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TEMPORARY AGENCY WORK: A COMPARISION BETWEEN VIETNAM AND
THE NETHERLANDS
T.X.M.NGUYEN 254734
Supervisor: Dr. Nuna Zekic
Second Reader: PhD Candidate Silvia Rainone
TILBURG UNIVERSITY -2018-
MASTER THESIS ON LLM LABOUR LAW AND EMPLOYMENT RELATIONS
1
Table of Contents
ABBRAVERTION LIST
CHAPTER I. INTRODUCTION ................................................................................................ 3
1.1. Background .................................................................................................................... 3
1.2. Research questions ........................................................................................................ 5
1.3. Structure of the thesis..................................................................................................... 5
1.4. Methodology .................................................................................................................. 5
CHAPTER 2: THEORETICAL FRAMEWORK OF TAW ........................................................ 7
2.1. Globalization and its impact on the flexible labour market .......................................... 7
2.2. Overview on TAW .......................................................................................................... 9
2.2.1. Overview about the TAW in Vietnam ................................................................................... 11
2.2.2. Overview about TAW in the Netherlands ............................................................................ 13
2.3. Conclusion..................................................................................................................... 15
CHAPTER 3. VIETNAM ............................................................................................................ 17
3.1. Legal grounds ............................................................................................................... 17
3.1.1. Conditions and limitations of TAW ....................................................................................... 17
3.1.2. TAW contract ............................................................................................................................... 18
3.1.3. Rights and obligations of parties in the relationship of TAW ....................................... 18
3.1.4. Penalties and remedies for the violations ............................................................................. 20
3.2. Analysis ......................................................................................................................... 21
3.2.1. Analysis of the legal framework .............................................................................................. 21
3.2.2. The grey area of the current legal framework ..................................................................... 22
3.2.3. Enforcement of TAW ................................................................................................................. 24
3.3. Conclusion.................................................................................................................... 25
CHAPTER 4. THE NETHERLANDS ...................................................................................... 27
4.1. Legal grounds for TAW ............................................................................................... 27
4.2. Rights and obligations of parties in the relationship of TAW ..................................... 27
4.2.1. Rights and obligations of the agency .................................................................................... 27
4.2.2. ABU Collective agreement ....................................................................................................... 31
4.3. Penalties for the violations ........................................................................................... 34
4.4. Analysis ........................................................................................................................ 35
4.4.1. Analysis on the legal framework ............................................................................................. 35
4.4.2. Enforcement ................................................................................................................................. 37
4.5. Conclusion.................................................................................................................... 38
CHAPTER 5. COMPARATIVE ANALYSIS ............................................................................. 39
5.1. Analyses of similarities and differences ....................................................................... 39
5.2. Policy suggestions ........................................................................................................ 42
CHAPTER 6. CONCLUSION ................................................................................................... 45
APPENDIX
BIBLIOGRAPHY
2
ABBRAVERTION LIST
Algemene Bond Uitzendondernemingen ABU CAO
Circular No. 01/2014/TT-BLDTBXH on
guiding the Decree No. 55 and Article 54
Section 3 of the Labour Code (Circular No.
01
Circular No. 1
Decree No. 55/2013/ND-CP Decree No. 55
Developing Countries DPs
Flexible and Security Act WFIZ
Foreign Direct Investment FDI
Gross Domestic Product GDP
International Labour Organization ILO
Labour Code 2012 The Code
Ministry of Labour - Invalids and Social
Affairs
MOLISA
Multinational Companies MNCs
Nederlandse Bond van Bemiddelings en
Uitzendondermingen
NBBU CAO
Sociaal en Cultureel Planbureau
(Netherlands Institute for Social research)
SCP
Organization for Economic Co-operation
and Development
OECD
Temporary Agency Work TAW
Temporary Agency Workers TWs
Temporary Employment Agency Contract TAWC
Trade Union TU
Vietnam Dong VND
Wet Allocatie Arbeidskrachten door
Intermediairs
WAADI
Wet op de Ondernemingsraden (Work
council Act)
WOR
Working Conditions Act Arbowet
Working Hours Act ATW
3
CHAPTER I. INTRODUCTION
1.1. Background
Throughout the ups and downs of history, Vietnam has gradually realized the importance of
regulating the employment relationship. The quest for competitiveness in the context of globalization
has further broadened the adoption of a flexible labour market. In this regard, the patterns of
employment relationship are increasingly developing towards the need for a more flexible workforce.
Besides standard employment such as permanent contract, a new form of employment relationship has
appeared, which is the so-called ‘temporary agency work’ (TAW).1 Compared to the standard
employment relationship, which consists of the bilateral relationship between the workers and
employers, TAW has the feature of a triangular relationship which includes three parties. More
precisely, there are the employer (the agency), the workers or employees (TWs) and the company that
hires the workers from the agency to work for it (the client firm or the user).
As a consequence of the wars that Vietnam experienced, the economy was in crisis during the
1970s and 1980s. In 1986, to overcome the crisis and stabilize the economy, the government decided to
open the doors to the global economy and carried out the economic reform ‘Doi Moi’ period towards
the introduction of a market economy. This brought about swift changes in Vietnamese economy and
was seen as an important movement to integrate into the trend of globalization. To be more specific,
when Vietnam first opened its economic market, its labour market became more dynamic thanks to the
investors’ increasing demands for employees for short-term projects or seasonal works. To become an
attractive market for foreign investors and make Vietnam become a more competitive market
compared to other emerging markets such as China and Thailand, there comes a need for a more
dynamic and flexible labour market for both employers and employees. Accordingly, it has been argued
that TAW seems to be the best approach to meet the requirement of an active supply for the labour
market.2 It is safe to say that the presence of flexible forms of employment in Vietnamese labour
market at present is indispensable since TAW brought about multiple benefits for parties of the
employment relationship. For instance, TAW has the advantage of either being an alternative way for
workers to shift from unemployment to employment or being a stepping stone to find a permanent
job.3 Moreover, as mentioned by Yoon Youngmo, Chief Technical Advisor of Industrial relations for
ILO Vietnam, many foreign investing companies have considered TAW as an essential part of their
business practice.4 For example, TAW gives them the flexibility for periodic demands.5
For Western countries, TAW increasingly played a central role in the labour market from the
years of the 1970s. Specific legislations which contained detailed rules were introduced in the
Netherlands (1965), Germany (1972), and Belgium (1976).6 Among these countries, the Netherlands is
widely regarded as “a forerunner of the regulation of temporary agency work as well as other forms of flexible work
1 Serrano, M. (2015), ‘Regulating non-standard employment in Asian and East Asia: a comparative survey of labour
laws and union strategies’, 4th Conference of the Regulating for Decent Work Network, 8-10 July 2015, Geneva,
Switzerland, p 11. 2 Ibid. 3 Coe, N., Jones, K., & Ward, K. (2009). The business of temporary staffing: a developing research agenda, in Geographies of
Temporary Staffing Unit, Working Paper No. 12, (Manchester, University of Manchester), p 8. 4 Hoang, P. T. (2013) “New regulations for labour subleasing”, Vietnam News.
<http://www.vietnamnews.vn/society/238818/new-regulations-for-labour-subleasing.html> Accessed on 15 April
20, 2018. 5 Serrano (n 1). 6 Blanpain, R. (1993), ‘Comparative Report’ in R. Blanpain (eds), Temporary work and labour law of the European
Community and Member States (Kluwer Law and Taxation, the Netherlands).
4
that combines flexibility with a high degree of social security”.7 Indeed, the Netherlands was the first country that
integrated TAW as a form of employment in the Temporary Work Act of 1965.8 With the sharp
increase of TAW from 6 % in 1983 to over 15 % in 2000,9 the Netherlands started to have more
control on TAW by the introduction of the Allocation of Employees by Intermediaries Act10 (WAADI)
in 1998 and Flexibility and Security Act11 in 1999. Throughout the years, there have been more and
more essential improvements of the legislation in this sector. Concretely, until now, TAW has been
regulated not only through national legislation (Labour Market Intermediaries Act, Civil Code12,
Flexibility and Security Act, Work and Security Act13) but also through collective labour agreements14
(for example, the collective labour agreement for TAW between the federations of private employment
agencies and four trade unions, including FNV15, LBV16, CNV Vakmensen and De Unie, the most
established trade unions in the Netherlands). However, the Dutch regulation of TAW does not seem to
be without problems. The frequent law reforms already indicate that there is often the need to adjust
the existing regulation. Furthermore, even with a large number of legislation, practice shows that there
is still gray area in the enforcement of the law. For instance, although the Dutch Law has clearly stated
the prohibition to discriminate workers on the grounds of nationality or ethnicity,17 temporary
employment agencies do not seem reluctant to discriminate among the TWs based on their origin or
ethnicity if their customers request this.18 Thus, the working opportunities offered to Dutch TW’s with
a migration background are often less than those offered to Dutch TWs without a migration
background, even though they have the same skills.19
In short, the thesis will give a closer look at Temporary Agency Work in both the Vietnam and
Netherlands by offering comprehensive comparisons of the regulation of TAW. The starting point and
the primary focus of the thesis will be the Vietnamese TAW. The Netherlands is chosen as a sort of
model system to confront Vietnamese rules. Explanation for this is that even with the constant growth
of TAW for the past 15 years, Dutch rules seem to guarantee a sufficient control on the rights and
obligations of the users, the agency and the employees by the introduction of the flexicurity strategy.20
Indeed, the Netherlands is marked as an example of a successful combination of the flexibility and
7 Final report for the Joint Eurociett/UNI Europa Project: ‘Temporary Agency Work and Transitions in the Labour
Market’, Hamburg (2013), p 39. 8 In Dutch ‘Wet op het ter beschikking stellen van arbeidskranchten’. 9 Jacobs, A., Labour law in the Netherlands (2nd edn, Wolters Kluwer 2015) para 9. 10 In Dutch ‘Wet Allocatie Arbeidskrachten door Intermediairs’ (WAADI). 11 In Dutch ‘Wet Flexibiliteit en Zekerheid’. 12 In Dutch ‘Burgerlijk Wetboek’. 13 In Dutch ‘Wet werk en zekerheid’. 14 In Dutch ‘Collectieve arbeidsovereenkomst voor uitzendkrachten’. 15 In Dutch ‘Federatie Nederlandse Vakbeweging’. 16 In Dutch ‘Landelijke Belangen Vereniging’. 17 The General Act on Equal Treatment and the Dutch Constitution, Article 1 states that everyone in the
Netherlands, regardless of origin, must have an equal chance at getting a job. 18 Pieters, J., ‘Temp agencies happy to discriminate on clients’ behalf: report’, nltimes.nl, January 30, 2018
<https://nltimes.nl/2018/01/30/temp-agencies-happy-discriminate-clients-behalf-report> Accessed on 12 May
2018. 19 Andriessen, I., Fernee, H, and Wittebrood, K., (2014), ‘Perceived discrimination in The Netherlands’, The
Netherlands Institute for Social Research, The Hague, p 19. 20 Hartmann, T., ‘Temporary Agency Work in Germany and the Netherlands’ (Master thesis, Tilburg University
2012), p 1.
5
security of TAW and as one of the most experienced countries in this sector.21 In consideration of the
fact that Vietnam is drafting its revised Labour Code, the analysis of Dutch rules can help assessing
what could be, for Vietnam, effective mechanisms to regulate TAW.
1.2. Research questions
The thesis aims to answer the following research question:
‘In light to the comparison with the Dutch system, to what extent can Vietnam enhance the current legal regulation
of TAW?’
To answer this research question, the thesis needs to touch upon the following questions:
1) What role can TAW play in the economy in a globalised world?
2) How is TAW developed in the Dutch and Vietnamese labour market?
3) How is TAW currently regulated in the legal framework of the Netherlands and Vietnam?
4) What are the similarities and differences between the legal frameworks of the two countries?
5) What lessons can Vietnamese policy makers learn from the Netherlands to improve the
current legal framework on TAW?
1.3. Structure of the thesis
This paper consists of six chapters:
After the introduction, the second chapter will provide a theoretical framework of TAW. The
third and the fourth chapter will be organised in the same way – a brief overview of Vietnamese and
Dutch legislation on TAW, including the grounds, rights and obligations, as well as the penalties for the
violations. The fifth chapter will compare the provided aspects of TAW in the Netherlands and
Vietnam. Finally, in the sixth chapter, a general conclusion is drawn and commented upon in the form
of recommendations for Vietnam.
1.4. Methodology
This thesis is based on literature analysis and builds on the available primary and secondary
resources.
Primary sources (legislation) were used mainly when addressing issues in Vietnam, as this is the
author’s mother tongue and the author can provide for the translation into English. Meanwhile, in the
case of the Netherlands, only the secondary sources will be used (for example, the translated texts in
English) given the fact that they are published in its original language; and only few academic articles
are available in English. However, these sources will be approved and verified by professors who have
academic knowledge on the Dutch Labour law.
Secondary resources were used the most, given the fact that they extensively address the societal
and the legal context of TAW. Monographs of the Netherlands and Vietnam in the International
Encyclopaedia for Labour Law and Industrial Relations were used when describing various aspects of
the TAW. Furthermore, academic articles and books were used when examining the development and
up-to-date practices of TAW in both Vietnam and the Netherlands.
Additional resources, such as various Eurofound publications and European Commission
documents or academic theses, have also been consulted, as they have provided up-to-date data and
information about both the legal and non-legal parts of this thesis. Furthermore, to draw more
comprehensive conclusions, the Organization for Economic Co-operation and Development (OECD)
21 Pedersen, S. H., Hansen, B. C., Mahler, S. (2007), ‘Temporary agency work in the European Union’, European
Foundation for the Improvement of Living and Working Conditions (Eurofound), p 17.
6
scale on Employment Outlook and International Labour Organization (ILO) reports or conventions
on TAW were also used.
7
CHAPTER 2: THEORETICAL FRAMEWORK OF TAW
2.1. Globalization and its impact on the flexible labour market
Thanks to the globalization, modern societies have witnessed many changes during the last two
decades such as the internationalization of markets, increasing economic competition or the rising
importance of markets and their international interdependence.22 One of the most important features
of globalization is the globalization of the economy (and therefore markets). More precisely, a global
economy is characterised by the trend towards an open and liberal market, where free trades happen
with less regulatory barriers at the national levels and competition between companies is constantly
increasing.23 In both developing and developed countries, the current trend of economic globalization
has been accompanied by growing concern about its influence on the national labour markets,
especially in terms of employment policies.24
To be more specific, economic globalization has opened the door for the pouring of the Foreign
Direct Investment (FDI) into developing countries (DPs). Indeed, economic globalization gives profit-
seeking companies the chance to relocate their business in countries with cheaper labour cost.
Gradually, DPs have recorded the benefits brought about by FDI. For instance, by the transfer of
technology and innovation from the developed countries, DPs are able to access advanced technology
at the low cost or reduce the rate of unemployment by creating more work opportunities. As a result,
FDI is considered as one of important sources for economic development, income growth and
employment of the emerging markets.25 Thus, most of developing countries have liberalised their
labour market in order to become an attractive destination for foreign investors.26 One example that
shows the attempt of the government in liberalizing the market is the adjustment of national
regulations such as the lifting of barriers concerning non-standard forms of employment or favourable
tax rates for MNCs.27 This is with the aim to create a market with flexible workforce that enables
MNCs to easily adjust their workforce to adapt to the fluctuation of the economic. For developed
countries, before the process of economic integration, local companies generally had business
relationship only with the local partners. Moreover, the international trades were limited due to the
tariff barriers and unharmonized state legislation.28 Thanks to globalization, MNCs have derived many
benefits from the integration of the economy (for example, the creation of a single market within the
European). For instance, MNCs can now easily establish their business in the country whose legal
system offers comparatively more convenient conditions. However, they also suffer the increased
competition between global companies, which are also searching for comparative advantages on their
22 Mills, M & Blossfeld, H. P., ‘Globalization, Uncertainty and the Early Life Course: A Theoretical Framework’, in
Blossfeld, H. P., Klijzing, E., Mills, M. and Kurz, K. (eds), Globalization, Uncertainty and Youth in Society (Routledge Advances
in Sociology 2005). 23 Schmidt, D. J., ‘Flexicurity, Casualization and Information of Global labour markets’, in Ghosh, N.B, and Guven,
M.H (ed), The globalization and the third word: a study of negative consequences (Palgrave Macmillan 2006). 24 Näätänen, A., ‘The Impact of Economic Globalization on the Employment Policies’, in Western Democracies from
1985 to 2010: Limited Change or Radical Shift towards Workfare? (Soc. Sci. 2015). 25 Arbatli, E. (2011), ‘IMF Working Paper: Economic Policies and FDI Inflows to Emerging Market Economies’,
International Monetary Fund, p 3. 26 OECD (2008), ‘Tax effects on Foreign Direct Investment’, Policy brief, p 1. 27 Sebastian, J. (2009), ‘Tax and non-tax incentives and investments: Evidence and policy implications’, Foreign
Investment Advisory Service, p 6. 28 Surugiu, M. R., and Surugiu, C. (2015), ‘International Trade, Globalization and Economic Interdependence
between European Countries: Implications for Businesses and Marketing Framework’, Procedia Economics and Finance,
Vol. 32, p 132.
8
competitors. This has led to an increased pressure for more dynamic markets to meet the challenges of
globalized trade (for example, reducing the cost of recruitment process by the use of TWs). 29
Putting aside many positive outcomes that a flexible market may bring about, it should be noted
that a flexible market also results in deregulatory labour policies. Deregulation of labour legislation can
be described as the attempt to reach a more flexible labour market through the lowering of the worker
protection and the weakening of trade unions.30 More precisely, with the high pressures of profit-
seeking, firms have tried to reduce the cost of production. To meet this demand, the employers have
advocated for a ‘lighter’ employment framework in terms of hours of work and wages. Together with
the fear of high rate unemployment during the economic downturn, governments have, in different
degrees, complied to these demands. Deregulation, especially in DPs, has created a problem of “race to
bottom”, which means that countries compete for mobile capital by lowering regulatory standards.31
Consequently, though the rate of employment has increased thanks to the job-creating functions of
non-standard employment,32 the protections for workers have also been lower. For instance, in the
Netherlands, it is usually easier to dismiss a temporary worker in phase A than a normal employee since
the former requires no legal grounds. In short, the deregulation of the labour policies is, on the one
hand, functional to enhance the flexibility of the market with the rise of the temporary jobs, and on the
other hand, is accompanied with the decrease in the protection of the workers.
To conclude, globalization has lifted up the national borders, created free trade and enhanced
economic integration.33 Economic globalization – as an aspect of globalization - is considered as the
main driving force for the appearance of the flexible market worldwide. For emerging markets,
globalization allows MNCs to find different locations for investments by pouring the FDI. With the
benefits that FDI brings to the economic development, DPs are making efforts to attract more and
more FDI. Since having a flexible market is one of important factors that attract FDI, policy makers in
DPs have made significant changes to allow a smooth transition from the traditional market which was
characterised by rather rigid labour rules, to a flexible one with more flexible labour rules. For the
emerged market, the globalization has lifted the national barriers and led to increased competitions
between MNCs. The competitions in which MNCs are required to minimize the labour costs and
maximize the profit gaining are one of the factors that introduced the flexibilization of the labour
market. However, globalization has also brought about the deregulation of the labour policies, in which
the protection for non-standard workers are usually lower than that of normal employees.
29 Hoekstra, K., Euwals, R., Arsova, A., and Berkhout, E. (2016), ‘Flexible employment in an international
perspective: An empirical analysis and some country-specific case studies’, CPB Netherlands Bureau for Economic Policy
Analysis, p 11. 30 Schmidt (n 23). 31 Langille, A. B., ‘Labour Standard in the globalized economy and the free trade/ fair trade debate’, in Sengenberger,
W. and Campbell, D. (eds), International labour standards and economic interdependence (ILO 1994), p 336. 32 Voss, G. H., Deregulation and Labour Law in the Netherlands, in Roger, B., Bulletin of Comparative Labour Relations:
Deregulation and Labour Law (Kluwer 2000). 33 Hak, M. G. A. (2015), ‘Multidimensional character of globalisation’, Organizacjai Zarzadzanie, Vol. 59, p 69 – 70.
9
2.2. Overview on TAW
To begin with, TAW is a triangular employment relationship that involves a business relationship
between the agency and the client firms (user firms), an employment relationship between employee
and the agency, and a commercial relationship between the employees and the client firms.34 (Figure 1)
Figure 1. Triangular employment relationship of temporary agency employment (Source:
Håkansson 2015)
The temporary agency workers are workers who work under the labour contract with the
temporary work agency, but they are placed at the disposal of the client firm, which has the right to
manage TWs. The temporary work agency is the employer of the temporary agency workers and has
the function to dispatch them to the client organization. Client firm is the customer of the temporary
work agency who indeed provides them with TWs. There is no employment contract between the
client firm and the employees. However, the client firm is often bound by specific responsibilities
stated in the business contract between the client firm and the agency such as working conditions,
health and safety or payment of wage.
Over the past decades, together with the global trend, the growing acceptance of neoliberal
thinking and practices of free market have led to important changes in the labour market. Though
TAW is currently seen as a global trend, it should be noted that, TAW was historically outlawed during
the 1950s, partially or completely in many nations.35 In this period, there was a concern that work was
used as a commodity, whether basically borrowed or sold, and therefore, violated human rights and the
standards established by ILO.36 In particular, when the agency put the worker at the disposal of the
client firm, this was considered to be in violation of the ILO’s Convention No. 96 on Fee-charging
employment agencies in 1949, since the Convention prohibited the operation of private fee-charging
employment agencies in the labour market.37 This rule was supported not only by ILO but also by the
European Court of Justice in its judgment Manpower.38 Though having the legal barriers, several
34 Håkansson, K. and Isidorsson, T. (2015), ‘Temporary Agency Workers—Precarious Workers?’, Nordic Journal of
Working Life Studies, Vol. 15(4), p 3. 35 Blanpain, R., ‘Introductory Remarks’, in Blanpain, R. and Graham, R. (eds), Temporary agency work and the information
society (Kluwer Law International 2004). 36 ILO's Declaration of Philadelphia of 1944. 37 Article 1, Convention No. 96. 38 C-35/70 - Manpower v Caisse primaire d'assurance maladie de Strasbourg. Judgment of the Court of 17 December
1970. The case is about a French temporary worker – Mr Francis Fehlmann, working for a French company – Manpower
whose object was to hire out labour to meet the temporary requirements of other undertakings for qualified personnel.
Manpower sent Mr Francis to perform for a site of a German user. On the same day Mr Fehlmann suffered an accident
while working on the site. The judge decided that Mr Francis Fehlmann was considered to be an employee of the
10
countries became aware of the difference between the replacement of workers for a defined period and
the selling of labour workforce, which was prohibited by the Convention.39 As a result, the number of
countries that support TAW grew noticeably in the 1990s - a period that was considered as the
breakout of globalisation. Gradually, this period witnessed an increasing legitimacy of TAW across
Europe in the 1970s.40 Together with the global economic and international competitions, TAW played
an important part in improving the functioning of the labour market.41 The demand of a more flexible
market played the main driving force for the lifting of ban on TAW by the ILO Convention No. 181 in
1997. The Convention was the result of ILO’s awareness about the importance of the flexible market
and the effective role that TAW may bring to the flexibilisation of the labour markets. This was
explicitly stated in the Preamble of the Convention that ‘[…] private employment agencies may play in a well-
functioning labour market […]’. Since then, many countries have witnessed a boom of the TWs. For
example, the TAW growth rate from 1997 to 2002 was 72% in Austria and 164% in Sweden.42
As mentioned, TAW can bring advantages to both the employers and the employees. For the
employees, TAW can be the stepping stone for their future career. This can either be because of the
working experiences that they gain from the TAW, or the opportunities of having a position in the
client firm while they work as TWs. Additionally, in some cases, TAW plays the role of an effective
channel to link the job-seekers and the employers quicker than the job-seekers themselves. Moreover,
for some people, especially those who have family responsibilities (for example: housewives), TAW
gives an additional income by guaranteeing flexible working times when they still have time to take care
of their family. For the employers, TAW is the main method for maximising the profits by adjusting the
workforce in a flexible way. For example, TWs can be a solution in case of temporary replacement for
sick leave or maternity leave; or as a supplement of worker in the upturn of economy and reduction in
the downturn period. The generally more common use of TAW is also related to the cost of using
TWs, especially in case of dismissal: unlike the dismissal of permanent workers, which is bound by the
respect of various conditions and is time-consuming, the reduction of TWs is faster and is generally
cheaper, in terms of compensation to the worker (table 1).
Reasons for engaging agency workers %
Provide
employees
for regular
jobs
to convert to permanent posts 11 15
because they are cheaper 1
other reasons 3
Provide specialised skills 5
Help
absorb
fluctuations
replacements 27 81
seasonal fluctuations 23
unexpected peaks 21
economic cycle 10
Table 1. Reasons of European work organisations for hiring agency workers (Source: CIETT
(2000), Orchestrating the Evolution of Private Employment Agencies towards a Stronger Society)
Manpower, with the result that go in line with Directive No.1408/71 of 1971, French social security contributions were to
be paid in France, since the temporary worker was engaged for a task of less than 12 months. 39 Sartori, A. (2016), ‘Temporary agency work in Europe degree of convergence following directive 2008/104/EU’,
European Labour Law Journal, (7) 1, p 110. 40 Schmidt (n 23). 41 Ibid. 42 Appendix 1.
11
To summarise, TAW’s development has departed from the prohibition that characterised its
origin. In each country, there are specific factors that influence the distribution of TAW. The following
sections will respectively present the general views on the driving forces for the use of TAW in the
labour market of Vietnam and The Netherlands.
2.2.1. Overview about the TAW in Vietnam
Practice has showed that there are two main reasons contributing to the increase of TAW in
Vietnam: the rate of unemployment and the attraction of the FDI.
First is the high rate of unemployment. Report showed that there was a high rate of
unemployment before the regulation of TAW in the labour code. This rate was then decreased from
3% in 2010 to 1.9% in 2012.43 One possible explanation for this is the increase of the job opportunities.
To be more specific, the groups of workers with low skills, low education background or lack of
working experiences usually face more difficulties in getting a job. Specifically, according to the
Institute of Labour Science and Social Affairs (ILSSA), the rate of unemployment is the highest in the
group of workers who do not finish their studies at the secondary level.44 Since TAW can create jobs
without the high skill requirements or work experiences, it can provide a hand in reducing the rate of
unemployment in this group. Furthermore, by taking short-term jobs, new graduates or low-skilled
workers can gain more experiences to improve their employability towards their future careers.
Normally, they are known as young professional45. Moreover, the problem of unemployment has also
pushed job-seekers to approach temporary agencies for helping in finding a job, as temporary agencies
have proven to be quite effective in matching offers and demands quite quicker and efficiently.46
Consequently, they are seen as a good channel to connect the job-seekers and job-providers in the
labour market.
Second, since Vietnam opened its economy to the world, it has witnessed a rapid acceleration in
the rate of FDI. Explanations for this are the cheap labour and the young workforce, as more than 60
million people are under the age of 35.47 Thanks to those advantages, Vietnam has been hailed as one
of the new ‘workshops of the world’, which ranks as one of the most attractive destinations for foreign
investors in South East Asia. Additionally, the FDI has brought about millions of occupations and has
boosted the economy’s growth in recent years. In the past decades, the foreign investment has
constituted approximately 70% of the country’s export, which is equivalent to 22% of Gross Domestic
Product (GDP).48 Since the FDI is seen as a source of pushing the economic development, the
Vietnamese policy makers have designed the labour regulations in order to make it more flexible by
diversifying the labour market’s employment relationship such as the introduction of TAW or domestic
worker.49 This is with the aim to bring about a more flexible workforce that enables MNCs to react
43 Appendix 2. 44 Vietnamnet, ‘Labour exports: concern about Vietnam’s human resources’, vov.vn
<http://english.vov.vn/society/labor-exports-concern-about-vietnams-human-resources-360622.vov> Accessed on
14 May 2018. 45 Young professionals are freshly employed in the temporary agency work industry to acquire (first) professional
experience. They are young, urban and highly qualified. Before temporary agency work, most of them were students.
(Sources: Final report for the Joint Eurociett / UNI Europa Project on Temporary Agency Work and Transitions in the Labour Market) 46 Coe, N., Jones, K., & Ward, K. (2009), The business of temporary staffing: a developing research agenda, in Geographies of
Temporary Staffing Unit, Working Paper No. 12, (Manchester, University of Manchester), p 8. 47 PWC Vietnam (2017), ‘Doing Business in Viet Nam: A reference guide for entering the Viet Nam market’ APEC
CCO Submit Vietnam 2017, 6th edition. 48 Ibid. 49 See n 46.
12
quickly to the economic fluctuation. According to the ILO, TAW is rather relevant when looking at the
employment practices of many MNCs in Vietnam.50 To begin, TAW enables MNCs to easily adjust the
size of workforce for a quicker react to the constant change of the labour market. Usually, TWs are the
first persons that will be used in the upturn of the business to face the increase in demand. Conversely,
when it comes to the business downturns, MNCs first dismiss TWs before permanent workers.51
Indeed, the 2012 Labour Code strictly regulated the processes of dismissal and the legal consequences
of unfair dismissal for the permanent workers. For example, when the employers want to dismiss
workers, they must rely on reasonable grounds and respect a notice period. Meanwhile, for the TWs,
the client firm can terminate the contract before the time stated in the contract52 and they do not need
to follow the labour law rules that apply to standard workers. This way, TAW helps to avoid the cost of
dismissing permanent workers when MNCs finish their projects. Additionally, the use of TAW gives
way for MNCs to get away with the risks that employers may suffer. In the Labour Code, the
obligations of the employer are correlated by severe punishments that apply in cases of violation,
especially in terms of dismissal.53 For instance, the Criminal Code 2015 states that the employer may be
held with either criminal responsibility or administration fine in case of illegal dismissal.54 Thus, by the
transfer of the legal responsibilities, MNCs can avoid the legal risks of being an ‘employer’. The client
firm also does not have the responsibility to pay the employees unemployment benefit or health
insurance. Due to these reasons, TWs are usually favoured by most of the MNCs in Vietnam.55
Furthermore, the employment agency may perform a role as the client firm’s human resources
department.56 Indeed, it should be noted that the main objective of MNCs when investing in other
countries is to maximise their benefits and minimise the costs. Since hiring and recruitment is not the
core task, TAW allows MNCs to get away from the involvement of the non-core competencies and
focus on the market strategy. In some cases, hiring TAW can be a relatively cheaper and more effective
way to search for potentially permanent employees. Normally, the agency can provide MNCs with
workers having sufficient skills that fit the MNCs’ production. In addition, all the steps of the
recruitment such as advertising, selecting and interviewing are passed on to the employment agency.
Not only does this save the MNCs cost and time in relation to recruitment, but also is an effective way
to scan potential workers.
50 ILO, ‘Luật hóa cho thuê lại lao động mở ra cơ hội mới nhưng cũng là con dao hai lưỡi’ (Legalize Temporary
Agency Work opens up new opportunities but also is a double-edged sword) ILO
<http://www.ilo.org/hanoi/Informationresources/Publicinformation/comments-and-
analysis/WCMS_229128/lang--en/index.htm> Accessed on 13 May 2018 51 Jahn, E. J., and Bentzen, J. (2010), ‘What drives the Demand for Temporary Agency Work?”, Institute for the
Study of Labour, No. 5333, p 3. 52 Article 126 of the Labour Code. 53 Chapter 3 and Chapter 8 of the Labour Code. 54 Article 162 of the Criminal Code 2015 (amended in 2017) states:
1. A person who commits any of the following acts and causes serious consequences shall be liable to a fine of from VND 10,000,000 to
VND 100,000,000 or face a penalty of up to 01 year's community sentence or 03 – 12 months' imprisonment (a) issuing illegal decisions on
dismissal of an official; (b) laying off a worker against the law; or (c) forcing or threatening an official or worker to resign.
2. This offence committed in any of the following circumstances carries a fine of from VND 100,000,000 to VND 200,000,000 or a
penalty of 01 - 03 years' imprisonment (a) the offence is committed against more than one person; (b) the offence is committed against a women
whose pregnancy is known by the offender; (c) the offence is committed against a woman raising a child under 12 months of age; (d) the offence
results in the suicide of the person who is illegally laid off or forced to resign, or e) the offence results in other very serious consequences or extremely
serious consequences. 55 See n 46. 56 Forde, C., and Slater, G. (2016), ‘Temporary agency work: evolution, regulation and implication for performance’,
Journal of Organizational Effectiveness: People and Performance, Vol 3 (3), p 7.
13
In short, the development of TAW in Vietnam can be explained from the demand and supply
sides. The demand side comes from both the government and the MNCs. For the latter, when foreign
investors relocate their business in Vietnam, there is a need for a more flexible workforce that meets
the fluctuation of the economy. At the same time, the government recognises the benefits that FDI can
bring to the economy and therefore, it paves a way for the development of TAW. Indeed, the use of
TAW has brought about many comparative advantages. First, it offers the client firm the flexibility of
adjusting the workforce through the ups and downs of the economy. Second, by using TAW, the client
firm can get away from the responsibility of an employer. Third, the agency can play the role of a
Human Resources department for scanning of suitable workers with lower cost comparing with
traditional recruitment procedures. Thus, these comparative advantages lead to TAW is being favoured
by MNCs when they invest in Vietnam. For the supply side, affected by a high rate of unemployment,
TAW plays a role in the creation of job opportunities, especially for new graduates and low-skilled
workers.
2.2.2. Overview about TAW in the Netherlands
The growth of TAW in the Netherlands first came as a result of a change in perspective of both
the trade union (TU) and the Dutch government.
In the past, profit-making agencies providing employment services were prohibited under the Job
Placement Act in 1930.57 However, the Act was reported to leave various aspects of the functioning of
temporary agency in a grey-unregulated area. By taking advantage of the gaps in legislation, TAW was
able to avoid tax payment, safety and health regulations as well as the payment of proper wages for
TWs.58 This made TWs a vulnerable group with bad employment protection. For this reason, TU was
not in favour of TAW and saw this type of employment as a trade of illegal black-market labour, which
was treated as a commodity. 59 It was not until the employment crisis in the 1970s that the TU changed
this view under the pressure of the high rate of unemployment. 60 At the same time, the government
had to find solutions for the unemployment rate as quick as possible to deal with the declining social
policy budget. Furthermore, the efficiency and usefulness of Public Employment Services was criticised
because it also operated by using the agency formula to solve the problem of unemployment.61 With
the mentioned comparative advantages with respect to traditional employment, TAW was used as a way
to create more job opportunities. Thus, the Wassennaar agreement proposed by the social partners in
1982 showed a shift in the attitude towards TAW of both the TU and the government. A view of a
labour market where more flexibility in the employment relationship can go hand in hand with the
sufficient protection for employees in the flexible jobs was widely accepted. Since the liberalisation of
the labour market in 1982, the Netherlands has witnessed a gradual decrease in the unemployment
rate.62 One of the main contributions to the reduction of the unemployment rate was the growing
number of jobs.63 The job growth in the Netherlands was reported to come from the growth of part
57 Pot, F., Koene, B, and Paauwe, J. (2001), ‘Contingent employment in the Netherlands’, Erasmus research institute
of Management Report series research in management, p 4. 58 Liemt, V. G. (2013), ‘Sector working paper: Private employment agencies in the Netherlands, Spain and Sweden’,
International Labour Organization’s sectoral activities department, (290), Geneva, p 11. 59 See n 49. 60 Koene, B., Paauwe, J., and Groenewegen, J. (2004), Understanding the development of temporary agency work in
Europe, Erasmus research institute of Management Report series research in management, p 14. 61 Malyar, T., Directive 2008/104/EC on Temporary agency work: the implementation of this Directive in the
Netherlands and Germany (Master thesis, Tilburg University 2010) p 19. 62 Appendix 3. 63 See n 46.
14
time and contingent jobs, which provided for 57% and 28% of the total job growth, respectively.64
Since the TAW accounted for 64% of the growth in the total rate of non-standard employment, TAW
was considered to play an important role in the creation of jobs in that period.65 This role of TAW was
again confirmed by the proportion of around 33% of unemployed persons returning to work through
temporary agency work in 2011.66
The introduction of TAW also finds its origin in other factors. First, the growing international
competitions together with the economic fluctuation have called for the demand of a more dynamic
labour market. Global competition has pushed the companies to find solutions for the reduction on the
cost of labour workforce. As a result, TAW has become more and more important than ever thanks to
its nature of flexibility. Indeed, it was able to help employers quickly react to the economic changes by
many comparative advantages, as it provides benefits such as the risk avoidance of being an employer,67
and cost-saving of recruitment68. Second, the introduction of TAW has led to changes in the
distribution of the workforce. Specifically, research concluded that more students have participated in
the labour market.69 In the period from 1991 to 1999, the age distribution of TWs had the highest rate
of average of 50% in the age of 15 years old to 24 years old. In 2011, this rate was 47%.70 In addition,
gaining more work experiences in combination with studies also accounts for the second and third
highest motivations for taking up TAW, which was 18% and 15%, respectively, in the Netherlands
according to the research by Ecorys. 71 These trends reflect the role of TAW in providing job
opportunities for young workers. The summary of the motives of TWs in the Netherlands is then
presented as the following72. (Table 2)
64 Ibid. 65 Appendix 4. 66 IDEA Consult (2015), ‘How temporary agency work compares with other forms of work’, Final report on the
demand of Eurociett and Uni Europa, Project No. VS/2013/0389, p 100. 67 Voss, G. H., Deregulation and Labour Law in The Netherlands, in Roger, B., Bulletin of Comparative Labour Relations:
Deregulation and Labour Law (Kluwer 2000). 68 See Section 2.2.1. 69 Voss, E., Vitols, K., Farvaque, N., and others (2013), ‘Temporary agency work and transition in the Labour
Market’, Final Report for the Joint Eurociett / UNI Europa Project, p 45. 70 Ibid. 71 Ecorys, (2009), ‘Agency workers on the move: The composition of the agency worker population in good times
and bad’, p 10. 72 Ibid.
15
Table 2. Motivations for the TAW (Sources: Ecorys, 2009)
To summarise, the development of TAW in the Netherlands is characterised by the shift in
attitude of the social partners, the demands of flexible market from the employers, and the changes in
the composition of the workforce. The high rate of unemployment in the 1970s raised a need for the
government to tackle the problem as quick as possible. Furthermore, from the TU’s side, instead of
opposing TAW, they tried to find a way to balance the flexibility of the market with the security of the
workers. The growth of TAW is also a response to the globalisation process. It is the international
competition that pushed the employers towards a more dynamic market where they can easily adjust
their business to economic shocks. Last but not the least, the high rate of participation of young
workers also contributed to the trend of TAW. Since this group is mainly for first-time entrants to the
labour markets, TAW is one of the effective channels to provide them jobs without asking high level of
working experiences.
2.3. Conclusion
Generally, flexibilisation of the labour market originated from the process of globalisation that
boosted international trade and the role of MNCs. Indeed, the globalisation of the economy has pushed
the labour market to become more dynamic, in order to catch up with the constant challenges affecting
trade and national markets.
On the one hand, the global economy gives MNCs chances to relocate their business in countries
where they have more opportunities to increase their profits. This explains the rapid rate of FDI in the
developing countries, where the workforce supply is high and normally cheaper than in developed
countries. The benefits brought by FDI are seen as the source of economic development in these
countries. As a result, to attract more FDI, the policy makers in the emerging markets have adapted
their system to the need of a flexible market to match the needs of MNCs and economic development.
On the other hands, the effect of global economy has also impacted developed countries. The increase
of international trades has put pressure on MNCs to both cut down the cost of workforce and
16
maximize the benefits or to react quicker to economic cycles. Thus, a flexible labour market can be
seen as an inevitable effect of economic global integration.
In the context of a more flexible and integrated economy, TAW represents a solution for the
need of adaption of the labour market. The consequence is that, throughout the years, TAW has passed
from performing a prohibited activity to be an important factor in the labour market. Nowadays, TAW
is a form of employment appreciated by many companies worldwide. Within the framework of two
divergent economies and social systems, the development of TAW in Vietnam and Netherlands shows
both differences and similarities.
Specifically, the TAW in both Vietnam and the Netherlands is the result of the high rate of
unemployment since it plays a significant role in the job creation. In the Netherlands, the positive effect
of TAW with respect to job creation is what triggered the changes in the attitude of the TU and of the
Dutch government towards TAW. Additionally, the objective of a more flexible labour market is what
Dutch employers have been advocating in order to face the challenges of the growing international
competitions. Moreover, another factor that contributed to the TAW’s development is the changing in
the distribution of the workforce, in which the young workers take part in large proportion. In the case
of Vietnam, not only the fight towards unemployment but also the process of liberalisation of the
labour market and the intention to attract FDI, have played a significant role in the introduction of
TAW.
The next chapter will present a more in-depth analysis of the current legislative framework in
both Vietnam and the Netherlands.
17
CHAPTER 3. VIETNAM
3.1. Legal grounds
Currently, TAW is regulated under the Labour Code 201273 (the Code), Chapter 2, Section 5. The
aim of the Code is to control the practice of TAW by establishing specific rights and obligations for
each party. It should also be noted that in Vietnamese Labour Code, the term labour dispatch is used
instead of TAW. Since there is no difference between the nature and meaning of the two terms, TAW
is used synonymously with the term stated in the Code. Besides the Code, the health and safety
responsibilities of the agency and the client firm are also regulated in the Article 65 of the Law on
Working safety and health 2015 (Law No. 84).74
Article 53, Section 1 of the Code defines TAW as the recruitment of employees by a licensed
enterprise to work for and be under the management of the client firm. However, the employee still
maintains the labour relationship with the agency. Though Vietnam has not ratified the ILO
Convention No. 181 on Private employment agencies,75 its definition seems to be much related to the
definition of TAW given by the Article 1 of the Convention. This seems to imply that the Convention
was used as guidance for the drafting provisions on TAW.
Besides the Labour Code, there are supplementary legal documents that regulate TAW. These
documents are categorized as the set of legislation regarding rights and obligations of the parties in the
TAW relationship and that of the administrative fees for the violations of TAW. As for the rights and
obligations of the parties, there are three legislations. The first is the Decree No. 55/2013/ND-CP
(Decree No.55) on detailing the implementation of Article 54, section 3. The second is the Decree No.
73/2014/ND-CP on the amendments to Article 29 of the Decree No. 55/2013/ND-CP. Last is the
Circular No. 01/2014/TT-BLDTBXH on guiding the Decree No. 55 and Article 54 Section 3 of the
Labour Code (Circular No. 01). As for the determination of the administrative fees in case of violation
of the previous set of rules, there are the two documents. The first is the Decree No. 95/2013/ND-CP
on penalties for administrative violations against regulations on labour, social insurance, and overseas
manpower supply. The second is the Decree No. 88/2015/ND-CP on the amendments to the Decree
No. 95.
Since the main provisions are stated in the Labour Code, the Decree No.55 and the Circular
No.01, this thesis will take into more comprehensive consideration these legislations, which are
analysed as the following.
3.1.1. Conditions and limitations of TAW
Generally, TAW aims to (i) timely meet the sudden increase of the workforce for a defined
period, (ii) replace client firm’s employees during maternity leave, occupational accidents/illness, or
employees with temporary leave to complete citizen’s obligations or (iii) fulfil the demand on high
technical and professional workers. If the purposes are not met, the TAW is considered to be violating
the law.
To set up the business of TAW, the company has to satisfy the requirements stated in Article 5,
Decree No. 55. Basically, the agency must (i) have a legal capital of 2 billion Vietnam dong (VND)
(95,200 USD) and having conducted payment of deposit of 2 billion VND and (ii) be able to maintain
the charter capital not lower than the legal capital during their operations. Furthermore, the renting
73 Labour Code, Law No. 10/2012/QH13 dated June 18, 2012. 74 Law No. 84/2015/QH13 on working safety and health dated June 25, 2015. 75 International Labour Law, Ratifications for Viet Nam, Normlex
<http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:11200:0::NO::P11200_COUNTRY_ID:103004>
Accessed on 16 May 2018.
18
period of the locations of head offices, branches and representative offices of the agency must be stable
for at least two years.76 The law also requires that the managers of the agency must have working
experiences in the field of TAW for at least three years.77 Furthermore, according to Article 12 of the
Decree No. 55, after obtaining the license for operating TAW, the agency should note that the validity
of the license for TAW must not exceed 36 months. In case the agency wants to extend the license, the
extension shall not be more than 24 months and such extension can only be granted twice.
Pursuant to Section 3 Article 53 of the Code, the TAW business in Vietnam is a licensed system.
Therefore, the operation of TAW requires a license issued by the Ministry of Labour - Invalids and
Social Affairs (MOLISA). The scope of TAW is only limited to 17 types of employment.78
The prohibitions of TAW are not regulated in the Labour Code but in the Decree No. 55.
Specifically, Article 24 indicates four cases where client firms are not entitled to use TWs. Those cases
are (i) enterprises which are having labour disputes, strikes or/and the use of TWs is for replacement of
employees during of implementing right of strike, settlement of labour disputes, (ii) the agency failed to
reach a specific agreement on responsibility for compensation of occupational accidents, occupational
illness for the TWs with the client firm, (iii) for the replacement of employees who are dismissed due to
restructure, changes of technologies or merger, consolidation, division, separation of enterprises or due
to economic reasons, and (iv) dispatching employees to work in places with harsh living conditions
according to list issued by the MOLISA and the Minister of Health, unless those employees have been
living in those above areas for three years or more.
3.1.2. TAW contract
a) Contents of TAW contract (TAWC)
According to Article 55 of the Code, the TAWC is the contract signed between the agency and
the client firm, which means that the TAWC is not a labour contract but a civil contract which contains
the terms and conditions of the service that is offered by the TAW agency to the client firm.
Specifically, the TAWC must contain the following information: (i) location of the workplace, working
position for the TWs, detailed description of the job and specific requirements for the TWs, (ii)
duration of the TAW and the starting time of the dispatch, (iii) working time, rest time, occupational
safety and hygiene conditions at the workplace, and (iv) obligations of each party towards the TWs.
Overall, the main idea of the TAWC is that these two parties must ensure the equal treatment between
the TWs and the employees directly hired by the client firm.
b) Duration of TAWC
According to Section 2 of Article 55 of the Code and Article 26 of Decree No.55, the period of
TAW must not exceed twelve months. Furthermore, the employee can neither renew nor extend the
contract with the same/different job in the same company.
3.1.3. Rights and obligations of parties in the relationship of TAW
a) Rights and obligations of the temporary agency
According to Article 56 of the Code and Article 16 of the Circular No. 01, the agency has the
following obligations: (i) it shall ensure to the client firm the supply of employees who meet the client’s
requirements and it must observe, vis-à-vis the TWs, the provisions stated in the labour contract, (ii) it
76 Article 7, Decree No. 55. 77 Article 8, Decree No. 55. 78 Appendix 5.
19
shall inform the TWs of the contents of the business contract signed with the client firm, (iii) it shall
sign a labour contract with the employee in accordance with this Code, (iv) it shall provide the client
firm a brief personal record of the TWs and the TWs’ specific requirements, (v) it shall act in
accordance with the obligations of an employer stated in this Code (for example, wage payment,
holidays allowances and annual leaves, severance allowance, social insurance, health insurance), also, the
agency must ensure the equal pay between the TWs and the client’s employees, and (vi) it shall either
make a dossier stating the number of TWs, the client firm and leasing fees or report to the provincial-
level state management agency of labour about the TAW.
For the responsibilities of the safety and health working conditions stated in Section 1, Article 65
of the Law No. 84, the agency must (i) negotiate with the client firm about the safe and hygienic
working conditions of the TWs, that have to be equal to that of the employee who are directly hired by
the client firm, (ii) regularly check with the client firm about the health and safety conditions for the
TWs, and (iii) keep the records of occupational safety and hygiene related to the TWs and send reports
on occupational accidents or occupational diseases to competent authorities.
Besides the obligations mentioned above, the agency has the right to impose disciplinary sanction
to TWs who are returned by the client firm due to the violations of the client’s company rules.
b) Rights and obligations of the client firm
Article 57 of the Code regulated the obligations of the client firm as (i) informing and guiding the
TWs to understand the company rules, (ii) prohibition to discriminate between the TWs and its
employees regarding working conditions, (iii) not to sub-lease the TWs, and (iv) provide evidence of
the TWs’ violation of labour discipline for the labour leasing enterprise to consider and discipline such
employee.
Specifically on health and safety, the client firm must follow Section 2 of Article 65 of the Law
No. 84 and therefore it has to (i) fulfil all commitments as mentioned in TAWC, (ii) when TWs have an
occupational accident or a safety threat, he/she must receive first aid and emergency aid, and the client
firm must either inform the agency or report and conduct an investigation stated by the Law, (iii)
provide training in occupational safety and hygiene for the TWs, unless the agency has provided such
training for the TWs, and send reports on occupational accidents or occupational diseases involved by
the TWs to the agency once or twice a year, and (iv) cooperate with the agency in investigation into
occupational accidents, and keep record of documents on occupational safety and hygiene related to
the TWs.
The client firm’s rights are to (i) negotiate with the TWs about working at night or overtime
when it is not included in the LDP, (ii) negotiate with the TWs and the temporary agency to
permanently employ TWs in case the labour contract between the TWs and the client firm has not yet
expired, and (iii) return to the agency the TWs who fail to meet the requirements agreed in the TAWC
or those who violates the client’s working rules.
c) Rights and obligations of the TWs
Pursuant to Article 58 of the Code, TWs have the obligations to (i) perform the job under the
labour contract signed with the agency, and (ii) comply with the internal rules, labour discipline, the
management and the collective labour agreement of the client firm.
For the responsibilities regarding the health and safety, pursuant to Section 3 Article 65 of the
Law No. 84, the TWs have the obligations to comply with internal regulations, process and measures
for assurance of occupational safety and hygiene of the client firm.
20
TWs acquire the rights to (i) have equal wage payment which is not lower than that of the client’s
employees, who have the same qualification and perform the same job or job equal value, (ii) lodge a
complaint with the agency when the client firm violates the agreements in the LDP, (iii) exercise the
right to unilaterally terminate the labour contract with the agency pursuant to Article 3779 of the Code,
and (iv) negotiate a labour contract with the client firm after terminating the labour contract with the
agency.
3.1.4. Penalties and remedies for the violations
According to Article 9 of Decree No. 95 and Article 1 Section 8 of the Decree No. 88, the
penalties are applied to both the agency and the client firm in case of violation of the law on TAW. The
penalties in this case are administrative fines.
a) For the client firm
The violation of one of the following rules will be fined with a fee ranging from 500 hundred
VND (22 USD) to 1 million VND (44 USD): (i) failing to inform the TWs their company’s labour rules
and (ii) discriminating the working conditions for TWs in comparison to those directly hired by the
client firms.80
With the money range from 5 million VND (220 USD) to 50 million VND (2.196 USD), the
violations include: (i) assigning TWs to another employer, (ii) charging the service fee with the TWs,
and (iii) employing TWs beyond the agreed dispatch duration. The money range in this case also
depends on specific number of TWs with respect to whom the client firm has committed violations.
For example, the fee amounts to a range from 5 million VND to 10 million VND when the number of
TWs is from 1 person to 10 persons.81
b) For the agency
Similarly, the violations of the agency are also categorized in different fees range. To be more
specific, a fee that may vary from 1 million VND (44 USD) to 3 millions VND (132 USD) applies to
violations of the agency such as: (i) failure to sufficiently record the quantity of TWs, client firm, and
TAW service charges, (ii) failure to provide information or providing false information about the
outsourcing contract for workers, and (iii) failure to send a written notification to the competent
authorities about the following information: the location/ area/ time of commencement, or the
manager/ persons holding key positions of the agency, or the change of the manager/ persons holding
key positions, or the charter capital of the enterprise, or reporting the TAW status.82
The fees can be from 10 millions VND (440 USD) up to 100 millions VND (4.392 USD), in case
the agency is found to (i) pay TWs less than workers of client firm who are at the same level and do the
same jobs or jobs with the same value, (ii) pay wages and other benefits to TWs less than the amount
agreed with the client firm, and (iii) assign TWs without his/her consent. In this case, the fee range
depends on the specific number of TWs whose rights are being violated by the agency. 83
79 Article 37 of the Labour Code states the right of employees to unilaterally terminate labour contracts and the
announcement of the termination. 80 Article 9, Section 1 of Decree No. 95. 81 Article 9, Section 3 of Decree No. 95 and Section 8, Article 1 of Decree No. 88. 82 Article 9, Section 2 of Decree No. 95 and Section 8, Article 1 of Decree No. 88. 83 Article 9, Section 4 of Decree No. 95 and Section 4, Article 1 of Decree No. 88.
21
The fee range is between 50 millions VND (2.196 USD) and 75 millions VND (3 293 USD)
when the the agency carries out its operations without the license to provide outsourcing services.84
The agency risks a fine between 80 millions VND (3.512USD) and 100 millions VND
(4.392USD) for (i) lending the TAW license to another company to provide TAW, (ii) providing TAW
for the fields or jobs prohibited by law, (iii) providing TAW beyond the permitted duration by law, and
(iv) providing TAW to an enterprise in the same parent company-subsidiary relationship, or the same
corporation of which the agency is an affiliate.85
Furthermore, the agency may suffer the additional penalty of confiscation of the license of TAW
(i) from 1 to 3 months in case of violations mentioned in Article 9, Section 4, and (ii) from 6 to 12
months in case of violations mentioned in Article 9, Section 6.
Besides the mentioned penalties, there are remedies which include86 (i) returning the collected
charges that applied to the TWs, (ii) paying the difference in wage for the worker in case of unequal
wage payment stated in Article 9, Section 4 and (iii) returning the illegal profit from having carried out
operations without the required license (stated in Article 9, Section 5).
3.2. Analysis
3.2.1. Analysis of the legal framework
Generally, TAW in Vietnam is regulated under many aspects.
First, the legal grounds for TAW are stipulated in a set of legislative documents with quite
detailed provisions on important parts of TAW such as wage payment or working conditions. The main
aim is to ensure the equal treatments between the TWs and the workers who are directly employed by
the client firm.
Second, the set of conditions for setting up the TAW business provides certain protection to
TWs, for instance, in case of bankruptcy of the agency. This also helps the government to identify and
ban untrustworthy agencies.
Third, the contract of TAW is developed with terms and conditions that clearly state the rights
and obligations of both the agency and the client firm. In some cases, this helps the Court to define the
responsibility of each party. Given the fact that some important rights of TWs are agreed in TAWC,
such as the equal treatment of the TWs compared with the employees of the client firm, the law has
provided that the TWs have the right to know about the contract signed between the agency and the
client firm. Since the TWs are not party of the TAWC, this makes the accords between the TAW and
the client firm more transparent, and this is especially functional when it comes to labour disputes.
Fourth, Vietnamese law lifts the barrier of the prevention so that the TWs can have the chances
to be hired by the client firm. This can be made by the negotiation between the agency and the client
firm about the official hiring TWs (in case the labour contract between the agency and TWs has not yet
terminated), or between the TWs and the client firm (when the mentioned contract is legally
terminated).
Last but not least, the violations of TAW are sanctioned by administrative fees. With the
mentioned amount of fee for each violation, it seems that the penalties and remedies are not serious
enough for both agency and the client firm to respect their obligations.87 Thus, in the draft of the
Decree on penalties for administrative violations against regulations on labour, social insurance, and
84 Article 9, Section 5 of Decree No. 95. 85 Article 9, Section 6 of Decree No. 95 86 Article 9, Section 8 of Decree No. 95 and Article 1, Section 8 of Decree No. 88. 87 Diu, P. T. H., ‘Cho thuê lại lao động theo phép luật lao động Việt Nam’ (Temporary Agency Work in Vietnamese
Labour Law) (Master thesis, National University 2016) p 88.
22
overseas manpower supply in 2018, there are amendments in the amount of administration fine. To be
more specific, the fee for the client firm’s violations is suggested to range from 1 million VND to 3
million VND (the current fee range from 500 hundred VND to 1 million VND). For the agency, the
administration fine is range from 5 million VND to 10 million VND (the current fee is from 1 million
VND to 3 million VND) in the cases mentioned in Article 9 Section 2. Furthermore, the range also
increases from 10 million VND to 60 million VND in cases mentioned in Article 9 Section 3 (the
current is 5 million VND to 50 million VND).
3.2.2. The grey area of the current legal framework
Even if the current legal framework governing TAW in Vietnam is characterised by rather
specified provisions on the rights and obligations of parties, there are still grey areas that hamper good
enforcement of the law.
First, according to Nguyen Xuan Thu, Deputy Director of the Ministry of Justice’s secretariat,
the condition that the owner of the agency must be at least three year-experienced in the TAW sector
leads to the fact that there are hardly any agencies that can meet this requirement.88 Indeed, it should be
noted that the Labour code has just come in force in 2012. This means that before this period, TAW
was not legalised. Thus, there are no grounds for the agencies to prove that they obtained work
experience in this sector. This results in TAW operating in breach of the legal requirements of having
license. Thus, this makes the TAW harder to control and the rights of the TWs easier to be violated.89
Second, Le Thi Hoai Thu, Professor on Business Law of Ha Noi National University, stated that
the deposit funds for the operation of TAW are necessary to protect the TWs, especially in cases where
the agency is unable to pay wages for TWs. However, it should be noted that each agency has a
different size and, thus, will have different profit. Thus, the deposit fund of 2 billion VND is quite rigid
and unreasonable.90 For example, for companies that only have less than 50 employees, the deposit
fund of 2 billion VND is too much.91 This may lead to the possibility that the agencies operate in
breach of the legal requirements of having a license. This will affect the rights of the TWs, especially in
the case of labour dispute. Indeed, in that case, the court may conclude that the contract is invalid,
which means that the relationship between the agency and the workers is not recognised by the law and
the workers are not legally protected. For instance, Mr. Huynh Nhan, owner of Nhan Ai Ltd., stated
that with the high amount of deposit fund, his agency may have to go back to illegal operation.
Third, the Vietnamese law on TAW has limited the possibility to rely on TAW, as it allows TAW
only for certain type of jobs. These jobs are generally performed by low-skilled workers, such as
security guard or those cleaning the factories. The explanation for this narrow scope comes from the
government’s difficulty in controlling the TAW in its early years.92 Specifically, at the time of drafting
88 Business and the Law, ‘Những vướng mắc, bất cập trong hoạt động cho thuê lại lao động’ (Difficulties and gray
areas of provisions on Temporary Agency Work), kinhdoanhvaphapluat
<http://kinhdoanhvaphapluat.com/newsdetail/kd--pl-so-80-nhung-vuong-mac-bat-cap-trong-hoat-dong-cho-thue-
lai-lao-dong-437.html> Accessed on 7 June 2018. 89 Ibid. 90 Ibid. 91 Tuyet, L., ‘Doanh nghiệp cho thuê lại lao động kêu trời với ký quỹ 2 tỉ đồng’ (Temporary Employment Agencies
react to the fund deposit of 2 billion VND), laodongvn
<https://laodong.vn/kinh-te/doanh-nghiep-cho-thue-lai-lao-dong-keu-troi-voi-ky-quy-2-ti-dong-121710.bld>
Accessed on 7 June 2018. 92 Thuan, N., ‘Mở rộng cấp phép dịch vụ cho thuê lại lao động?’ (Broaden the scope of Temporary Agency Work?),
baodautu
<http://baodautu.vn/mo-rong-cap-phep-dich-vu-cho-thue-lai-lao-dong-d813.html> Accessed on 7 June 2018.
23
TAW provisions, the government did not have much experience for maintaining efficient management
of this type of employment. Before the Labour Code 2012, there were no regulations on TAW.
However, TAW had already been used by many companies illegally, and, at the same time, the rights of
TWs were reported to be seriously violated.93 Thus, according to Ha Dinh Bon, Director General of
Legal Department Affairs, if the law extends the list of the TAW’s jobs, the government will have more
difficulties in controlling this sector.94 Indeed, the labour inspection in Vietnam is considered to work
inefficiently, and the Vietnamese government is at the stage of solving this problem. Thus, with the
broad scope, the government cannot have sufficient control over TAW, which may then lead to the
serious violation of the rights of the workers. By providing a specific list of works, it is, on the one
hand, easier for the client firm to comply with the law and, on the other hand, the rights and
obligations of the parties can be controlled by the government.
According to the statistics of the General Statistics Office of Vietnam in 2016 on the FDI
distribution by sectors, the manufacturing industry is the sector that has attracted most of the FDIs
with 58,81% of the total FDI amount.95 Of the total 6.8% GDP growth of Vietnam, the manufacturing
industry accounts for the highest rate of 4%.96 However, the works related to this sector are not present
in the list of TAW jobs. This leads to the fact that the supply of the labour workforce does not comply
with the demand of the labour market. Consequently, the agencies tend to ignore the listed jobs and are
willing to supply TWs even when the assignments are out of the list.
Fourth, according to the current legal framework, the time limit for operating the TAW business
is seven years. Currently, there is no official explanation for this limitation from the law makers.
However, this limitation seems to be the same for all the businesses that require licences (for example,
transportation or pharmaceutical industry)97. However, the main difference in the limitation period
between TAW and other licensed business is that the latter can renew the license after 7 years, while
this is impossible for TAW. This raises concern for the potential agencies whether they should invest in
a business that only lasts for only 7 years. The strict requirements that regulate the setting of TAW
business and the uncertainty of the profits that TAW can bring, may reasonably deter the setting up of
a temporary agency.
Fifth, the law has not mentioned any matter regarding the responsibility of the agency or the
client firm regarding tort law. To be more specific, tort law constitutes a very important part in the
Vietnamese legal framework. In a normal employment relationship, the employer will be responsible
for the damages caused by his employees because of the lack of supervision that leads to the damages
to the third party.98 However, this seems unreasonable when applied to the TAW relationship since the
client firm is the one who directly supervises the TWs. Thus, the lack of provisions on this matter
makes it difficult to identify whether the agency or the client is responsible in case of damages made by
TWs.
93 Ibid. 94 Ibid. 95 Appendix 6. 96 Viet Capital Securities, ‘Vietnam Strategy – Strong Earnings Will Drive Market Up 18 – 20%’, Vietnamadvisor
< http://www.vietnamadvisors.com/vietnam-strategy-strong-earnings-will-drive-market-up-18-20/> Accessed on
17 May 18, 2018 97 Law No. 03/2016/QH14 on amending law on investment dated November 12, 2015. 98 Article 584, Section 1 of the Civil Code.
24
Last but not the least, according to the Nguyen Thi Huong, Director of Talent Corporation,99 the
duration of twelve months for TAWC is quite short, especially in the context that the agency cannot re-
new the contract with the client firm with the same TWs. Practice has shown that this period normally
cannot satisfy the demands of the client firm. 100 In some cases, when the TWs need to be trained
before dispatching to the client firm, the agency will need to retrain new TWs to replace the already
trained TWs. For the agency, this is time consuming and costly. For the client firm, this may bring the
risk that the new TWs are not familiar with the procedures of the firm, and thus, not as productive as
the old one.101 For the TWs, in a short period, they may not be able to show off their talent to the client
firm and reduce the possibility of having a permanent job. The rule on prohibition concerning the
rehiring may also make the TWs more vulnerable, when they need to change so many companies
during their work life but without any guarantee of a permanent job.
3.2.3. Enforcement of TAW
Even with a set of rather detailed provisions, the rights of TWs are still violated. Most of the
violations are reported to be caused by the agency.
The first violation is the difference in the payment between what the agency actually pays for the
TWs and what has been agreed in the contract with the client firm. According to the inspection of the
Department of Labour, Invalids and Social Affairs in Ba Ria – Vung Tau province, one of the
provinces that have the highest rate of TAW,102 in most of the cases, the agency ignores the payment
that is already agreed in the contract between the agency and client firm and pays the TWs less than
that amount. The inspected agencies in Ba Ria – Vung Tau province then explained that this is because
the wage the agency contracted with the client firm to pay TWs is the gross salary103. After the
reduction of other fees such as training fees, administration cost or social insurance, the net salary104
will be less than what the agency contracted with the client firm. For example, in the case of Tran Van
Sau, a temporary worker of Bien Dong Temporary agency service company (one of the inspected
agencies by Ba Ria – Vung Tau Inspector), the agency paid him 311.000 VND/day (13.69 USD) while
it should be 428.000 VND/day (18.75 USD) according to the contract with the client firm.105 Even
after acknowledging that this is violated by the law, the agency still gives excuses for this difference in
payment.106
99 Bao dan tri, ‘Dịch vụ cho thuê lại lao động – chọn nhanh sẽ có nhân sự giỏi’ (The service of dispatching workers-
quick selection will have good personnel), mekongresources
<http://mekongresources.com/dich-vu-cho-thue-lai-lao-dong-chon-nhanh-se-co-nhan-su-gioi> Accessed on 18
May 2018. 100 See n 88. 101 Phuoc, N. H., and Ly, M. T., ‘Cho Thuê Lại Lao Động – Có Luật Vẫn Còn Băn Khoăn’ (Temporary Agency
Work – Legalization and its uncertainty), luatsunguyenhuuphuoc.com
<http://luatsunguyenhuuphuoc.com/cho-thue-lai-lao-dong-co-luat-van-con-ban-khoan/> Accessed on May 18,
2018. 102 Ibid. 103 Gross salary is the total amount of a person’s income in a particular period before tax and other fees is paid on it.
(Source: Cambridge Dictionary, see more at: https://dictionary.cambridge.org/dictionary/english/gross-income). 104 Net salary is a person's salary after taxes, insurance, etc. have been subtracted. (Source: Cambridge Dictionary, see
more at: https://dictionary.cambridge.org/dictionary/english/net-salary) 105 Truc, D., ‘Bất cập trong lĩnh vực cho thuê lại lao động’ (Difficulties in the field of Temporary Agency Work),
baobariavungtau
<http://www.baobariavungtau.com.vn/xa-hoi/201511/bat-cap-trong-linh-vuc-cho-thue-lai-lao-dong-645676/>
Accessed on 7 June 2018. 106 Ibid.
25
Second, the inspection reported that the agency usually places wrongful disciplines on TWs. For
example, in the case of Vo Hong Ron, a temporary worker of Van Nam Temporary agency Service
Company, he was sent back by the client firm because of the violation of its rules. The agency then
dismissed Mr. Ron though this is not a ground of legal dismissal.107 Then, the agency then explained
that this illegal dismissal has the meaning of implicitly sending a warning to other TWs to not violate
the client firm’s rule as Mr. Ron.108
Third, the agency is reported to send TWs to do jobs that are not in the list of jobs that is
allowed to use TWs. For instance, the petroleum and oil sector are the activity that is always in the high
demand of TWs in Ba Ria – Vung Tau. However, this sector is not listed by the law. Despite the
violation of the law, the agency still dispatches TWs to perform the works if there is a requirement of
the client firm. In practice, those agencies are sanctioned by the administrative fee. The fee depends on
the type of violations that are stated in Article 9 Decree No. 95.109
Last but not the least, Vietnam is currently promoting the projects regarding the new approach
for labour inspection. Those projects are usually based on the cooperation of the MOLISA and
partners such as ILO or the Kingdom of the Netherlands (for example, the Labour Inspection
Campaign to improve the labour rights in textile sector in 2015, the Labour Inspection Campaign to
obey the health and safety in construction in 2016 or the Labour Inspection Campaign to promote
working safety in mining sector).110
3.3. Conclusion
The legal framework of TAW in Vietnam is considered to be highly regulated, as it includes five
dimensions such as (i) regulations on the operations of third-party labour suppliers, (ii) duration of term
contracts, (iii) coverage by sector, job type and business activity, (iv) provision on solidarity liability
between user company and third-party labour supplier and (v) provisions on the rights and legal
entitlements of sources. 111
However, there are still grey areas in the current legal framework. Specifically, the requirement of
having a three-year experience for the setting up a TAW companies is considered to be unreasonable in
the context where TAW has been regulated only recently. Second, it is hard for the agency to comply
with the conditions of 2 billion VND deposit fund and the three-year experienced manager. These
conditions might be too rigid and do not fit the specific size of different agencies. Third, the maximum
of seven years operation of TAW is quite short compared to the normal business. This period raises
107 According to Article 126 of the Labour Code, grounds for dismissal include one of the followings (i) an employee
commits an act of theft, embezzlement, gambling, intentional infliction of injury, use of drugs inside the workplace,
disclosure of technological or business secrets or infringement of intellectual property rights of the employer, or acts which
cause serious damage or threaten to cause serious damage to the assets or interests of the employer, (ii) an employee who
has been subject to the disciplinary measure of prolonging the wage rise period commits recidivism when the disciplinary
record has not yet been written off or an employee who has been subject to the disciplinary measure of removal from office
commits recidivism, or (iii) an employee has been absent from work without permission for a total of 5 working days within
1 month or 20 days within 1 year without plausible reasons. 108 See n 101. 109 See Section 3.1.4. 110 ILO, ‘Tăng cường tuân thủ pháp luật tại nơi làm việc thông qua Thanh tra lao động’, (Strengthen compliance
with the law in the workplace through the Labour Inspectorate), ILO
<http://www.ilo.org/hanoi/Whatwedo/Projects/WCMS_340871/lang--vi/index.htm> Accessed on 7 June 2018 111 Serrano, M. (2015), ‘Regulating non-standard employment in Asian and East Asia: a comparative survey of labour
laws and union strategies’, 4th Conference of the Regulating for Decent Work Network, 8-10 July 2015, Geneva,
Switzerland, p 11.
26
concerns about the question for potential agencies of doing this type of business or not. Fourth, the
limitations of the jobs conducted by TAW do not match the demand of the labour market. Fifth, there
is no provision for the responsibility under the tort law as well as about workers’ representation in the
current legal framework. Last, the duration of twelve months with the condition of prohibiting the
renew contract of the TWs in the same client firm, even with different jobs, causes the disadvantages
with respect to those jobs that require specific skills. Additionally, this rule may go against one of the
main purposes of TAW that is providing TWs the first stepping stone to future works.
Due to the mentioned grey areas, the enforcement of the legal framework on TAW is quite
inefficient. Specifically, the labour inspection in Ba Ria – Vung Tau recorded that there are violations in
TAW, which are generally connected with the way the agency carries its operations. The violations are
related to the difference in payment between what the agency contracts with the client firm and what it
actually pays the TWs, illegal disciplines or the use of TWs for jobs that are not listed by the law.
27
CHAPTER 4. THE NETHERLANDS
4.1. Legal grounds for TAW
At EU level, the rules of TAW are regulated in the Directive 2008/104/EC on Temporary
Agency Worker. The main scope of the Directive is to set up the legal framework to enable the
flexibility of the labour market and to give more protection to the vulnerable groups. As a Member
State of the EU, the Netherlands has implemented the Directive 2008/104/EC.
At international level, the Netherlands is also a member of the International Labour
Organization. As mentioned in chapter 2, the Netherlands has issued many provisions that match the
requirements of the Conventions on TAW. The recent Convention No. 181 has brought about new
revisions about TAW, which are then ratified by the Netherlands.
Throughout the long history with many amendments, the Dutch TAW nowadays is regulated in a
number of statutory legislations such as the Civil Code112, the WAADI Act113, and the Flexible and
Security Act (WFIZ)114. Besides those legislations, there are two collective agreements that have a
crucial role in setting the working conditions and in the monitoring of TAW, which are the collective
agreement with the trade unions and the Algemene Bond Uitzendondernemingen (ABU CAO) and the
collective agreement with the TUs and the Nederlandse Bond van Bemiddelings en
Uitzendondermingen (NBBU CAO).115 Of the two, the thesis is focused on the ABU CAO, the
collective agreement with the largest employer organizations for private TAW with the coverage of
about 60% of the TAW labour market.116 Furthermore, ABU CAO is declared to be generally binding
by the Ministry of Social Affairs and Labour. This means that not only ABU’s members but also those
who are not its members will also be covered by the terms and conditions of ABU CAO, except the
members of the NBBU who follow the NBBU CAO. Except for the legislation and the collective
agreements, case law in the Dutch TAW system also contributes to the clarification of the law and a
smooth application of law into practice.
The definition of TAW is provided in all of the mentioned documents. Article 7:690 of the Civil
Code defines TAWC as an employment contract under which the agency – as the employer, places the
TW ‘at a disposal’ of a third party to perform work under the supervision and direction of that third
party. The TW thus has an employment contract with the agency. Similarly, in both ABU CAO and
NBBU CAO, the TAW is defined with the same nature as that of the Civil Code.
4.2. Rights and obligations of parties in the relationship of TAW
4.2.1. Rights and obligations of the agency
Generally, the agency has the same rights and obligations as an employer. These rights and
obligations are described as the following.
The Civil Code
a) Duty of the employer to inform the employee of specific data
According to Article 7:655, Section 1, the agency is obligated to supply the TWs the specific
information about the work that the TWs are about to perform at the client firm. This information is
112 In Dutch ‘Burgerlijk Wetboek’. 113 In Dutch ‘Wet Allocatie Arbeidskrachten door Intermediairs’ (WAADI). 114 In Dutch ‘Wet Flexibiliteit en Zekerheid”. 115 The ABU and the NBBU are the two main employers’ organizations in this sector. 116 ABU, ‘Facts and Figures’, abu.nl
< https://www.abu.nl/english/market-developments> Accessed 19 May 2018.
28
listed from paragraph a to paragraph m of Article 7:655, Section 1, which may include the usual
working hours per day or per week or whether the TWs will be able to participate in a pension scheme.
b) Right to be informed about the available vacancies
According to Article 7:657, Section 1, the workers with the employment contract for fixed term
period must be informed by the employer in time and concretely about an available position for an
indefinite term. However, in Section 2 of the same Article, it states explicitly that this duty is not
applicable in the case of employment contract mentioned in Article 7:690. This duty was then stipulated
in WAADI, which obliged the client firm to have a timely and clear notification about the job vacancies
available in that firm.
The WAADI
c) Equal treatment
Article 8, Section 1 of the WAADI states that the TWs have to be reimbursed the same wage and
other allowances (for example: travel costs, holiday allowances) as the other employees directly hired by
the client firm. Furthermore, Article 8a also requires the client firm to give the TWs the same access to
the facilities as that of the normal employees. Article 8 Section 3 stipulates that there are two exceptions
for the principle of equal pay for equal work which are cases that (i) the agency is under a collective
agreement or legislation that determines the specific level of wage and other payments117 and (ii) the
client firm is under a collective agreement in which there are additional obligations related to the
TWs.118 In the former case, the law sets some additional boundaries on the deviation by the collective
agreement. In the latter case, there is an obligation of negotiation of the client firms with the agency.
Failing to do so may cause the client to be responsible for the violation of the collective agreement.
However, both the NBBU CAO and the ABU CAO stipulate that, with some exceptions, the TW’s
should be paid the same wage as the employees of the client firm (Art. 19 ABU CAO).
d) The prohibition to charge fees to TWs
The charging of fees to TWs by the agency is prohibited in any cases pursuant to Article 9 of the
WAADI. This is the result of the ratification of the Convention No. 181, which prohibits the fee-
charging of TWs.
e) The prohibition to replace workers by TAW in case of labour disputes
For the agency, Article 10 of the WAADI states that in case there are strikes or lock-outs in the
client firm, the use of TWs to replace the workers who are on strike is forbidden. The agency is
considered to breach the provision if he/she knows or is reasonably assumed to know about the strike
or lock-out.
f) The obligation to provide information
Pursuant to Article 11 of WAADI, before performing the task in the client firm, the agency has
to provide the TWs with the information about the assignment such as the qualifications for the work
or the health and safety conditions. As a consequence, the client firm also has the duty to provide the
117 Paragraph a of Section 3 of Article 8 of the WAADI. 118 Paragraph b of Section 3, Article 8 of the WAADI.
29
agency with the information on the assignment according to Article 5 Section 5 of the Working
Conditions Act (Arbowet)119. This will enable the agency to pass the official information to the TWs.
g) Termination of the employment contract
Pursuant to Article 7:691, Section 1, the employment contract with the agency Section may
terminate with immediate effect when the client firm ends the assignment with the TWs. It should be
noted that this rule is only applicable in case the assignment is less than 26 weeks. This period is then
extended by the ABU collective agreement (ABU CAO), which is up to a maximum of 78 weeks.120
This can be seen as an exception of the normal employment contract since the dismissal, in this case, is
without reasonable grounds. Moreover, permission of the UWV to terminate the contract is also not
necessary. Meanwhile, compared to the normal contract, the employer can only dismiss the employees
with reasonable grounds (Article 7:681) and must obey the notice period (Article 7:672). With this ‘hire-
and-fire’ system, TAW can offer the client firm a high level of flexibility.121 However, this system also
creates the most uncertainty for the TWs since their contracts can terminate any time without objective
reasons. In short, the more flexibility that the TAW offers to the client firm, the less security of the
TWs.
For employment contract with a fixed-term period in the case of TAW, there are also differences
in the maximum number of contracts and the total duration of work compared with those of normal
fix-term contract. Specifically, from July 1, 2015, the employer can only have the maximum of three
fixed-term contracts or with the total of two years.122 These rules are then prolonged in the case of
TAW by ABU CAO, in which the maximum of six fix-termed contracts or the total of four years are
allowed. These extensions will be discussed in detailed in Section 4.2.
4.2.2. Rights and obligations of the client firm
In general, there are some cases that the client firm has the responsibility as an employer since it
directly supervises TWs. These cases are regarding the health and safety, working hours or tort liability
towards the TWs.
The Civil Code
a) The responsibility of the employer under the Tort law
Article 6:170, section 1 stated the responsibility of the employer to be liable for the damages
caused by a subordinated person during the working hours. This provision does not explicitly state that
if the agency or the client firm will be liable for the tort law of the Civil Code. The judgment of the
Court of Appeal ‘s Hertogenbosch then clarified that the agency will not take the responsibility on the
ground of Article 6:170 Civil Code for damages committed by the TWs who are working in the client
firm as the agency is not the one who supervises and manages the TWs.123
119 In Dutch ‘Arbeidsomstandighedenwet’ (Arbowet). 120 Houwerzijl, M. (2013), ‘Regulating Temporary Work in the Netherlands’ in Blanpain, R. (eds), Temporary agency
work in the European Union and the United States (Kluwer Law and Taxation, the Netherlands), p 131. 121 Visser, D., Plessen, W., and Jacobs, A. (2004), ‘The Netherlands’ in Blanpain, R. (eds), Temporary Agency work and
the Information soeiety (Kluwer Law and Taxation, the Netherlands), p 234. 122 Rob van Eldik, ‘Important changes in Dutch Labour Laws’, lexology
< https://www.lexology.com/library/detail.aspx?g=4496b0fd-cc5d-4e35-81a9-8db3afd13421> Accessed on June
29, 2018. 123 Court of Appeal ‘s Hertogenbosch 2 June 2009, Case law No. HD 103.005.517, Court of Appeal, dated 02-06-
2009, paragraph 4.4.2 and paragraph 4.5.2.
30
Working Hours Act and Working Conditions Act
b) Working hours and working conditions
According to Article 1(1) Section 2 of the Working Hours Act (ATW) 124 and Article 1 Section 2
of the Working Conditions Act (Arbowet), in some cases, the client firm is considered to be the
“employer” to carry out specific duties mentioned in the ATW and the Arbowet. The ATW clearly
contains the responsibilities of the client firm on the working time period in Article 1(7), Section f and
Chapter 5, rest period in Article 1(7), Section 1 and Chapter 5 and so on. The Arbowet indicated the
client firm on the health and safety (Article 3), preventing accidents and occupational at work (Article
4), reporting and recording of the accidents and occupational diseases at work (Article 9) and so on.
Work Council Act
c) Right to join Work Council
All companies in the Netherlands who employ more than 50 employees are according to the
Work council Act (WOR)125 obliged to set up a Work Council. Also, TWs count as employees for the
WOR and are represented by a Work council, if they have been working for the client firm for more
than two years (Art. 3 section a WOR).
As being treated equally as other workers, Article 6, Section 2 states that TWs have the rights to
vote for the members of the WC, provided that they have been employed in the agency for at least six
months. Moreover, Article 6, Section 3 gives TWs the chances of being elected as members of the WC
in case the employment has lasted for at least one year.
4.1.1. Joint liabilities between the agency and the client firm
Besides the responsibilities of an employer, the agency and the client firm also have joint
liabilities as following:
The Civil Code
a) Joint and several liabilities for accidents and safety at work
Pursuant to Article 7:658, Section 2 about the care duty of the employer, the employer has to be
liable for the damages that his employees have undergone from activities performed during working
time. Section 4 gave another party who also have to be responsible for the damages of the working
places caused by the employees. Specifically, this is a person who has someone to perform his work but
without the employment contract, he is also liable for the damages that the employees have suffered at
the working place. The sub district had applied this provision in the case law no. 633608 of the Court
of Utrecht.126 The court stated that the responsibilities regarding working accidents and safety will be
held for both the agency as well as the client firm.
<https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHSHE:2009:BI9107&showbutton=true&keyw
ord=02-06-2009> Accessed on 28 May 2018. 124 In Dutch ‘Arbeidstijdenwet’ (ATW). 125 In Dutch ‘Wet op de Ondernemingsraden’ (WOR). 126 Court of Utrecht, Date of Judgment 26-06-2009, Case No. 633608 AV EXPL 09-91 RK, First instance, paragraph
4.6
<https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBUTR:2009:BJ3477&showbutton=true&keywo
rd=26%2f06%2f2009> Accessed on 28 May 2018.
31
b) Joint and several liabilities for wage payment and holiday allowance
The noticeable regulation of the Civil Code is the joint and several liabilities for wage payment
and holiday allowance. According to Article 7.962, section 1 of the Civil Code the payment of the
applicable minimum wages and minimum holiday allowances are the responsibility of both the agency
and the client firm. This provision is precisely guided by the Sham Arrangements (Bogus Schemes)
Act,127 which has come in force since July 2015. Specifically, in case the agency fails to perform the
obligation of the wage payment, TWs can hold not only the agency but also the client firm liable for
this obligation.128 To avoid the joint liability which can cause by an untrustworthy agency, the fact sheet
of the Dutch social partners recommended the client firm to do business with agencies which have
registered as certificated agencies. The registration means that the agency is accepted as a reliable
company by the competent authorities. The agency can use a system of certification (which is so-called
NEN 4400129) to voluntarily register its business with the government. By the registration, the agency is
inspected twice a year by the competent authority to ensure that they meet the legal requirements.
4.2.2. ABU Collective agreement
a) Types of TAWC
There are two types of TAWC that are covered by the CAO: (i) the employment contract with
agency clause and (ii) the employment contract (or secondment agreement) for a defined period or an
indefinite period (Article 12).
To begin with, the employment contract with agency clause is the contract that automatically
ends if the client firm ends the assignment.
The employment contract for a defined period is the contract that automatically ends on the last
day of the agreed period. The period can either be mentioned in the contract by a specific date or a
project. Last, the employment contract for an indefinite period is the contract that is without an end
date.
b) The phase system of ABU CAO
ABU CAO consists of three phases as phase A, phase B and phase C. Each phase will have
specific types of TAWC. In phase A, there is normally the employment contract with agency clause.
However, there may also be the fix-termed employment contract which is mutual agreed by the agency
and the TWs (Article 13, section 1, point c). In phase B, there is normally the fixed-termed employment
contract, unless there are different agreements (Article 13, section 2, point c). In phase C, the TWs
work on the ground of the indefinite employment contract (Article 13, section 3, point b).
b.1) Phase A (Article 13, section 1)
Duration of working
Workers who work for 78 weeks or less will be in phase A (point a). Wages are only paid for the
hours that TWs actually worked.
Interruption rules
127 In Dutch ‘Wet aanpak schijnconstructies’. 128 Government of the Netherlands, Chain liability for wage; information for employers and clients, government.nl
< https://www.government.nl/documents/leaflets/2016/02/05/information-for-employers-and-clients> Accessed
on May 21, 2018. 129 This is a norm against illegal activities of the agency. This is a certification that the agency has fulfilled
requirements regarding minimum wages, taxes or social insurance. Neither the agency needs to be certificated this norm nor the client firm is obeyed to hire temporary workers from certificated agency. (Source: Houwerzijl, M. (2013), ‘Regulating Temporary Work in the Netherlands).
32
In this phase, if there is an interruption period in which the TW is not working, the interruption
is not included in the phase’s duration of 78 weeks (point b). In case the interruption is six months or
less, the TWs are still considered to be in phase A. In contrast, if the TWs have the interruption of
more than 6 months, they will come back to the beginning of phase A
There is temporarily no work
The main rule is that only the worked hours will be paid. This rule is applied for both TAWCs
with agency clause and the employment contract. However, for the latter, there may be mutual consent
to exclude the rule of continued payment of wages. This exclusion requires TWs to always stay available
for the agreed number of working hours, even if the agency has not yet found suitable jobs130 for them.
If the exclusion is successfully agreed, the TWs are entitled to the reversion wage, which accounts for
90% of the actual wage131 of their most recent assignment and never lower than the minimum wage.132
b.2) Phase B (Article 13, section 2)
Duration of working
TWs are moving to phase B after the end of phase A (point a). In this phase, the TWs work
under the employment contract with definite period, unless parties agreed otherwise. Phase B lasts with
either (i) the duration of four years or (ii) a maximum of six fixed-term employment contracts between
the agency and TWs (point b).
Interruption rules
The interruption of six months or less of the TWs will also be included in the total time of phase
B. In case the interruption is six months or less, the TWs are still considered to be in phase B. If the
interruption lasts more than 6 months, TWs will go back to the beginning of phase A. The vocational
training stated in Article 7.2.2 of the Vocational Training Act will not be counted as the interruption
period according to paragraph f.
There is temporarily no work
The rule is the same as that of the employment contract which excludes the continued payment
of wages rule stated in phase A.
b.3) Phase C (Article 13, section 3)
Duration of working
After the completion of phase B, if the TWs are in the employment without the interruption of
more than six months, TWs are considered to be in phase C (point a). Phase C is marked with the
employment contract with an indefinite period (point b).
Interruption rules
In phase C, if the interruption of the TWs is six months or less, they will be back to the
beginning of phase B (point c). If this period is more than six months, the TWs come back to the
beginning of phase A
130 Article 44, Section 2 of ABU CAO stated that a job is deemed suitable work if the position is no more than two
job grades lower than the position TWs most recently performed (as classified in the ABU job matrix). The number of
hours that TWs will work must also be suitable. This is the case if TWs will be working the same number of hours as stated
in the employment contract. 131 The actual wage can also be called as the based wage or the gross wage, which exclude other allowances such as
holiday allowances or bonuses (Article 6, Section 1 of the Minimum wage and minimum holiday allowance law). 132 Since 1 January 2018, Article 8 of the Minimum wage and minimum holiday allowance law stated that the
minimum wage for each pay-out period is (i) one month or a multiple of a month: 1,578 €, (ii) a week or a multiple of a
week: 364.15 €, and (iii) another time period: 72.83 €, multiplied by the number of working days included in this period.
33
There is temporarily no work
The same rule of phase B is applied.
b.4) Termination of the agency contract
For the employment contract with agency clause
There are four cases for the termination of the TAWC (i) end of assignment, (ii) due to the
illness, (iii) reaching the pensionable age, and (iv) unilaterally terminated by the TWs (Article 14).
First, the employment contract with agency clause ends immediately if the client firm terminates
the assignment with the TWs. In this case, the termination requires a notice period from the agency.
The notice period is presented as the following:
Duration of the
assignment (weeks)
Notice period
(calendar days)
0 – 12 0
12 – 26 5
26 – 52 10
52 – 78 14
Table 3. Notice period of the termination of agency contract with agency clause (Source: ABU CAO)
Second, for the termination caused by the illness, the temporary agency contract with agency
clause between the TWs and the client firm will automatically terminate.
Third, according to the General old age pension Act (AOW), the employment is ended once the
workers reach the pension age. The retirement age differs in each specific period.133 In 2018, the
retirement age is 66 years old. When the TWs reach this age, the contract will automatically end.
However, the TWs can make other agreements with the agency and agree otherwise.
Fourth, the unilateral termination by TWs requires the condition of one working day advanced
notice period by the TWs to the agency.
For the employment contract with definite period
There are three cases of ending the employment contract which are (i) the automatic termination,
(ii) the premature termination, and (iii) the TWs reach the pensionable age (Article 15, section 1, 2, 3,
5).
Generally, an employment contract ends automatically on the date mentioned in the agreement.
In this case, there is no requirement for a notice period. However, for the agreement that has been
valid for six months or more, the agency may be required to have one month notice in advanced
whether the agency wants to continue the agreement.
For the premature termination, either the agency or the TWs can terminate the agreement.
However, they are required to follow the notice period. For the agency, in any case, a notice period is
one month. For the TWs, the notice period depends on the duration of agreement. The notice period is
summarised as following:
133 Article 7a of the AOW stated the retirement age in each period as the following (i) before 1 January: 65 years old,
(ii) in 2013: 65 years old and one month, (iii) in 2014: 65 years old and two months, (iv) in 2015: 65 years old and three
months, (v) in 2016: 65 years old and six months, (vi) in 2017: 65 years old and nine months, (vii) in 2018: 66 years old, (viii)
in 2019: 66 years old and four months, (ix) in 2020: 66 years old and eight months, and (x) 2021: 67 years old.
34
Duration of the assignment
(weeks)
Notice period
(calendar
days) for TWs
Notice period for
agency
Three months or less 7 1 month
Between three months
and less than six months
14 1 month
Six months or more 28 1 month
Table 4. Notice period of employment contract for a defined period in case of premature
termination (Source: ABU CAO)
Furthermore, for the agency who prematurely terminates the agreement, the agency must choose
one of the three options as (i) it needs the permission from the Public Employment Services (UWV),
(ii) asking the sub district court for the termination of the contract, or (iii) settle a mutual consent
between TWs and the agency. For the third options, the TWs have a reflection period of fourteen days
to change their earlier decision.
However, a prohibition of the premature termination can only be agreed in the employment
contract with a definite period of three months or longer.134
In the case of reaching the pensionable age of the TWs, the rule is similar to that of the
temporary agency contract with agency clause.135
For the employment contract with indefinite period
There are three cases (i) no available works for the TWs, (ii) premature termination, and (iii) the
TWs reach the pensionable age (Article 15, Section 4 and Section 5).
In the case of premature termination, unless both parties have agreed different notice period,
they have to follow the requirement of one month. In case parties have the agreement on another
period which is longer than one month, that duration is then applicable for both parties. If the agency
wants to terminate the contract, there are also three options as that of the employment contract with
definite period.
When the TWs reach the pensionable age, the same rule of the employment contract with
definite period is applied.
c) Obligations of not discrimination
Article 9, Section 4 of the ABU CAO prohibited the discrimination of the agency to the TWs
based on the religion, political view, gender, nationality and so on.
d) Obligations of the TWs
Article 10 stated that TWs have the obligation of complying with the agreed internal regulations
and code of conduct of both the client firm and the agency.
4.3. Penalties for the violations
a) For the agency
Article 16 of WAADI defined the violation as the non-compliance of the valid registration of the
agency stated in Article 7a. In some cases, the violation can also start from cases stated in Article 7a.
The violations mentioned in Article 7a and Article 7b are fined by administration fees pursuant to
134 ABU CAO, Article 15, Section 1. 135 See n 133.
35
Article 18. Specifically, pursuant to Article 19, Section 1, the administrative fine that can be imposed for
a violation shall not exceed the amount of the fifth category stated in Article 23, Section 4 of the Penal
Code136. From 1 January 2018, this amount is 83,000 €.
Furthermore, Article 19, Section 2 and Section 4 also indicated the increasing percent of the fines
for the repetition of the same or similar legal obligation. For example, Section 2 stated that the fine will
increase 100% if within five years there is the recidivism of the violation.
b) For the client firm
The height of the administration fee stated in Article 34 of the Arbowet is the same as that of the
WAADI. However, the grounds for the administration fee in Arbowet is that violations related to the
working conditions such as safety and health, cases of illness, proper information about the work,
reporting and recording of accidents at work and so on.
Furthermore, pursuant to Article 34, Section 8 of Arbowet, in case there is a violation of Article
6, the court can have the criminal sanctions. Specifically, that is the case that the client firm does not
obey the conditions regarding necessary measures to prevent and limit hazardous conditions and
serious accidents.
c) For the TWs
According to Article 10, Section 2 of the ABU CAO, there are three possible sanctions that can
be applied on the TWs in case of violations stated in Section 1 (i) reprimand, (ii) suspension without
pay, and/or (iii) dismissal with immediate effect if necessary. Furthermore, Section 3 of the same
Article stated that the second mentioned sanction may be imposed in any case if there is evidence
shows that the TWs failed to justify his obligations. In case the TWs think that the sanctions imposed
on them are unreasonable, Section 4 stipulated that they may appeal to the Disputes Committee for the
Temporary Agency Work Sector.
4.4. Analysis
4.4.1. Analysis on the legal framework
Generally, the provisions on TAW ensure not only the flexibility for the labour market but also
the security for the TWs.
First, the phase system of ABU CAO enables the agency to benefit from the TWs for a long
period without the responsibility of having the permanent contract compared to the normal hiring
procedures. In other words, the phase system has the combination of the flexibility in the early stages
and more protection in the latter one. In other words, by the phase system, the security of TWs is built
step by step. Specifically, in the first phase, the agency can terminate the employment contract with the
agency clause at any time, while in phase C, this must be done by legal grounds. In turn of the
flexibility, the TWs will be treated unequally compared to the permanent workers in some cases. For
example, their employment contract with agency clause will be automatically terminated when they get
sick. In phase B, they do have more security with the fixed-term contracts, or even the open-ended
contracts. However, compared to the last ABU CAO in 2010, the duration of phase B has been
extended to four years instead of two years, and the maximum numbers of employment contract have
been reduced from eight to six agreements. The long duration of phase B may somehow demotivate
the TWs because it seems as they have to wait more than five years to have the chance to conclude the
open-ended contract with the agency. By contrast, for ‘regular employees’ this period is two years.
Second, with the general provisions stated in the Civil Code and other legislations such as
WAADI, Work Council Act and Working conditions Act, the TWs are protected in many ways. For
136 In Dutch ‘Wetboek van Strafrecht’.
36
instance, TWs are allowed to have the same protection on health and safety working conditions or the
job opportunities for vacancies in the client firms.
Third, with the introduction of the joint liability of the agency and the client firm in many aspects
such as wage payment or accidents at work, both the agency and the client firm need to raise more
attention to the using of TWs. For the agency, even if it does not directly supervise the TWs, there is
still the obligation to dispatch the TWs to a reliable client firm, where the health and safety conditions
are provided. If the agencies ignore this, when it comes to the accidents that happen in the workplace,
they are also liable together with the client firm. More precisely, in the case of chain liability for wage,
the government has mentioned one of the situations that the client can avoid this is to work with the
reliable agencies. From 1 January 2016, this has been made easier for the client firm to check the
reliability of the agency by the inspection details which are published by the Inspectorate SZW.137
Fourth, regarding the tort liability, there is no joint liability between the agency and the client
firm. This follows from the District Court’s opinion that because the supervision and management of
TWs belong directly to the client firm and not the agency. The rule of the principle of the tort law is
that person who causes the damages for other persons will be liable. In the working relationship, if the
employees cause the damages to the third parties, the employer will have to be responsible for damages
because of the insufficient control of the employees during the working time. Since the client firm is
the one who supervises the activities of the TWs, the exclusion of the tort liability for the agency seems
reasonable. Furthermore, this provision may raise more awareness for the client firm on the
management of the TWs to avoid the responsibility of the tort law.
Fifth, the right to information, consultation and information of the TWs in the client firm when
they have worked for that firm at least 24 months promotes the proper protection of the TWs’ interest
when they have contributed their work to the client firm. With that working period, it is reasonable for
the TWs to have the same rights that the client firm’s work council give to the normal employees. For
example, in case that there are changes regarding terms of employment or insolvency, the TWs are also
counted to give their opinion, or they are also entitled to be informed in case of the client firm’s
insolvency.
Last but not the least, the penalties for the violations are applicable to all parties. Most of the
penalties are by the administration fees, which are legally stated by law and depend on the case by case.
To emphasise on the duty to comply with the law, there is also an increased 200% of the administration
fee for the violations of same or similar obligations. Furthermore, in the case that the client firm
violates the conditions of working in hazardous environment, which may seriously affect human
being’s health or life, the Court may base its judgement on the given facts to impose a criminal
sanction. The introduction of the sanctions for the recidivism and the criminal responsibility
contributed to the obedience of the law for all the parties in the TAW relationship.
137 See more information at:
<https://www.government.nl/binaries/government/documents/leaflets/2016/02/05/information-for-employers-
and-clients/factsheet-chain-liability.pdf> Accessed on June 17, 2018.
37
4.4.2. Enforcement
According to a survey conducted by Ecorys, generally, the TWs are satisfied with both the agency
and the client firm. Specifically, 49% of the participated TWs are pleased with the wage payment of the
agency. More than 80% of TWs have satisfaction on the quality of work and the guidance of the client
firm.138
However, when it comes to the Dutch TWs with migrant backgrounds, the situation seems less
positive. Specifically, the discrimination against the TWs without migrant background and TW’s with a
migrant background has always been considered as one of the serious problems in controlling TAW in
the Netherlands. In 2011, a research by sociologists Evelien Loeters and Anne Backer of Vrije
Universiteit posted a question to 187 agencies “I would rather not have worker with Turks background,
is that possible?” had brought a shocking result of 76.8 % of the asked agencies agreed to the request.139
For further research, the Netherlands Institute for Social research (SCP) conducted a general research
on this matter in 2012. The SCP then concluded that the employment agency still discriminates against
workers with migrant backgrounds. Especially, the number of agencies that deal with the discriminatory
requests from the client firm is nevertheless still too high.140 Even with the hard effort on combating
this problem, for example, the inspectorate can check if the agency instructs their code of conduct to
cooperate in the discriminatory request, discrimination still happens recently. In October 2017, one
research at the Radar TV program showed that almost half of the investigated agencies cooperated with
the request of not having candidates with Moroccan, Surinamese and Turkish background. According
to Iris Andriessen – a researcher of SCP, it is very difficult to eliminate the discrimination against TWs
with migrant background from the agency.141 There may be two reasons for this. First, it is usually hard
to identify and control the discrimination. For years, the Netherlands has had extra supervisions such as
the inspection on the cooperation with the rules of conduct against discrimination, according to the
SCP, these extra supervisions seem to not effective.142 The explanation for this might be that the
discrimination usually is not recorded but only expressed orally. In the recent research of Radar, the
request that showed the discrimination against the TWs with migrant background was taken into
account, as long as “it is not put on the paper”.143 Because of this, there is no evidence to show that
there is actually discrimination. Without knowing that there is actually an arrangement like that, the
TWs cannot fight for their rights in this case. Consequently, the inspector can only intervene when
there is a notification about the discrimination and not the job recruitment. Second, it may come from
the high pressure of the agencies to meet their client’s demands. The main driving force for the
138 Voss, E., Vitols, K., Farvaque, N., and others, (2013), ‘Temporary agency work and transition in the Labour
Market’, Final Report for the Joint Eurociett / UNI Europa Project, p 147. 139 Witteman, J. (2011), ‘Driekwart uitzendbureaus schuldig aan discriminatie 'Ik wil liever geen Turken, kan dat?'
(Three quarters of temporary employment agencies guilty of discrimination 'I prefer not to use Turks, is that possible?), De
Volkskrant
<https://www.volkskrant.nl/nieuws-achtergrond/driekwart-uitzendbureaus-schuldig-aan-discriminatie-ik-wil-liever-
geen-turken-kan-dat-~baf9ef62/> Accessed on 30 May 2018. 140 ANP - Nederlands persbureau, ‘Uitzendbureau discrimineert migranten nog steeds’, parool.nl
< https://www.parool.nl/binnenland/-uitzendbureau-discrimineert-migranten-nog-steeds~a3364426/ > Accessed on 30 May
2018 141 See n 139. 142 Maartje Geels (2018), Staatssecretaris: extra controles bij uitzendbureaus op discriminatie, (Secretary of State:
additional control on temp agencies regarding discrimination), nrc.nl
<https://www.nrc.nl/nieuws/2018/05/01/staatssecretaris-extra-controles-bij-uitzendbureaus-op-discriminatie-
a1601450 > Accessed on 30 May 2018. 143 See n 136.
38
discrimination does not come from the agency itself but from the client firms.144 According to the
research made by Andriessen, she explained that the agency usually feels pressure to meet the
business’s goal, in which the satisfaction of the customers is a very important strategic.145
4.5. Conclusion
In short, the provisions of the Dutch TAW aim to promote the balance between the flexibility of
the labour market and the security of the vulnerable TWs through the incorporation of many
legislations and the collective agreements. Taking all these provisions and the efficient control on TAW,
the Netherlands may be an example for other countries to gain more experiences in this field.
However, the Dutch TWs with migrant background are still being discriminated regardless of this
being prohibited by law. Recent research shows that there is a high rate of discrimination against
migrant TWs. For years, even with the hard effort of TUs and the government, this is still considered
to be a problem on the labour market. The explanations here are (i) the difficulty in controlling the
recruitment process of the agencies, which normally is not recorded as evidences for the discrimination
and (ii) the pressure of the agency’s doing the business to meet the requirements of the client firms.
144 Ibid. 145 Ibid.
39
CHAPTER 5. COMPARATIVE ANALYSIS
5.1. Analyses of similarities and differences
Though the Netherlands and Vietnam differ in many aspects such as historical development,
political system, economic situation and labour market performance, they still bear certain similarities
regarding the TAW system.
First, both countries prohibit the charging of fees of the TWs. Even though Vietnam has not yet
ratified the convention No. 181 of ILO, it is true that the TAW system is based on this convention.
Additionally, the replacement of workers who go on strike with TWs is also forbidden in both the
Netherlands and Vietnam.
Second, the equal treatment principle is legally respected in both countries. This is the main rule
that ensures that the TWs will have the same rights as the workers that are directly hired by the client
firm. The equal treatment may be either the same wage payment or non-discrimination between the
TWs and the normal workers. However, it seems that the Dutch equal treatment rule does not apply to
TWs who have an employment contract with the agency clause, especially in cases regarding the
dismissal protection. To be more specific, they are at risk of being dismissed at any time by the request
of the client firm.146 As mentioned above, the TWs in phase A have less protection compared to phase
B and phase C, however, TWs in phase A give the agency and the client firm the most flexibility in the
phase system. In other words, the more security for the TWs, there will be less flexibility for the agency.
Third, the penalties in both countries are according to the administrative fees. However,
compared to the fees of Vietnam, the Netherlands has much higher fees for the penalties. The Dutch
law also allows for criminal penalties in case of serious violations while in Vietnam, the violations are
only sanctioned by administrative fees.
Fourth, another similarity in both countries is the lifting of barriers for TWs to be hired by the
client firm. In the Netherlands, this rule is explicitly stated by the duty to inform about the vacancies to
the TWs. Additionally, the WAADI explicitly forbids agencies to use any (contractual) obstructions
when the client firm wants to hire the TWs directly by concluding an employment contract, after the
agency work is completed. In Vietnam, although the client does not have the duty of informing about
the vacancies, they can negotiate with the TWs about a permanent position after the TWs’ labour
contract with the agency is terminated. In case the client firm wants to hire the TWs before the
termination of the contract with the agency, it has to negotiate with both the TWs and the agency.
Last but not the least, the TAW is regulated by statutory law in both countries. However, in the
Netherlands, collective agreements concluded by the social partners on the sector-level are also very
important sources. In general, collective agreements constitute a very important source of the Dutch
Labour Law through which the social partners can deviate from some rules in the legislations even at
the detriment to the workers. Meanwhile, in Vietnam, the collective agreement must always obey the
law, and be concluded mainly at the company level.
Besides the similarities, the Netherlands and Vietnam have some distinctive differences as
follows.
First, the liability of occupational accidents belongs to both the client firm and the agency in the
Dutch system, while in Vietnam this depends on the negotiation between the agency and the client
firm. In other words, this can belong to the agency, the client firm or there can be joint liability.
Second, there is a difference in the nature of the TAW contract in each country. The Netherlands
defines agency employment contract as the employment contract between the agency and the TWs.
This means that the TAW contract has the nature of an employment relationship. Meanwhile, in
146 See Section 4.2.1, point g.
40
Vietnam, the TAW contract is defined as the service contract between the agency and the client firm,
and the contract between the agency and the TWs is the employment contract, which may be for a
seasonal period, fixed-term or open-ended.
Third, while the Netherlands establishes a dual-channel system of workplace representation
(works councils and trade unions), Vietnamese employees are represented in the workplace only by the
trade union. Furthermore, regarding the workplace representation, the workers in the Netherlands can
also have the chance of being a member of the work council established by the client firm after two
years working for that firm. Regardless of the fact that this may provide a more equal treatment to the
TWs compared with the normal employees for the representative purpose, here raises the question of
the nature of being ‘temporary’ of the TWs. More precisely, it may be the case that the client firm takes
advantage of using TWs as one of its basic work force, since it can use TWs as long as it is still in
demand of TWs. In this context, the TWs are exploited by the client firm since they may pay the same
contribution as that of the normal workers but have less benefits as well as protections.
Fourth, in Vietnam the establishment of TAW requires specific conditions such as the fact that
the manager has to be three-year-experienced in the TAW sector or use the deposit fund of 2 billion
VND. The agency who does the business must have the license of TAW, and the license has to be
renewed each year for a maximum of seven years. Meanwhile, in the Netherlands, the license system
was abolished to make way for the flexibility of the labour market.147 To set up a business of TAW, the
agency just needs to satisfy the same conditions as other normal businesses.
Fifth, with respect to the jobs that can be performed by TAW, the Vietnamese law has limited
the list of 17 jobs where TAW can be used. In addition, the TWs can only work for the client firm for a
maximum of one year. Furthermore, they are not allowed to be rehired by the same client firm. In
contrast, the Dutch government leaves this opens. There is no restriction on the duration of the use of
TWs in the client firm. In other words, workers can work for the client firms as long as the client firm
needs them, which may create a gap for the client firm to exploit TWs as mentioned above.
Sixth, there is a joint liability between the agency and the client firm about the health and safety
conditions as well as the wage payment and holiday allowances in the Dutch system. For instance, in
case the agency is unable to pay wages to the TWs, the client firm has to share this responsibility. On
the one hand, this raises the awareness of the client firm to do business with a trustworthy agency. On
the other hand, this encourages the agency to register their business with the authority to improve their
reliability, which will then make it easier for the government to control the operation of the agency.
Meanwhile, in Vietnam, this responsibility depends on the negotiation between the agency and the
client firm, which is then stated in their agency employment contract.
Seventh, in Vietnam, the type of the employment contract between the agency and the TWs
depends on their negotiation. The contract can be fixed-term or permanent.148 However, in the Dutch
system, this depends on the phase system.149 To be more specific, the legal position of the TWs will
change in each phase system. The longer they work as TWs, the more protection they have.
Eight, as can be seen from the Dutch system, one of the reasons that keeps the TAW labour
market under control are the well-developed legal provisions. Those provisions are applicable to the
practice and gaining satisfaction from the agency, the client firm and the workers. It is the collective
agreement between the social partners in the Dutch system that is the solid ground for these
147 Tijdens, K., Klaveren, M., and Houwing, (2006) ‘Temporary Agency Work in the Netherlands’, Amsterdam
Institute for Advanced Labour Study’, Working Paper No. 54, p 3. 148 Article 22 of the Labour Code. 149 See Section 4.2.5.
41
provisions. The collective agreements are based on the balanced rights and obligations between parties.
Consequently, the employees feel more protected. Meanwhile, in Vietnam, the collective agreement
does not play an important role in supporting the protection of TWs. Since the introduction of the
Labour Code in 1994, there has been only one sectoral collective agreement regarding the textile sector.
Thus, the provisions usually do not meet the needs of the parties, which lead to low performance in the
private enforcement.
Last but not the least, both countries seem to have problems with the enforcement of the law. In
Vietnam, the problems mostly relate to the provisions that make them ineffectively applicable in
practice. Meanwhile in the Netherlands, the provisions are proved to be well applicable in practice by
the satisfaction of the majority TWs. However, the protection of migrant TWs seems to be left as a
grey area in the enforcement of the Dutch TAW system.
The comparison is summarized as follows:
Vietnam The Netherlands
Similarities Prohibition on fee charging
Principle of equal treatment
Administration fees as the main penalties
No barriers on the job opportunities for TWs at client firms
Differences Sources Legislation Legislation
Collective Agreement
Collective
agreement can
deviate from
legislation
No Yes
Levels of
collective
agreement
Sectoral level (very few)
Company level (mostly)
Sectoral level (most important)
Company level
Nature of the
agency contract
Service/Civil Contract
between the agency and
the client firm (Article 57
Labour Code)
Employment contract between
the agency and the temporary
workers (Article 9 of ABU CAO)
Worker
representation
Not yet regulated Work council or/and Trade
Union
When workers work for client
firm for two years, they have the
right to be a member of the work
council of the client firm
Jobs can be
performed by
TAW
17 jobs No limitations
Conditions of
setting up TAW
business
Normal procedures stated
in the Law on Enterprises
Three-year experienced
manager
Normal procedures stated in the
Company Law.
42
Deposit fund of 2 billion
VND
Liability on
health and
safety
conditions
Joint liability By agreement stated in the
contract between the agency and
the client firm
Liability on
wage payment
and holiday
allowances
The agency
In case the agency is
unable for the wage
payment, there is a joint
liability between the
agency and the client firm
The agency
Responsibility
on Tort Law
Not yet regulated The client firm
Table 5. Summary of comparison between Vietnam and the Netherlands.
5.2. Policy suggestions
First, as mentioned above, there are no provisions that regulate the responsibility regarding the
tort liability. Thus, as a lesson from the Netherlands, the Vietnamese law can add the responsibility of
the tort law that will belong to the client firm instead of the agency. This would become an exception
of the tort law stated in the Civil Code,150 where the employer is liable for the damages caused by the
workers to the third party during his working hours.
Second, regarding the duration of the TW’s assignment, the author suggests that Vietnam may
leave this open similar to the Netherlands. This will enhance the flexibility of the market because the
client firms can choose the period that matches their needs most. For TWs, this will offer them more
chances to show their ability to the client firm for the permanent positions. There are also arguments
that state that this may be too risky because the client firm can take advantages of this and only use
TWs for its production. However, it should be noted that the law has already prevented this by
regulating cases in which the client firm is allowed to use TWs. Thus, the client firm cannot use TWs as
a basis of workforce for its business.151
Third is about the conditions of setting up the agency. The condition of the three-year experience
for the agency’s owner should not be necessary for the regulation of TAW. It is true that TAW is a new
sector for the legal system in Vietnam, hence, the government wants to take a step by step approach in
controlling this matter. However, this rule may contribute to the illegal operation of TAW since they
are unable to meet this requirement.152 Thus, this rule does not seem to meet the purpose of filtering
the untrustworthy agencies. The author then recommends abolishing this rule as one of the conditions
for setting up the TAW. In addition, the capital of 2 billion VND seems to be another obstacle for
many agencies to set up the business. Practice shows that for many agencies, especially for small sized
150 Bussiness and the Law, ‘Những vướng mắc, bất cập trong hoạt động cho thuê lại lao động’ (Difficulties and
gray areas of provisions on Temporary Agency Work), kinhdoanhvaphapluat
<http://kinhdoanhvaphapluat.com/newsdetail/kd--pl-so-80-nhung-vuong-mac-bat-cap-trong-hoat-dong-cho-thue-
lai-lao-dong-437.html> Accessed on 7 June 2018. 151 See Section 3.1.1. 152 See Section 3.2.3.
43
agencies, this amount of money is too high, which may lead to illegal operations.153 Thus, the author
suggests adjusting the deposit funds according to the size of the company, for example, for medium-
sized company, the fund can be 2 billion VND, but for small companies, it should be less. To have a
reasonable amount of deposit funds, the author suggests the competent authority should have a survey
on public opinions.154 The result will then come up with an amount of money that is considered to be
reasonable for each size of the business. Moreover, this way may make the rule more applicable when
applied into practice.
Fourth, the author proposes that the maximum of seven years of operating TAW should be
eliminated. Pursuant to the Law on Enterprises,155 since the agency follows the normal procedures of
setting up a company, it should be considered as a legal entity. Additionally, as a legal entity, the ending
of its operation is due to the bankruptcy or other related business matters. Thus, it would be
unreasonable to determine an ending of a legal entity by the maximum of seven years. Moreover, this
may affect the right to freely conduct a business of the temporary employment agency. By the
abolishment, the potential agency can invest in this sector without worrying about the termination of its
business.
Fifth, as mentioned, the jobs are too limited and do not meet the actual needs in the labour
market at this moment. Accordingly, the author suggests that there should be more jobs added to the
current list of TAW. Generally, the recommended jobs should be based on the public opinions or
statistical data conducted by the authorities to define the trends of TAW that fit the demands of the
labour market. For example, the jobs that are always in high demands of workforces, such as those
related to the manufacture sector or petroleum and oil sector.
Last but not the least, according to the government, the limitation of the list on TAW or the
violations also come from the insufficient operation of the labour inspection.156 Thus, the author
suggests that there should be more improvement in the role of labour inspection. One of the effective
methods to do this is by the cooperated projects on labour inspection. Notably, recently there is the
‘Increasing Workplace Compliance through Labour Inspection in Viet Nam’ Project between the
MOLISA and the Kingdom of the Netherlands that has brought about solutions for the more effective
labour inspection. To be more specific, the project was introduced the modern model of labour
inspection. In the modern form, labour inspectors are seen as not only law enforcers, who have the
main tasks of warnings and sanctions, but also as advisors for the prevention of future violations.157
With this new approach, two important roles for a labour inspector are emphasised, which are
providing information for the workers and the advisory services for companies. The campaign was
carried from 2014 to 2016 and reported to have positive results. For instance, the Tan Ha Ltd.,
company successfully overcame their problems regarding working conditions and working hours.158
153 Oanh, D.T., ‘So sánh pháp luật việt nam về cho thuê lại lao động với một số nước trên thế giới’ (Comparison
between Vietnamese TAW law and other countries) (Master thesis, Ha Noi National University 2015), p 40. 154 Public opinion is defined as what majority people think about something. (See more at: https://www.merriam-
webster.com/dictionary/public%20opinion) 155 Article 4, Section 7 of the Law No. 68/2014/QH13 on Enterprises. 156 See n 150. 157 ILO, ‘Thanh tra lao động: xử phạt hay tư vấn để doanh nghiệp phát triển bền vững?’, (Labor inspectorate:
sanctions or counseling for sustainable development?), ILO
<http://www.ilo.org/hanoi/Informationresources/Publicinformation/feature-articles/WCMS_463262/lang--
vi/index.htm> Accessed 7 June 2018. 158 Ibid.
44
Moreover, the advices from the inspectors can be used as a solid ground for companies to build a self-
compliance system on the labour standards, which may help their working environment get healthier.
45
CHAPTER 6. CONCLUSION
Within the context of globalization, TAW plays an essential part in a flexible market. Given that
this form of employment has been legalized in Vietnam only in recent years, it is important to gain
more experience from other countries in order to have better protections for the TWs, especially since
they are regarded as a vulnerable and easily exploited group.
This thesis provides insight into TAW systems and into the penalties in case of violation both in
Vietnam and the Netherlands with the aim of answering five research questions.
In answer to the first research question – ‘What role can TAW play in the economy in a
globalised world?’ – findings from this thesis conclude that the flexible labour market is a response to
the globalization process. More precisely, the global economy gives MNCs the opportunity to go
beyond national barriers to relocate their business in countries with more potential for profits. This has
led to increasing efforts aimed towards attracting FDI in most emerging markets. Moreover, the global
economy also offers companies the opportunity to conduct business with foreign partners, which
results in increasing competition between MNCs. However, flexible labour market also means that
there may be deregulation of labour policies, which may ignore the rights of temporary workers.
Section 2.1 presents a detailed report of these answers and gives an overview of the general
development of TAW.
The answers of the second research question – ‘How is TAW developed in the labour market in
the Netherlands and Vietnam?’ – are dealt with in Sections 2.2.1 and 2.2.2. It can be concluded that the
development of TAW varies in each country. In Vietnam, the development of TAW stems from the
need to attract FDI and reduce the high rate of unemployment. Meanwhile, the Dutch TAW originates
from other factors. The first and foremost force is the shifting perspective of the TU and the
government in the context of the increasing rate of unemployment. Additionally, TAW shifted from
being considered as a form of employment characterized by insecurity to one that can be advantageous
to a labour market with flexicurity. Other factors, such as the growing competition between MNCs and
the changing labour composition, also contribute to the development of TAW in the Netherlands.
The answer to the third research question – ‘How is TAW currently regulated in the legal
framework of the Netherlands and Vietnam’ – has been provided in Chapter 3 and Chapter 4. In
general, the two chapters presented the legal grounds, rights and obligations of the agency, the client
firms and the TWs in each country. Moreover, analyses on the legal provisions, the grey areas, as well as
the enforcement in the Dutch and Vietnamese systems have been provided.
Section 5.1 of Chapter 5 has given answers for the fourth research question – ‘What are the
similarities and differences between the legal frameworks of the two countries?’ It can be concluded
that the legal systems of both countries respect the main principles of TAW, such as equal treatment,
prohibitions on charging fees on the TWs and the penalties of the administration fees for the violations
of the agency as well as the client firm. Apart from these similarities, the two countries also have
differences in the regulation of TAW, which have been discussed in the table in Section 5.1 of Chapter
5. Generally, Vietnamese legal framework has some noticeable differences compared with the Dutch
TAW such as the definition of the Temporary Agency Contract, limitation of jobs that can be
performed by TAW, the conditions of setting up TAW business and the maximum duration of
operating TAW.
The fifth research question – ‘What lessons can Vietnamese policy makers learn from the
Netherlands to improve the current legal framework on TAW?’ has been answered in Section 5.2 of
Chapter 5. The main concern of Vietnamese policy makers, in this author’s view, should be to
strengthen the non-effective labour inspection system as well as to make the following provisions more
applicable:(i) adding the responsibility of tort law; (ii) eliminating the maximum duration of the
46
temporary assignments; (iii) abolishing the conditions of setting up TAW; (iv) lifting up the maximum
period of seven years in conducting TAW business to avoid contradiction with the Law on Enterprises;
(v) broadening the list of TAW jobs to meet the actual needs of the client firm; and (vi) improving the
efficiency of labour inspection by cooperating with partners, such as ILO or foreign governments, to
have more projects or training for labour inspectors. All the suggestions mentioned above aim to
develop the Vietnamese labour market to be more flexible to meet the demands of the parties and, at
the same time, provide security to the TWs.
All of the questions mentioned above have the aim to help answering the main research question
‘In light to the comparison with the Dutch system, to what extent can Vietnam enhance the current
legal regulation of TAW?’. In sum, the analyses showed that there is still non-compliance between
legislation and practice. In light of the comparison with the Dutch TAW system, some policy
suggestions have been made for a more sufficient legal framework of TAW in Vietnam. Because of the
differences in history, political situation, industrial relations and economy, not all of the provisions in
the Netherlands are considered to be applicable in Vietnam. More precisely, the collective bargaining
system in the Dutch system plays a crucial part in balancing the flexibility of the market and the
protection of the workers. That is the reason the sectoral collective agreement can deviate from the
legislation and match more practical demands of the parties in TAW relationship. Meanwhile, collective
bargaining in Vietnam is mostly done at the company level and has no deviation from the law. This can
lead to the gap in what the parties actually need and what the law regulates. Thus, to make the law more
applicable to practice, the author suggests the law makers to take more public opinions as an important
source for the next amendments of the Labour Code. Moreover, concerning the legal aspect, the author
also suggests some recommendations which may be transferable from the Dutch system into
Vietnamese system. First is the adding of the tort liability of the client firm to the current TAW
framework. Deviation from the general rule of the Civil Code which states the tort liability of the
employer (the agency), the client firm should hold this responsibility as well due to its direct
supervision. Second, to promote the flexibility of the labour market, the duration of the assignments
for TWs should not be limited to twelve months. To ensure that the client firm will not take advantage
of this rule and use TWs as a basic workforce, the author proposes to improve the role of labour
inspectors. Specifically, the labour inspectors should not merely impose sanctions on the agency, but
also play a part of advisors for the prevention of future violations. Besides the lessons taken from the
Netherlands, some additional suggestions for amendments in the current provisions can be made. First
is the abolishment of the conditions of working experience for the agency’s managers. Second, the
deposit fund should depend on the size of the company. Third, the author suggests expanding the list
for economic activities relating to TAW to other sectors which are currently in high demands in
Vietnam such as manufacturing sector or petroleum and oil sectors. Finally, the maximum duration of
operating TAW should be eliminated to ensure the right to conduct business and the consistent with
the Law on Enterprise.
In short, the suggestions are based not only on the comparison with the Dutch system but also
on the grey areas of the national provisions themselves. The author’s main purpose is to come to the
achievement of the flexicurity model, where the flexibility of the market and the protection of the TWs
are balanced.
47
APPENDIXES
48
Appendix 1: Numbers of agency workers, selected countries, 1997-2007 (in daily FTEs,
thousands)
Sources: CIETT (2009) The agency work industry around the world: main statistics.
Brussels: CIETT
49
Appendix 2: Unemployment rate in Vietnam, 2001 - 2016
Source: General Statistics Office of Vietnam (2018)
50
Appendix 3: Unemployment as percentage of the labour force, 1982 – 1999
Source: Centraal Bureau voor de Statisitiek (CBS), labour force survey, 1999
51
Appendix 4: Development of the number of agency jobs (thousands), 1970-2000
Source: National Labour Statistics Netherlands, CBS, 2001
52
Appendix 5: List of jobs entitled to carry out labour dispatch (Promulgated together with
Decree No. 55/2013/ND-CP dated June 22, 2013)
No. Job
1 Translating / stenograph
2 Clerk / administrative assistant
3 Receptionist
4 Tour guiding
5 Sale support
6 Project support
7 Programmer of production machine system
8 Producing, installing equipment of broadcasting and telecommunication
9 Operating / examining / repairing machines for construction, electrical
system for production
10 Cleaning and keeping sanitation of buildings, factories
11 Editing documents
12 Bodyguard / guard staff
13 Marketing / Caring customers through telephone
14 Handling financial and tax problems
15 Repairing / examining operation of cars
16 Scanning, drawing in technique and industry / home decoration
17 Driving
Source: Decree No. 55/2013/ND-CP dated June 22, 2013, Annex V.
53
Appendix 6: FDI distribution by sectors from 1988 to 2016
No Sector Number of
projects
The total
registered FDI
(USD)
Proportion of
registered
capital (%)
Total 22.594 293.700,4 100
1. Agriculture, forestry
and fishing
522 3.573,8 1,22
2. Industry and
construction
13.312 199.781,8 68,02
2.1. Mining industry 104 3.497,9 1,19
2.2. Industry of
manufacturing
11.716 171.717,6 58,81
2.3. Producing and
distribution electricity
and others
108 12.907,6 4,39
2.4. Construction 1.384 10.658,7 3,63
3. Services 8760 90.344.8 30,76
Source: The General Statistics Office of Vietnam
54
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