German Supply Chain Law: Monitoring employment practices and environmental issues in Vietnam


last updated on 5 May 2022 | reading time approx. 6 minutes

Which risks occur along supply chains in Vietnam?

Although Vietnam has a comprehensive legal framework of relevant labor standards, the practice of the implementation of labor standards in Vietnam remains patchy due to a lack of effective monitoring and enforcement measures. As a result, rights of employees are not always completely secured. The following are some examples of areas of concerns:

Non-compliance with occupational labor protection and danger of accidents or work-related health hazards

While Vietnam has made great progress in developing the legal framework to promote occupational safety in the workplace, it is not always implemented in practice, which is indeed a problem in many industries. Labor incidents may be caused by incompliance with the laws, such as a lack of proper training for employees on working guidelines, machine operation and accident handling. Employers in some cases may fail to investigate and assess labor risks related to the working environment (as required by the law), provide insufficient personal protective equipment, fail to take proper care of electrical hazards and fire hazards, or refuse to provide mandatory health checks to employees.

Child labor

Although legally banned, child labor may occur in the informal and family businesses further down in the manufacturing and production supply chains.

Labor discrimination

Vietnam is making considerable strides with regard to their efforts to eradicate labor discrimination through its legal framework such as the Labor Law granting specific protections to specific groups of employees (women, disabled, elderly, etc.), and requires every company to encourage the establishment of grassroots trade unions to ensure employees' rights though collective bargaining and social dialogue. Labor discrimination is still a problem in Vietnam, though, with some companies still opposing the freedom of association and disregarding gender equality in the workplace.

Environment related risks

In an attempt to avoid extra costs related to waste treatment, some companies will occasionally explicitly refuse to comply with the environmental standards, preferring to pay governmental penalties rather than bearing the compliance expenses, which sometimes exceed the overall cost of the sanction. Others, on the other hand, try to conceal their non-compliance by dumping waste or effluent, rather than paying for the transfer to a treatment plant. Even though Vietnamese legislative standards on hazardous waste management are well developed (including the ratification of the international conventions relevant to the German Supply Chain Act), the compliance with and implementation of desirable technical and technological solutions remains low. The competent agencies are not always sufficiently equipped to effectively check compliance, and sometimes depend on compliance with paperwork requirements rather than field site observations.

Which industries appear particularly vulnerable to adverse impacts of human/labor rights or environmental issues in Vietnam?

Agriculture, textiles and apparel, storage and transportation, accommodation, food, and retail industries, which employ a significant number of people, tend to be susceptible to adverse consequences of human/labor rights or environmental issues. Some electrical and electronic components manufacturing and leather processing may be subject to higher environmental risks. In general, while employees in higher tiers of the supply chains are more likely to work in a formal employment environment with their rights being more protected, the lower tiers of supply chains, as well as subcontracting for lower tiers, are more sensitive in terms of human rights.

Is there any legislation in Vietnam which addresses these risks? To what extent is it enforced in practice?

Human/labor rights and environmental protection regulations are addressed in several laws that outline responsibilities of employers to respect human rights in supply chains.

Forced labor

Employees have the basic rights to freely choose an occupation and suffer no forced labor. Employee mistreatment and forced labor are prohibited actions. Employees have the right to terminate unilaterally if they are mistreated, assaulted, physically or verbally abused by their employers.

Child labor

According to the Vietnamese legislation, the minimum working age is 15 years. Hiring younger staff than the above-mentioned age limit is only permissible in specific circumstances under the Vietnam Labor Code and other related labor regulations. Employment of staff between the age of 15 and 18 requires the consent of their legal representatives; overtime work is prohibited; and jobs are limited to those that do not jeopardise their physical, social, or moral health. Prohibited actions include wrongful adolescent employment; overtime work, hazardous working conditions, workplace harmful to the physical health, mental health, or personality of adolescents.

Labor discrimination

Employees have the basic rights to not be harassed or discriminated, to receive equal pay for equal work, to denounce the discrimination and to participate in investigation or lawsuit, or to oppose discrimination. Labor discrimination based on race, color, sex, national origin, marital status, religion, disability status, HIV disease status, participation in a trade union is strictly prohibited. Employees can unilaterally terminate their contract in case of being maltreated, assaulted, physically or verbally insulted by employers.

Violation of Occupational health and safety obligations

Several legal provisions describe the employer's obligations to ensure safe working conditions and to protect the welfare of all employees. These legislative provisions cover a wide range of legal issues, including labor accidents and occupational diseases; welfare for employees who work in high-risk conditions; labor safety at work; the mandatory contribution to occupational disease insurance and the obligations of employers to execute occupational safety and health regulations (must be incorporated in internal labor regulations). Employees have the right to be provided with personal protection equipment and to work in a safe and healthy workplace. They also have the right to refuse to work if they believe their job harmfully effects their life or health.

Disregard of the freedom of association

Freedom of association and the effective recognition of the right to collective bargaining are core labor rights for all employees. Vietnam labor regulations protect the right to establish, join or operate a Trade Union. Any kind of obstructing, coercing, discriminating against employees who are Trade Union members is prohibited.

Withholding a reasonable wage

The base salary must not fall below the statutory minimum wages. No salary deduction is allowed except in case of compensation by the employee for damage caused to the equipment or assets of the employer; any monthly deduction shall not exceed 30 percent of the net monthly salary of the employee.

Causing harmful soil contamination, water pollution, air pollution, harmful noise emission or excessive water consumption

The Government of Vietnam commits to follow the Stockholm Convention on Persistent Organic and Pollutants, and the Minamata Convention on Mercury. Vietnam´s legal framework has been improved by a roadmap for legislative development addressing key responsibilities under the Stockholm and Minamata Conventions through various amendments in local laws and regulations. Mercury, Mercury compounds and some chemicals under the Stockholm Convention are listed as industrial chemicals restricted from production and trading, with sub-licenses being required for involved business. For all organizations and individuals engaged in activities related to industrial hazardous chemicals, following the general safety requirements for the production, trade, usage, storage and transportation of industrial hazardous chemicals is mandatory.

Inadequate treatment and Industrial hazardous waste management

In general, all industrial facilities must engage into an agreement with a service provider to collect, transport, and treat/dispose of the industrial hazardous waste generated by the industrial facilities. The industrial hazardous waste must be collected at least every six months. Most industrial companies must register the hazardous waste source owner with the Department of Natural Resources and Environment of the province where hazardous wastes are generated (save for the companies whose regular or annual production of hazardous wastes does not exceed 600 kg/year, with the exception for hazardous wastes under the Stockholm Convention). Hazardous wastes may only be reused within the premises of the facility where they are generated, and the reuse must be registered in the register of hazardous waste source owner.

Can you provide a case example (e.g. taken from local media coverage) in which a foreign or local company had to deal with such adverse impacts?  

In mid-2016, a steel production unit of the Taiwan-based Formosa Plastics Group – Formosa Ha Tinh Steel Corp. (FHS) – hit the headlines [1] with a toxic spill into the ocean that resulted in the killing of tons of fish across the four coastal provinces of Ha Tinh, Quang Binh, Quang Tri, and Thua Thien Hue-Vietnam, which washed up ashore along more than 200 km (125 miles) of coastline. Formosa Plastics Group manufactures and sells plastic raw materials. Its products are utilized in packaging materials, bottles, apparel, sports equipment, furniture, furnishings, tool components, medical products, etc., which are supposed to be a part of the supply chains in several industries.

After the deadly marine pollution, thousands of protestors pressed claims for legitimacy rights to be addressed. According to the outcomes of the investigation by the Government into FHS, FHS committed 53 procedural violations. Among others, a serious violation was the illegal modification of registered waste-treatment technology. FHS admits responsibility for the toxic chemical spill in Vietnam and agrees to pay 500 million US-Dollar in compensation.

The Vietnamese government has indicated that the disaster had impacted the livelihoods of more than 200,000 people, including 41,000 fisherman, and the recovery will take decades.



[1] Source: Thanh Nien News. 2016. “ Formosa unit owns up to fish kill disaster, commits to $500 million compensation”, in Thanh Nien News, 30 June 2016. Available at: [30 Oct 2021]
Source: My Pham. 2017. “Vietnam punishes officials over Formosa incident”, in Reuters, 22 April 2017. Available at: / [30 Oct 2021]
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