovative compensation methods, such as equity incentives or flexible work arrangements, which may be more attractive than pure cash compensation.

Hiring experienced labor law consultants is also very necessary. Professional legal advisors can help the company assess the legal risks of the plan, ensure that every step complies with legal requirements, and provide professional advice during the mediation process.

Legal Perspective:

1.According to Articles 42 and 43 of the Vietnamese Labor Code, the company must:

2.Notify the provincial labor management department and trade union 30 days in advance

3.Consult with the trade union to develop a labor use plan

4.Prioritize retaining certain categories of employees (such as pregnant women, parents with young children, etc.)

5.The company must pay the statutory minimum severance pay, which is one month’s salary for each full year of work.

It’s worth noting that according to data from the General Statistics Office of Vietnam, in the fourth quarter of 2022, 472 enterprises nationwide conducted large-scale layoffs, affecting over 80,000 employees. This indicates that layoffs due to economic downturn are a common phenomenon. Companies can refer to the practices of other enterprises but should also be careful to avoid mistakes they may have made.

When preparing mediation materials, you can contact the Vietnam General Confederation of Labor (Address: 82 Trần Hưng Đạo, Hoàn Kiếm, Hà Nội, Phone: (+84) 24 3942 1716, Website: http://www.congdoan.vn/) to obtain more information about union positions and negotiation skills. This helps the company better understand and respond to employee demands, increasing the possibility of reaching a consensus.

Part Two: Mediation Process

Scenario 3: First Mediation Meeting

At the first mediation meeting, when employee representatives make higher-than-expected compensation demands, the company needs to maintain a calm and professional attitude, avoiding emotional reactions. Carefully listen to the other party’s demands and record key points. This not only shows respect but also helps with subsequent analysis and response.

When stating the company’s position, clearly emphasize the fact that the company has followed legal procedures. Use specific examples and data to support the company’s viewpoint, which is more persuasive than abstract statements. At the same time, propose step-by-step solutions, dealing first with issues that both parties recognize. This helps establish initial consensus and trust.

If differences are too great, don’t rush to make concessions or end the meeting. Instead, suggest pausing the meeting to give both parties time to reconsider. This cooling-off period can be used to reassess strategies, seek legal advice, or prepare new proposals.

Specific Process:

1. Mediator introduces mediation rules and procedures (about 10 minutes)
2. Applicant states their demands (20-30 minutes)
3. Respondent responds (20-30 minutes)
4. Mediator summarizes the focus of the dispute, asks if both parties have anything to add (10 minutes)
5. Open discussion, seeking consensus (30-60 minutes)
6. Mediator summarizes meeting results, arranges next steps (10 minutes)

Legal Perspective: According to Article 188 of the Vietnamese Labor Code, mediation should begin within 5 working days of receiving the application. The goal of the first meeting is to clarify the focus of the dispute, not to immediately reach an agreement. Understanding this helps the company manage expectations appropriately and not rush to reach a comprehensive agreement at the first meeting.

Scenario 4: Breaking the Deadlock

When mediation reaches a deadlock, the company needs to adopt more flexible and innovative methods to break through. First, try to adopt an “interest-based” negotiation method, exploring the fundamental needs of employees in depth. This may involve aspects such as career development, job security, or personal dignity, not just monetary compensation.

Consider offering non-monetary compensation, such as extended health insurance or providing vocational training. These options may be more easily accepted while also demonstrating the company’s sincerity and long-term consideration. If possible, invite company executives to participate in the mediation process. This not only demonstrates the company’s sincerity in solving problems but may also bring new perspectives and solutions.

Financially, propose phased payment plans. This can reduce the company’s immediate financial pressure while providing long-term security for employees. In addition, consider introducing independent third-party experts, such as industry experts or senior mediators, to provide objective assessments and suggestions, which may help break the deadlock.

Legal Perspective:

1.Article 188 of the Vietnamese Labor Code stipulates that the mediation period can be extended to 5 working days.

2.If mediation fails, arbitration can be applied for to the Labor Arbitration Committee according to Article 191.

At this stage, the company can consider contacting labor relations experts from the Vietnam Chamber of Commerce and Industry (VCCI) for advice. VCCI’s contact information is: Address: 9 Dao Duy Anh, Dong Da, Hanoi, Phone: (+84) 24 3574 2022, Email: [email protected]. At the same time, consider hiring professional mediators. These professional institutions and individuals may provide valuable advice and help in breaking the deadlock.

Part Three: Post-Mediation

Scenario 5: Reaching a Mediation Agreement

When both parties finally reach an agreement on the compensation plan after difficult negotiations, the company needs to carefully handle the details of the agreement and subsequent matters. First, ensure that every clause of the mediation agreement is clear and unambiguous. This requires careful review of the wording of the agreement, avoiding any ambiguous expressions that may lead to future disputes. It is recommended to have legal advisors carefully review the content of the agreement before signing to ensure that all clauses comply with legal requirements and fully protect the company’s interests.

In the agreement, it is crucial to clearly stipulate the implementation timetable and methods. This includes not only the time and method of compensation payment but should also include execution details of other commitments, such as the specific duration of extended health insurance, specific arrangements for vocational training, etc. At the same time, consider including confidentiality clauses in the agreement to prevent similar cases from spreading, which is very important for maintaining the company’s reputation and preventing future disputes.

After reaching an agreement, arranging for company executives to meet with employee representatives to rebuild trust is also a wise move. This gesture not only helps repair damaged labor relations but can also convey positive messages that the company values employees and is willing to communicate. In the meeting, company executives can explain the considerations for reaching the agreement and express expectations for future cooperation, which helps create a more positive work atmosphere.

Legal Perspective:

1.According to Article 193 of the Vietnamese Labor Code, mediation agreements signed by both parties are legally binding.

2.The agreement should include the following elements:

• Complete information of both parties
• Specific content of the dispute
• Content of the agreement reached by both parties
• Implementation time and method
• Signatures and dates of representatives from both parties

To increase the legal effectiveness of the agreement, it is recommended to file the mediation agreement with the local labor management department. You can contact the Ho Chi Minh City Labor Management Department (Address: 159 Pasteur, Phường 6, Quận 3, Thành phố Hồ Chí Minh, Phone: (+84) 28 3829 1302) for filing. This step not only increases the formality of the agreement but also provides additional legal protection in case of future disputes.

Scenario 6: Mediation Failure

When multiple rounds of mediation fail to reach an agreement and the employee threatens to file a lawsuit, the company needs to respond calmly while preparing for possible legal procedures. The primary task is to remain calm and avoid making statements that might be seen as provocative. Even when faced with the threat of litigation, the company should reaffirm its willingness to continue dialogue. This not only shows the company’s sincerity but may also leave room for future negotiations.

It is very necessary to immediately consult with the company’s legal team to comprehensively assess litigation risks. This includes analyzing the strengths and weaknesses of the company’s legal position, the maximum possible compensation amount, the potential duration of litigation, and the potential impact on the company’s reputation. Based on this assessment, the company can decide whether to continue attempting out-of-court settlement or prepare for litigation.

At the same time, start preparing detailed case documentation in preparation for possible legal procedures. This includes collecting all relevant employee records, company policy documents, communication records, etc. These documents should be organized chronologically, and a detailed event timeline should be prepared. Additionally, identify and prepare potential witnesses, ensuring they understand the case and are ready to testify if necessary.

When considering whether it’s worth settling out of court, weigh the costs and benefits. Calculate potential litigation costs, including legal fees, management time costs, possible compensation amounts, etc., and compare them with settlement options. At the same time, consider the potential negative impact of litigation on the company’s reputation and employee morale.

Legal Perspective:

1.Article 196 of the Vietnamese Labor Code stipulates that after mediation fails, both parties have the right to file a lawsuit in court.

2.Important points to note:

• The statute of limitations for filing a lawsuit is 1 year (calculated from the date the dispute occurred)
• Labor litigation is exempt from court fees (according to Article 11 of the Law on Court Fees)

It’s worth noting that according to statistics from the Supreme People’s Court of Vietnam, in 2022, courts nationwide accepted 3,245 labor dispute cases, of which 60% were successfully resolved through pre-trial mediation. This data shows that even after entering the litigation stage, there is still a great chance to resolve disputes through mediation.

At this stage, it is recommended to consult professional labor lawyers to assess litigation risks and possible outcomes.

Conclusion

Effective labor dispute mediation not only requires an in-depth understanding of Vietnamese labor law but also flexible negotiation strategies and long-term strategic vision. By simulating various possible scenarios, enterprises can better prepare to face various challenges in actual mediation processes.

Remember, each mediation is unique and needs to be handled flexibly according to specific circumstances. Continuous learning and experience accumulation will help enterprises achieve better results in future labor disputes. Most importantly, prevention is better than mediation. Establishing healthy labor relations, sound human resource policies, and effective communication mechanisms are the best ways to reduce labor disputes.