Many Chinese-invested enterprises in Vietnam still wonder: must they set up a grassroots trade union inside the company, and if there is no union yet, do they owe any payments? Under the current legal framework (as of 14 October 2026), the answer has two clear parts: setting up a trade union is voluntary — not mandatory, but the 2% trade union fund contribution is a mandatory obligation, even where the enterprise has no grassroots union.
1. No obligation to establish a union: the voluntary principle
Under Article 7 of the Trade Union Law 50/2024/QH15 (effective 1 July 2025, replacing Trade Union Law 12/2012), establishing, joining and operating a trade union proceeds from the voluntary will of employees. No provision requires an enterprise — including a Chinese-invested one — to proactively establish a grassroots trade union.
Validity note: Trade Union Law 2012 expired on 1 July 2025; any citation of the old law must be replaced by Law 50/2024 and Law 97/2025/QH15 on amendments and supplements (also effective 1 July 2025).
2. But the 2% trade union fund contribution is mandatory
The most misunderstood point in practice: an enterprise without a grassroots union must still contribute to the trade union fund. Under Article 29 of the 2024 Trade Union Law (as amended by Law 97/2025) and Decree 105/2026/ND-CP (effective 16 May 2026, replacing Decree 191/2013/ND-CP), the contribution is 2% of the salary fund used as the basis for social insurance contributions.
A practical distinction to note: this amount is paid through the higher-level union organization (the local Labor Federation), not to the social insurance agency — the two payments are completely separate.
A numbering caution: Decree 105/2026/ND-CP (trade union finance) is entirely different from Decree 105/2025/ND-CP (fire prevention and fighting) — the same number, different fields.
3. Chinese specialists working 12 months or more may join a union
Clause 2, Article 5 of the 2024 Trade Union Law extends union membership: foreign employees — including Chinese nationals — working in Vietnam for 12 months or more may join a trade union organization.
Two accompanying limits: foreign employees may not initiate the establishment of a grassroots union and may not serve as union officials — they participate as members, on equal footing with Vietnamese members.
4. Employers must not obstruct union activity
Article 170 of the Labor Code 45/2019/QH14 recognizes the right to establish, join and participate in representative employee organizations at the grassroots level; Article 175 lists acts prohibited for employers, including obstructing or creating difficulties for the establishment, joining and operation of trade unions.
In other words: the enterprise is not required to “proactively establish” a union, but it must not prevent employees from doing so.
5. Checklist for Chinese enterprises in Vietnam
- Contribute 2%: calculated on the SI-contribution salary fund, paid periodically through the local Labor Federation — even without a grassroots union;
- Facilitate when employees wish to establish a grassroots union: no obstruction, no discrimination against participants;
- Note on Chinese specialists: anyone working 12 months or more may join a union — HR departments should know this to answer employee questions correctly;
- Distinguish the two payments: trade union fund contributions (2%, paid by the employer) differ from union membership dues (paid by members under union regulations) — do not merge them in accounting.
Frequently asked questions
A 100% Chinese-owned company with 30 employees and no union — must it pay the 2% trade union fund?
Yes. The 2% contribution obligation does not depend on whether a grassroots union has been established.
Can a Chinese general director serve as chair of the grassroots union?
No. Foreign employees may not serve as union officials.
Is the trade union fund the same as social insurance?
No. They are completely separate: the union fund goes through the union organization; social insurance goes through the social insurance agency.
Can the old legal bases (Trade Union Law 2012, Decree 191/2013) still be cited?
No. Law 12/2012 expired on 1 July 2025 and Decree 191/2013 was replaced by Decree 105/2026 on 16 May 2026.
Sources
- Trade Union Law 50/2024/QH15 — effective 1 July 2025 (replacing Law 12/2012): Articles 5, 7, 29;
- Law 97/2025/QH15 — amending and supplementing the Trade Union Law, effective 1 July 2025;
- Decree 105/2026/ND-CP — effective 16 May 2026 (replacing Decree 191/2013/ND-CP): trade union finance, 2% contribution rate;
- Labor Code 45/2019/QH14: Article 170 (right of establishment), Article 175 (prohibited acts of employers).
For reference only; not legal advice. This content was prepared by AI and will undergo quality review by the AI Legal Council of FLAT Law Firm before any publication consideration; it is not the legal opinion of a licensed human lawyer. Laws and regulations may change; verify the current legal texts before applying them.
Does your Chinese enterprise need a review of its union obligations and the 2% fund? Contact FLAT Law Firm for advice.