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WHAT SHOULD ENTERPRISE DO TO AVOID DISPUTES UPON REDUCTION OF TET BONUS OF THE TIGER YEAR?

(Le Thi Hoa, Đoan Thai Thanh – Phuoc & Partners)
reduce the bonus

What Should Enterprise Do To Avoid Disputes Upon Reduction Of Tet Bonus Of The Tiger Year?

After a year of hard working, employees expect to receive a salary and a certain mount of “bonus” from the enterprise in the Tet holiday to cover Tet holiday’s expenses. However, this has been difficult in the last two years, especially in 2021 when Vietnam’s economy was almost completely “paralysed” by prolonged social distancing. Many enterprises was miserable to maintain minimal business operation in order to recover and they almost run out of financial resources. Therefore, it can be said that this Year of Tiger is an obsession for enterprise owners when they have to pay the last month’s salary in the year, 13th month salary, Tet bonus, etc.

What is the Tet Bonus?

According to Article 104.1 of the Labour Code 2019: “bonus means a sum of money or assets or other forms which an employer grants an employee based on production and business results [and] the level at which the employee has completed his or her work”. By this definition, it can be understood that “Tet bonus” means a sum of money, in kind or other forms, that an enterprise givse to an employee on the occasion of Tet (Lunar and/or Solar calendar) based on production and business results as well as the level of employees’ job completion. Thus, Tet bonus can be made in many forms such as money, gifts (phones, jewelry,…) or other ways (travels, meals, stocks…), and awarding Tet bonus, the form of payment and the bonus value completely depends on enterprise’s will.

Along with the Tet bonus, “13th month salary” is also often mentioned which is usually paid by enterprises with the periodic payment of the previous month of the Lunar New Year. In fact, most enterprises insist on that the 13th month salary and the Tet bonus are the same. However, it is notable that the 13th month salary is a common term in a labour relationship but it has not been governed by any legal document, so the 13th month salary cannot be considered as the bonus in accordance with the provisions of the Labour Code. The payment of the 13th month salary is an agreement between the enterprises and the employees upon the labour contract; meanwhile, the bonus is governed by the labour law.

Especically, according to Plan No.146/KH-TLD of the Vietnam General Confederation of Labour, in addition to the Tet bonus and/or 13th month salary that employees may receive, in the Lunar New Year 2022, employees who pay social insurance at enterprises will receive VND300,000 for a visit and gifts from the trade union’s financial fund[1].

The bonus payment in Lunar New Year 2022 in practice?

Due to the negative impacts of the Covid-19 pandemic in Vietnam during the second half of 2021, most enterprises’s business is stagnant. Despite re-opening for economic recovery, many enterprises are still facing difficulties in managing cost, balancing cash flow, remain the customer market share, etc. Therefore, the enterprises do not expect to have enough money to pay the Tet bonus to employees since they are still struggling to find opportunities to make business operation recovery. However, many enterprises have also “tighten their belts” to give Tet bonus to employees, but the bonus amount tends to decrease significantly compared to 2021 or replacing a bonus as in kind to reward employees on the occasion of the Year of Tiger 2022.

Employees of Gtwill Vietnam Co., Ltd. in Ninh Binh shared: On 29 April 2021, the Company has notified in writing to all employees about the reduction of Tet bonus 2022, especifically the bonus level is equal to 50% of the basic monthly salary in the labour contract. However, on 28 December 2021, the Company decided not to pay Tet bonus to employees. Therefore, more than 400 employees, simultaneously, left their jobs to against the above decision and ask the Company to implement its commitment on 29 April 2021.[2]

After the above situation, a similar incident also happened at PouChen Co., Ltd in Bien Hoa City, Dong Nai province. In particular, after receiving the notice of the bonus plan in the Year of Tiger with a lower bonus compared to 2021, on 07 January 2022, all employees collectively stopped working to claim Tet bonus as well as “relieve” the frustration because the Tet bonus is not as expected, while the employees have more workload than before.[3]

In this 4.0 technology era, information is spread at breakneck speed on social networking platforms, the strike at Gtwill and PouChen may lead to a “domino” effect leading employees in many other enterprises strike for putting pressure on enterprises upon the significant reduction or cut of the Tet bonus. Additionally, many employees will resign or unilaterally quit their jobs without prior notice due to not receiving Tet bonus, which may cause enterprises endurance because of a shortage of labour force in the recovery period after Tet.

What should enterprises do to avoid disputes arising due to reduction of Tet bonus?

Although Tet bonus is a right of enterprises to employees, it does not mean that enterprises can arbitrarily decide on it. According to prevailing regulations of law, the bonus policy will be decided by the enterprise and must be publicly announced at the workplace after consulting with the employee’s representative organisation at the grassroots level if havingthe employee’s representative organisation.[4] Therefore, when issuing bonus regulations or making changes in bonus regulations, enterprises must hold ad-hoc dialogues at the workplace to get employees’ opinions. The payment of the 13th month salary is an agreement between the enterprise and the employee, and it is not required to hold a dialogue. However, to minimise disputes arising upon implementation of the plan of reducing the Tet bonus and 13th month salary, enterprises need to organise a dialogue with the collective of employees to present the difficulties that enterprises are facing first, and should note several points as follows:

  • For enterprises not having the representative organisation of employees at the grassroots level, the enterprise is responsible to guide, support and provide favourable condition that the employees may choose their representative members to participate in dialogues or can dialogue with all employees;
  • Regarding the number of representatives of each party participating in the dialogue, the enterprise needs to have at least 03 participants in the dialogue including the legal representative which makes employees feel respected;while the number of participants in the dialogue of the employee’s side will depend on the total number of employees of the enterprise; and
  • In addition to the number of representatives participating in the dialogue above, enterprises can also invite all employees to participate in the dialogue because the adjustment of Tet bonus impacts to all employees.

Aside from reducing Tet bonus as agreed with employees after holding a dialogue at the workplace, enterprises can show efforts in ensuring that each employee receives Tet bonus by visiting and compensating employees with gifts such as rice, soft drinks, vegetables, etc. This action not only shows the goodwill of enterprises towards employees but also shows enterprises’s care, even though the value of such gifts is not large but appealing employees.

It must be admitted that the reduction of Tet bonus impact employees. Therefore, thegood implementation of the above options upon reducing the Tet bonus will create sympathy of employees and reduce legal risks. However, disputes between employees and enterprises on this issue is still potential, so enterprises should prepare legal and feasible backup plans for the case case that employees suddenly go on strike or unilaterally quit their job without prior notice, in order to avoid negative actions which may impact the image, production and business activities of enterprises.

[1] http://www.congdoan.vn/tra-cuu-van-ban/chi-tiet-2205.tld

[2] https://dantri.com.vn/lao-dong-viec-lam/400-cong-nhan-o-ninh-binh-dong-loat-nghi-viec-vi-bi-cat-thuong-tet-20211231132250761.htm

[3] https://laodong.vn/cong-doan/khong-thay-doi-tien-thuong-tet-cong-nhan-pouchen-ngung-viec-ngay-thu-3-993360.ldo

[4] Article 104.2 of the Labour Code 2019.