With or without a Trade Union: Which option is optimal for your business

When it comes to "trade unions", many businesses often immediately think of the 2% trade union funding or the procedures that need to be carried out. However, the difference between enterprises with trade unions and enterprises without trade unions lies not only in costs or procedures. The presence or absence of a trade union also affects how businesses resolve labor disputes, protect the interests of employees and build a stable working environment. So what are the advantages and limitations between these two models? Let's find out in detail in the article below. 

1. Meaning of grassroots trade unions 

The grassroots trade union is an organization representing employees at the enterprise, has the role of protecting the legitimate rights and interests of employees, and at the same time is a bridge between employees and employers. Through dialogue, negotiation and coordination with businesses, trade unions contribute to building harmonious, stable and sustainable labor relations. 

2. Comparison of companies with and without grassroots unions  

2.1. Obligation to pay trade union dues 

Whether the enterprise has established a grassroots trade union or not, the enterprise must still pay a trade union fund equal to 2% of the salary fund as a basis for paying social insurance for employees according to the provisions of Clause 1, Article 2 of Decree 105/2026/ND-CP. In other words, the failure to establish a grassroots trade union does not give rise to or exempt the obligation to pay this 2% fund. 

2.2. Trade union funding retention benefits 

The big difference between the two models lies in the use of paid funds. For enterprises with grassroots trade unions, trade unions are entitled to a refund of 75% of the trade union funds to serve activities at the enterprise according to the provisions of Clause 1, Article 28 of Decision 1408/QD-TLD. This funding can be used to take care of life, organize welfare activities and support workers. 

On the contrary, enterprises that have not established a grassroots trade union are not entitled to this fund. All trade union funds will be paid according to regulations and enterprises do not have trade union funds to organize activities for employees. 

2.3. Comparing the pros and cons between the company with and without a union

3. For companies with 10 or more employees, should a grasssroots trade union be established or not ? 

Although  the law does not require the establishment of a grassroots trade union, for enterprises with 10 or more employees, this is an option that should be considered. Enterprises still have to pay 2% of the trade union fee with or without a trade union. When establishing a grassroots trade union, enterprises are allowed to leave 75% of the trade union budget to organize welfare activities for employees, and at the same time create a bridge in dialogue, dispute resolution and building harmonious labor relations. 

4. Misunderstandings about the establishment of grassroots trade unions 

• Given that if a trade union is not established, it does not have to pay trade union funds. This is a misconception. Enterprises that are subject to payment of trade union dues according to Point b, Clause 1, Article 29 of the Law on Trade Unions 2024 must still perform this obligation even if they have not yet established a grassroots trade union.
• Confusion between trade union funding and trade union fees. Trade union funds are paid by enterprises, while trade union dues are paid by trade union members.
• It is believed that the establishment of a trade union will increase the management burden or pose many risks for businesses. In fact, if organized and operated in accordance with regulations, grassroots trade unions also help businesses strengthen dialogue, limit labor disputes and build a stable working environment.

The choice to establish a grassroots trade union should be considered based on the operational characteristics and needs of each enterprise. If you need detailed advice, please contact Lexsol for timely support and solutions.