Issue of January 2022 – Cases of unilateral termination of employment contracts of employers

Dear Valued Clients,

Under the 2019 Labor Code (“LC”), enterprises or employers have the right to terminate employment contracts (“ECs”) with their employees in some certain cases. ENT would like to send Valued Clients this article collecting cases of lawful unilateral termination of employers and their obligations in the event of unilateral termination of ECs.

Cases of unilateral termination of an EC of employers

Under Article 36.1 of the 2019 LC, an employer has the right to unilaterally terminate an EC in the following circumstances:

1. The employee repeatedly fails to perform his/her work according to the criteria for assessment of employees’ fulfillment of duties established by the employer. The criteria for assessment of employees’ fulfillment of duties shall be established by the employer with consideration taken of opinions offered by the representative organization of employees (if any).

2. The employee gets sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive months (in case of an indefinite-term EC), for 06 consecutive months (in case of an EC with a fixed term of 12 – 36 months), or more than half the duration of the contract (in case of an EC with a fixed term of less than 12 months).

Upon recovery, the employer may consider concluding another EC with the employee.

3. In the event of a natural disaster, fire, major epidemic, hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted.

4. The employee is not present at the workplace after 15 days from the expiry of the suspension period of the EC.

5. The employee reaches the retirement age as per the law, unless otherwise agreed by the parties.

6. The employee is not present at work without acceptable excuses for at least 05 consecutive working days.

7. The employee fails to provide truthful information during the conclusion of the EC[1] in a manner that affects the recruitment.

Cases in which employers are prohibited from unilaterally terminating an EC[2]

1. The employee is suffering from an illness or work accident, occupational disease and is being treated or nursed under the decision of a competent health institution, except for the cases where the employee gets sick or has an accident and remains unable to work as stipulated in clause 2 of the aforementioned Section “Cases of unilateral termination of an EC of the employers”.

2. The employee is on an annual leave, personal leave, or any other types of leave permitted by the employer.

3. The employee is pregnant, on a maternal leave or raising a child under 12 months of age.

Obligations of the employer in case of lawful unilateral termination of an EC[3]

Inform the employee in advance in case of termination due to the reasons mentioned in clauses 1, 2, 3, 5 and 7 of the aforementioned Section “Cases of unilateral termination of an EC of the employers” as follows:

1. At least 45 days in case of an indefinite-term EC.

2. At least 30 days in case of an EC with a fixed term of 12 – 36 months.

3. At least 03 working days in the case of an EC with a fixed term of less than 12 months and in the termination cases due to sickness and accident as stipulated in clause 2 of the aforementioned Section “Cases of unilateral termination of an EC of the employers”.

4. Regarding specific business lines[4], the notice period shall be: (i) at least 120 days before the termination date if the EC has an indefinite term or a term of at least 12 months; or at least one fourth (1/4) of the EC duration if the duration is less than 12 months.

5. The employer is not obliged to inform the employee in advance if the contract termination is due to the reasons in clauses 4 and 6 of the aforementioned Section “Cases of unilateral termination of an EC of the employers”.

Obligations of the employer in case of unlawful unilateral termination of an EC[5]

A unilateral termination of an EC, which is not consistent with the aforementioned regulations, shall be considered an unlawful unilateral termination and the employer must take responsibilities under Article 41 of the 2019 LC as follows:

1. Reinstate the employee in accordance with the original EC, and pay the salary, social insurance, health insurance and unemployment insurance premiums for the period during which the employee was not allowed to work, plus at least 02 months’ salary specified in the EC.

• • After the reinstatement, the employee must return the severance allowance or redundancy allowance (if any) to the employer.
  • Where there is no longer a vacancy for the position or work as agreed in the EC and the employee still wishes to work, the employer shall negotiate revisions to the EC.
  • In case the employer fails to comply with the aforementioned notice obligation, the employer shall pay a compensation that is worth the employee’s salary for the remaining notice period from the termination date.

2. In case the employee does not wish to return to work, in addition to the compensation prescribed in clause 1 of this Section, the employer shall pay a severance allowance[6] in order to terminate the EC.

3. Where the employer does not wish to reinstate the employee and the employee agrees, in addition to the compensation mentioned in clause 1 of this Section and the severance allowance, both parties shall negotiate an additional compensation which shall be at least 2 months’ salary under the EC in order to terminate the EC.

As usual, we hope you find this article helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.

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[1] Under Article 16 of the 2019 LC, upon the conclusion of an EC, the employer shall provide the employee with truthful information about his/her full name, date of birth, gender, residence, educational level, occupational skills and qualifications, health conditions and other issues directly related to the conclusion of the EC which are requested by the employer.

[2] Under Article 37 of the 2019 LC.

[3] Under Article 36.2 of the 2019 LC.

[4] Under Article 7 of the Decree 145/2020/NĐ-CP, specific business lines include:

• • Aircrew members; aircraft maintenance technicians, aviation repairmen; flight coordinators.
  • Enterprise managers are defined by the Law on Enterprises; the Law on Management and use of State Investment in Enterprises.
  • Crewmembers working on Vietnamese vessels operating overseas; crewmembers dispatched to foreign vessels by Vietnamese dispatching agencies.
  • Other cases prescribed by law.

[5] Under Article 36.2 of the 2019 LC.

[6] Under Article 46 of the 2019 LC.