Labor Debt Collection

During the performance andr and termination of labor relationship, the financial obligations between the employee and the employer are not always performed to its fullest extends. From there, debts related to labor arise and directly affect the legitimate rights and interests of the parties. The collection of labor debt requires an understanding of the law and the handling process. The following article will clearly analyze the concept, common types of debts, the collection process as well as the challenges and solutions in the practice of labor debt collection in Vietnam.

1. What is labor debt?

Labor debts are obligations that have not been performed or are not fully performed between the parties to the labor relationship, mainly arising between the employer and the employee in the course of work. Specifically, labor debts arise in the following cases:

• For employers, employers may owe salaries, allowances, and benefits,… which they are obliged to pay to the employee under the labor contract, collective labor agreement, other lawful agreements and the provisions of law.
• For employees, employees may owe compensation for damage when causing damage to the employer’s property, and debts for training expenses when they have to be reimbursed,…

2. Common types of labor debt

Financial obligations between the employer and the employee arise not only during the labor contract but also upon termination of the labor contract. Common types of labor debt are classified into two main groups as follows:

Debts arising in labor relations:

• The employer owes the salary to which the employee is entitled such as probationary salary, salary under labor contract, overtime salary, night work wage.
• The employer owes bonuses, allowances and subsidies agreed upon in the labor contract, collective labor agreement or in the internal regulations of the enterprise
• The employee is responsible for compensation but has not paid compensation for damage caused by damage to tools, equipment and property of the employer.

Debts arising upon termination of labor relations:

• The employer owes amounts payable to the employee in full upon termination of the contract such as severance pay, job loss allowance, salary for unpaid working days, salary for leave days for the remaining year,…
• The employer owes compensation for damages when unilaterally terminating the contract illegally but does not want to receive the employee back.
• The employee owes compensation for damage when unlawfully terminating the labor contract.
• Employees owe money to reimburse training costs.

3. Labor debt collection process

Summarize and review labor records and debt documents to determine and prove the right to claim debt repayment: The parties need to compile all relevant documents, including labor contracts, appendices, payrolls, bonus decisions or documents proving financial obligations. The preparation of sufficient evidence is a prerequisite for protecting one’s interests as well as a basis for requesting the other party to perform the payment obligation.

Contact the debtor to request payment of the debt: The parties can actively contact the other party to formally notify the obligation to pay, clearly stating the amount, legal basis and payment term.

Conduct negotiations to agree on a debt settlement plan: Negotiation will help the parties reach an agreement on a debt payment plan such as paying in installments, deducting an amount, or extending the payment term.

Request competent agencies, organizations and individuals to settle labor disputes and enforce judgments: In case negotiations are ineffective, the parties may request competent entities to settle disputes in order to request the debtor to perform their obligations. Pursuant to Articles 187 and 191 of the Labor Code 2019, the jurisdiction to settle individual labor disputes and collective labor disputes on rights belongs to:

• Labor mediators;
• Labor Arbitration Council;
• People’s Courts.

4. Challenges and difficulties in the process of collecting labor debts

Psychological barriers on the part of employees: Employees are often afraid to confront employers, especially in cases where labor relations are still ongoing.

Difficulties in collecting and providing evidence: The absence of a written employment contract, lack of payslips, timesheets, or other confirmatory documents will make it difficult to prove and require the debtor to pay the debt.

Time and cost of pursuing the case: The time to resolve the case can be long, along with the cost such as procedural costs, legal support costs, and other related costs, can be a factor that causes many parties to abandon the pursuit of the case.

Legal obstacles and lack of understanding of labor laws: The debt collection process must be carried out in accordance with the order and procedures and comply with the law. Therefore, not fully grasping the legal regulations may affect the ability to collect debts.

5. Costs of labor debt collection

Depending on the dispute resolution method chosen by the parties and the complexity of the case, the cost of collecting labor debt may include:

• Legal support costs, including: legal consultation, drafting applications, preparing documents, participating in negotiations or representation in the proceedings. The fee is usually determined based on the nature and complexity of the case and the agreement between the lawyer and the client.
• Procedural expenses, including: first-instance fee, appellate fee (if appealed), fees and other expenses as prescribed by the civil procedure law. This is a mandatory expense for the competent authority to consider and resolve the case.
• Other expenses: Expenses for travel, accommodation in the process of settling the case, expenses for printing, copying documents, notarization, authentication and other related administrative expenses.

6. Contents to note to increase the efficiency of labor debt collection

Debt collection in labor relations often has many potential legal risks and difficulties in practice. To improve efficiency in the process of collecting labor debts, the parties should:

• Proactively and promptly resolve the case: The delay in handling debts may lead to the loss of the ability to collect or the loss of the right to sue due to the expiration of the statute of limitations.
• Keep complete records and evidence: One of the important factors for successful debt collection is to have clear and legal records and evidence. The parties need to fully archive labor contracts, payrolls, debt confirmation minutes, correspondence, and documents related to the payment process to prove payment obligations and protect legal rights when disputes arise.
• Seek assistance from experts or legal organizations: In case of complex cases or disputes, consulting lawyers, legal experts or using services from professional legal organizations will help the parties ensure legal correctness. At the same time, increase the chances of successful debt collection. In addition, this also helps to limit legal risks that may arise during debt settlement.
• Take advantage of mediation and negotiation options: Parties should consider using alternative methods such as negotiation or mediation to save costs, shorten time, and maintain or terminate labor relations in good faith.

7. Frequently asked questions related to labor debt collection

Can parties collect labor debts on their own without a lawyer?

The parties can carry out the labor debt collection on their own without the assistance of a lawyer. This usually applies to simple cases, when the parties can negotiate and mediate directly and there are no complex disputes. However, in the event of a dispute or difficulty in gathering evidence, drafting documents, or participating in proceedings, the assistance of a lawyer or legal expert will help better protect your interests and increase the likelihood of success in debt collection.

Is it mandatory to take the case to court?

Require the Court to settle is not always mandatory or the only option. Before initiating a lawsuit, the parties can use alternative dispute resolution methods such as negotiation and mediation. The selection of the appropriate solution depends on the nature of the case, the complexity of the dispute as well as the wishes of the parties involved. However, if negotiation and mediation fail, initiating a lawsuit at the Court will be a feasible option to collect labor debts.

8. Labor debt collection services in Vietnam

Currently, in Vietnam, many organizations and units support labor debt collection for both employees and employers. This service includes consulting, negotiating, drafting documents, and participating in proceedings if necessary. The use of professional services helps the parties save time, limit risks and ensure legal interests. However, service users need to choose a reputable, capable unit that operates in accordance with the law. At the same time, the service contract needs to be clear about the cost, scope of work, and responsibilities between the parties.

Above is the article “Labor debt collection in Vietnam” TNTP sends to readers. Hope the article will be useful to those who are interested in this issue.

Respect.