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New regulations for labour subleasing

Update: May, 02/2013 - 10:39

by Thu Huong

Illustrarive image.— Photo
HA NOI (VNS)— The Labour Code has been amended to recognise the practice of labour dispatch, where workers are employed by one company and sent to work in another, to come into effect starting yesterday.

While the move was to accommodate fluctuating demands in the labour market, Ngo Hoang, deputy director of the Labour Law Division at the Ministry of Labour, Invalids and Social Affairs said, enforcement was critical in regulating the process.

"This is significant because Viet Nam has never put labour subleasing in any of its legislative documents. It takes time to stabilise the market."

Labour dispatch, or subleasing, had been going on unregulated in Viet Nam for at least 10 years, according to reports, mostly popular in industrial areas especially in the south, such as HCM City, Dong Nai, Binh Duong and Can Tho provinces.

According to limited scale surveys conducted by the ministry and the International Labour Organisation in Viet Nam between 2009-11, HCM City led the country with 59 enterprises engaged in the business of subleasing workers, some of which had up to 2,000 employees.

The service fees range between 15-25 per cent of the employee's wages.

The types of jobs vary from security guards and domestic workers to interpreters, marketing and sales staff, personnel managers and electrical engineers.

Yoon Youngmo, chief technical advisor on industrial relations for ILO Viet Nam, said for many foreign enterprises this type of employment was an important part of their business practice in other countries.

"Most of these companies also have a global strategy of keeping the workers they employ directly to the minimum, relying on short-term dispatched labour during peak production periods," Youngmo said.

The amended Labour Code stipulates that the company providing the employees must pay salaries to dispatched employees equal to the level of the company receiving the employees. In addition, the company providing the employees and the user company must share responsibilities for occupational safety, health issues and compensation.

The new regulation also provides guidelines for establishing and operating labour dispatch businesses, allowing only companies with starting capital of VND2 billion ($95,200) and a VND1-billion in deposit.

Hoang said the establishment regulations were aimed at eliminating the illegal businesses who did not meet financial and facility requirements, thus protecting workers' rights.

The ILO in Viet Nam also suggested that dispatch workers were vulnerable to exploitation and a lack of social and employment security due to the nature and special characteristics of this employment pattern.

"The surveys in Viet Nam already found some real problems in labour subleasing services, including the timely payment of wage, overtime, working hours, leave, social insurance, which neither sending nor use companies want to take responsibility," Youngmo said.

The implementation decree also restricts labour subleasing to 17 occupation groups, such as interpreters, secretaries, drivers, security guards, which some believe is a "cautious" move by the Government.

Nguyen Kieu Linh, general manager at Manpower Viet Nam, part of a leading workforce service provider in the world, said the Government must continue reassessing and evaluating the market demand and making relative adjustments but the new regulation was a first step to officially regulate firms licensed to provide the service.

"The labour market and job demand keep changing," Linh said "and we recognise that the Government is taking it slow in opening up the market for this type of labour supply. The challeng is to inspect and enforce the requirements."

According to Vinh Quoc Nguyen, senior attorney-at-law at Tilleke&Gibbins, a regional law firm in Thailand and Viet Nam, the new labour subleasing regime would allow investors to overcome the difficulties that lay with long-term hiring by allowing them to accommodate for seasonal demand. — VNS

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