A dispute over overtime pay between the union and management of a footwear company had dragged on for four months. The labor mediator held three sessions, all failed. The union announced it would begin strike procedures; management wanted to take the case to court to “settle it once and for all.” The company’s lawyer proposed a third option: request the labor arbitration council to resolve the dispute. Both sides were puzzled: what is labor arbitration? Are its decisions binding? And may workers strike while arbitration is pending?
When mediation deadlocks, the law offers two main paths: labor arbitration or the courts — each with different logic, costs and consequences, especially with a strike looming.
The legal position of labor arbitration
Under Clause 2, Article 191 and Clause 2, Article 195 of the Labor Code 2019 (Law No. 45/2019/QH14), collective labor disputes — both rights-based and interest-based — must go through mediation by a labor mediator before the parties may request a labor arbitration council or take further steps. The labor arbitration council is established by decision of the provincial People’s Committee chairperson; procedures are detailed in Decree 145/2020/ND-CP.
The critical point in a strike context: once the parties have chosen the labor arbitration council, the employee representative organization may not strike while the council is handling the dispute. If the arbitration panel is never formed, issues no decision within the time limit, or the employer fails to implement its decision, the right to begin strike procedures is restored (Article 199).
Comparing labor arbitration and the courts
Speed and cost: labor arbitration is markedly faster — the panel must be formed shortly after the request and decide within statutory time limits, with simple procedures and no court fees. Court proceedings follow strict litigation rules across two levels and can take many months or years.
Effect of the decision: this is the biggest difference. An arbitration panel’s decision is not a judgment with enforcement power like a court ruling. If the employer does not voluntarily implement it, the workers’ side has two options: sue in court, or — in interest disputes — begin strike procedures under Article 199. Labor arbitration is “authoritative adjudication” that relies heavily on voluntary compliance.
Confidentiality: arbitration is private, doing less damage to long-term labor relations and corporate reputation; court trials are public by litigation principle, suiting cases that need a deterrent, enforceable judgment.
Which path when a strike is looming
For workers and unions: if the goal is fast pressure to win interest demands (higher wages, allowances), the strike path after failed mediation is usually more effective than arbitration — an arbitration decision cannot be enforced yet freezes the right to strike while pending. Arbitration suits rights disputes better (wage arrears, agreement enforcement), where the parties need a neutral third party to rule on right and wrong.
For employers: facing strike threats, proactively proposing the labor arbitration council is a lawful delaying tactic — the union may not strike while arbitration is pending. But it only makes sense with genuine willingness to honor the panel’s decision; non-implementation restores the workers’ right to strike and destroys negotiating goodwill.
Practical recommendations
Whichever path is chosen, prepare complete evidence from the mediation stage. For employers: honestly assess whether the workers’ demands have merit — settling early at the bargaining table is always cheaper than any legal route. For unions: seek legal advice before choosing strike or arbitration, as each option carries a different “price” in time and leverage.
Frequently asked questions
Does labor arbitration cost anything?
No. The labor arbitration council is a state-established institution; parties pay no court fees or arbitration fees as in commercial arbitration. This is a major advantage over court litigation.
Is an arbitration panel’s decision enforceable like a judgment?
No. It has no compulsory enforcement effect like a court judgment. If a party does not voluntarily comply, the other side must sue in court for an enforceable judgment, or (for interest disputes) begin strike procedures.
Can we request arbitration while preparing a strike?
Internal preparation is allowed, but no strike may be conducted while the arbitration council is handling the dispute. Breaching this can render the strike unlawful.
Can rights disputes (like wage arrears) be resolved by strike?
No. Article 199 permits strikes only for collective interest disputes. Rights disputes (demanding performance of commitments like wage payment or agreement enforcement) go through mediation, labor arbitration or the courts.
Choosing between arbitration and the courts is not about which is “better” but which fits your objective. FLAT Law Firm advises on collective labor dispute strategy for both employers and unions — from mediation and labor arbitration to court litigation and lawful strike procedures.
This article has been quality-reviewed by the FLAW AI Legal Council