Labor discipline is one of the central institutions of labor law and, at the same time, an important legal tool for the employer (“Employer“) to maintain order in production and business operations. Owing to the inherent imbalance of power in the labor relationship, the law has established a strict system of principles, limitation periods, and procedures to ensure that the Employer’s right to take disciplinary action is exercised in accordance with law, without infringing upon the lawful rights and interests of the employee (“Employee“). On the basis of the 2019 Labor Code (“Labor Code“) and Decree No. 145/2020/ND-CP detailing and guiding the implementation of a number of articles of the Labor Code on working conditions and labor relations (“Decree 145“), this article analyzes the legal provisions on handling labor discipline and the legal issues that enterprises should note when applying them, with a view to limiting legal risk and ensuring the lawfulness of disciplinary decisions.

1. Grounds for Handling Labor Discipline

In order to handle labor discipline, the Employer must prove the following grounds:

(1) Disciplinary Violation

A disciplinary violation is a precondition for establishing an employee’s disciplinary liability. A disciplinary violation may be understood as an act of the Employee that breaches the obligations set out in the Internal Labor Rules and in law.

A violation may exist in either of two forms: (i) performing an act that the Internal Labor Rules or the law prohibits, and/or (ii) failing to perform an act that the Internal Labor Rules or the law requires to be performed.

(2) The Element of Fault

In legal science, fault is understood as a person’s state of mind toward his or her own conduct and the consequences caused by that conduct. Fault is divided into four types:

–   Direct intentional fault: fault where the Employee clearly perceives that the act being performed constitutes a disciplinary violation and that, if performed, it will cause adverse consequences for the enterprise and seriously breach labor discipline, yet still performs it. In this case, the degree of the Employee’s fault is the highest;

–   Indirect intentional fault: fault where the Employee clearly perceives that his or her act constitutes a disciplinary violation and foresees that harmful consequences may occur; although the Employee does not desire the harm to occur, he or she nevertheless consciously allows it to occur;

–   Unintentional fault due to carelessness: fault where the Employee fails to perceive that his or her act constitutes a disciplinary violation capable of causing harm to the enterprise, although he or she should have known, and could have known, that the act constituted a disciplinary violation;

–   Unintentional fault due to overconfidence: fault where the Employee, although aware that his or her act may constitute a disciplinary violation and cause a certain degree of harm, is overconfident that the violation and the harm will not occur or can be prevented.

Each type of fault reflects a different nature and degree of disciplinary violation; determining the type and degree of the Employee’s fault upon a disciplinary violation is therefore of great significance. Based on the element of fault, the Employer may select the form of disciplinary action that corresponds to, and is appropriate for, the degree of the Employee’s violation.

2.  Principles of Handling Labor Discipline

Article 122 of the Labor Code sets out the principles the Employer must follow when handling labor discipline; in substance, this article functions as a mechanism controlling the Employer’s decision-making process in disciplinary matters. The principles for handling labor discipline are provided as follows:

Principle 1: In handling labor discipline, the following requirements must be satisfied:

(i)  The Employer must prove the Employee’s fault

This principle comprises two important elements. First, the burden of proving fault rests with the Employer. Because the Employee is typically in a weaker position than the Employer and may face difficulties in gathering documents and evidence to prove his or her own “innocence,” whereas the Employer, as the managing and operating party, enjoys greater advantages in accessing, retaining, and collecting documents and evidence relating to the violation. It is precisely because of this disparity in position and evidentiary capacity that the law places the burden of proving fault on the Employer. Second, the Employer may impose the disciplinary form of dismissal only if the Employee is at fault in committing the violation. The element of fault is one of the grounds on which the Employer handles labor discipline. The Employer cannot take disciplinary action against the Employee without proving the Employee’s fault in the violation.

(ii)  The handling of labor discipline must involve the participation of the grassroots employee representative organization of which the employee being disciplined is a member

This principle is designed to ensure the objectivity and transparency of the disciplinary process. The participation of the employee representative organization serves to monitor the Employer’s compliance with the order and procedures prescribed by law and to prevent the Employer from abusing its power or handling discipline arbitrarily, without adequate grounds, or disproportionately to the severity of the violation.

(iii)  The employee must be present and has the right to defend himself or herself, or to be defended by a lawyer or by the employee representative organization; where the employee is under 15 years of age, his or her legal representative must participate

This principle is designed to ensure the Employee’s right of defense when subject to disciplinary consideration. The Employee’s direct presence enables him or her to present views and adduce evidence and arguments in his or her own defense before the Employer issues a disciplinary decision, thereby preventing the Employer from unilaterally imposing a disciplinary form without hearing the views of the person being disciplined.

The law’s allowance for the Employee to be defended by a lawyer or by the employee representative organization is intended to redress the disparity in position and legal knowledge between the Employee and the Employer. For an Employee under 15 years of age, who belongs to a group not yet possessing full civil act capacity or the capacity to perceive and protect his or her own interests, the law mandates the participation of a legal representative in the disciplinary process. This provision clearly reflects the State’s policy of protecting minor workers, aiming to prevent the risk of such workers being disciplined unfairly on account of a lack of understanding or an inability to protect themselves.

(iv) The handling of labor discipline must be recorded in written minutes.

The preparation of minutes is an important legal basis for recording the entire course and content of the disciplinary process, including the views of the participating parties (the Employer, the Employee, the employee representative organization, counsel, etc.). This serves as a basis for determining the lawfulness of the disciplinary process in the event of a subsequent dispute.

In addition, the minutes also serve as evidence in the event of a complaint, a lawsuit before a court, or the resolution of a labor dispute, providing the competent authorities with an authentic basis on which to assess the correctness and objectivity of the disciplinary decision.

Principle 2: The Employer may not apply more than one form of disciplinary action for a single disciplinary violation.

This principle means that, for each disciplinary violation, the Employer may select and apply only one of the forms of disciplinary action prescribed by law (reprimand; extension of the salary-increase period by not more than 6 months; demotion; dismissal), and may not apply two or more disciplinary forms simultaneously for the same violation. For example, the Employer cannot both reprimand and extend the salary-increase period for the same violation by the Employee. Enterprises should therefore carefully review their Internal Labor Rules to accurately identify the disciplinary form corresponding to each type of violation, avoiding the simultaneous application of multiple disciplinary forms for a single violation.

The law lays down this principle to ensure fairness and proportionality between the violation and the disciplinary form. Each violation should be handled only once, by a single disciplinary form appropriate to its nature and severity, so as to avoid the Employee bearing multiple adverse legal consequences at once for the same fault.

This principle is also consistent with the common legal principle that “a single violation shall be handled only once,” as applied in the law on administrative violations and in criminal law. This consistency helps ensure uniformity and coherence in the development and application of law.

Principle 3: Where an employee simultaneously commits multiple disciplinary violations, only the highest disciplinary form corresponding to the most serious violation shall be applied.

This principle applies where the Employee commits several different disciplinary violations at the same time, or where multiple violations are discovered and handled simultaneously. In such cases, the Employer may not aggregate the disciplinary forms corresponding to each violation for simultaneous application, but may only select and apply the single highest disciplinary form, corresponding to the most serious of the violations concerned. For example, if the Employee has committed both a minor violation (corresponding to reprimand) and a serious violation (corresponding to demotion), the Employer may apply demotion only, and may not apply both reprimand and demotion at the same time. Accordingly, where an Employee commits multiple violations at once, enterprises should take care to clearly identify the most serious violation in order to apply the corresponding highest disciplinary form, so as to ensure that the handling of labor discipline complies with law and to avoid subsequent disputes.

This principle ensures proportionality and reasonableness between the degree of violation and the legal consequences borne by the Employee. Applying only the highest disciplinary form helps avoid the Employee being disciplined excessively or redundantly, bearing multiple cumulative legal consequences for different violations, when, in substance, the highest disciplinary form already encompasses and adequately reflects the severity of the most serious violation.

This principle also simplifies the process of handling labor discipline, making it easier for both the Employer and the Employee to determine the applicable disciplinary form, while limiting labor disputes arising from the Employer applying multiple disciplinary forms for multiple violations by the same Employee.

Principle 4: The Employer may not handle labor discipline against an employee during the following periods: (i) sick leave or convalescent leave; leave taken with the Employer’s consent; (ii) being held in temporary detention or custody; (iii) pending the conclusion of an investigation and verification by a competent authority of a violation specified in Clauses 1 and 2, Article 125 of the Labor Code; (iv) where the employee is a female employee who is pregnant, on maternity leave, or raising a child under 12 months of age.

This is a humane provision reflecting the State’s policy of protecting the Employee, given that the Employee is facing health, physical, mental, or legal difficulties (as in the case of temporary detention or custody) and is not yet in a position to fully exercise the right of self-defense or to present his or her views during the disciplinary process. Suspending disciplinary action in these circumstances ensures that the Employee has the actual conditions necessary to exercise his or her right of defense fully and effectively.

As regards an Employee awaiting the outcome of an investigation or verification by a competent authority, this principle also reflects respect for the presumption of innocence and ensures accuracy and objectivity in the handling of discipline. The Employer must obtain an official and clear conclusion from the competent authority regarding the violation before issuing a disciplinary decision, so as to avoid hasty disciplinary action lacking a sound basis that could cause a miscarriage of justice for the Employee.

For female employees who are pregnant, on maternity leave, or raising a child under 12 months of age, this provision reflects the State’s special protection policy toward female employees, who belong to a group particularly vulnerable in the labor relationship owing to their specific health circumstances. This provision helps ensure social security and prevents female employees from losing their jobs or income during a period that is sensitive for their health and family life, and it is consistent with the international commitments on the protection of the rights of female workers to which Vietnam is a party.

Enterprises should therefore take care to monitor and keep fully up to date the status of the Employee (on sick leave, maternity leave, raising a child under 12 months of age, held in temporary detention or custody, or under investigation, etc.) before taking disciplinary action, so as to ensure that the handling of labor discipline complies with law.

Principle 5: The Employer shall not handle labor discipline against an employee who commits a disciplinary violation while suffering from a mental illness or another illness that deprives him or her of the ability to be aware of, or to control, his or her own conduct.

This principle stems from the nature of the element of fault in the handling of labor discipline. As analyzed in Section 1 above, fault is a mandatory ground for establishing the Employee’s disciplinary liability. Where the Employee suffers from a mental illness or another condition depriving him or her of the ability to perceive or control his or her own conduct, the Employee, in substance, lacks the capacity to perceive the nature and consequences of his or her own act, and the act is therefore not regarded as being at fault in this case. In the absence of fault, the Employer has no grounds on which to take disciplinary action.

This principle is similar to common legal principles found in criminal and civil law, under which a person lacking act capacity (owing to mental illness or another condition) is not held legally liable for his or her conduct during the period of illness, because he or she lacks the capacity to perceive and control that conduct. This ensures consistency and logical coherence among the provisions of the legal system.

In addition, this principle encourages the Employer to act more responsibly in caring for and facilitating medical examination and treatment for the Employee, rather than immediately applying punitive disciplinary measures, thereby contributing to a humane and socially responsible working environment.

In light of the foregoing legal provisions, where there are indications giving rise to suspicion that the Employee suffers from a mental illness or another condition affecting his or her capacity to perceive or control his or her conduct at the time of the violation, the enterprise should request a medical assessment or collect medical records to obtain an authentic basis before deciding whether to take disciplinary action. The enterprise should not rush to issue a disciplinary decision before clarifying the Employee’s mental health condition at the time of the violation, so as to avoid the risk of the disciplinary decision being declared void when a labor dispute is resolved before a court.

3. Forms of Handling Labor Discipline

Article 124 of the Labor Code lists four forms of disciplinary action in ascending order of severity: (i) reprimand; (ii) extension of the salary-increase period by not more than 06 months; (iii) demotion; and (iv) dismissal.

This ascending arrangement of the forms of disciplinary action is not merely a listing device; it also binds the Employer to apply a form commensurate with the severity of the violation, rather than a form more severe than necessary. Specifically, the first three forms (reprimand, extension of the salary-increase period, and demotion) do not terminate the labor relationship and are applied on grounds that the Employer itself sets out in the Internal Labor Rules, provided that the handling of labor discipline complies with the principles under Article 122 of the Labor Code and does not fall within the acts prohibited when handling discipline.

Article 124 of the Labor Code is designed to give effect to the principle that disciplinary action must be commensurate with the nature and degree of the violation. However, the fact that the law has not yet set out quantitative criteria or specific guidance for selecting the appropriate disciplinary form still leaves a gap in the application of the law, which may give rise to disputes over the reasonableness and proportionality of disciplinary decisions. Accordingly, to limit legal risk, enterprises should develop Internal Labor Rules that specifically classify violations and the corresponding forms of disciplinary action, while ensuring that the application of disciplinary forms always complies with the principles of fairness, objectivity, and proportionality set out in the Labor Code.

Because dismissal is the only form of disciplinary action that terminates the labor relationship, Article 125 of the Labor Code confines its application to four closed groups of grounds. The first is the group of acts seriously infringing property or person occurring at the workplace, including theft, embezzlement, gambling, intentional infliction of injury, or drug use. The second is the group of acts infringing the enterprise’s core business interests – disclosure of business secrets or technological secrets, infringement of intellectual property rights, or acts causing serious damage, or threatening to cause especially serious damage, to the property or interests of the Employer. The third is recidivism during the period in which a prior disciplinary record for extension of the salary-increase period or demotion has not yet been expunged, reflecting the progressive nature of disciplinary liability. The fourth, and also the most common ground in practice, is unauthorized absence from work for 05 cumulative days within 30 days, or 20 cumulative days within 365 days, without a legitimate reason.

The law’s exhaustive enumeration of the grounds for dismissal under Article 125 of the Labor Code is intended to protect the Employee from the risk of arbitrary dismissal: the Employer may not unilaterally add grounds for dismissal beyond the scope of this article, even where such grounds have been additionally stipulated in the Internal Labor Rules or agreed upon in the labor contract. This is also the point at which enterprises most commonly err in practice: where the Internal Labor Rules stipulate additional grounds for dismissal falling outside Article 125 – for example, “failure to meet work targets” or “violation of corporate culture” – then, even if the Employer fully complies with the order and procedures under Articles 122 and 123 of the Labor Code, the dismissal decision remains at risk of being declared unlawful for lack of a lawful statutory ground. In cases of disciplinary dismissal, enterprises should consult their legal department or counsel before making a decision, so as to minimize legal risk and avoid a disciplinary decision being declared void by a court, which would result in liability for compensation, reinstatement of the Employee, and other adverse legal consequences.

In practice, the application of the ground of unauthorized absence from work has become increasingly complex in the context of remote or hybrid working arrangements, because the concept of “presence at the workplace” is no longer tied to a fixed location as it once was. Employers adopting flexible working models need to establish sufficiently clear mechanisms for timekeeping, work reporting, and online confirmation to provide a basis for proving unauthorized absence in the event of a dispute; otherwise, it will be difficult to prove fault in accordance with the obligation set out in Article 122 of the Labor Code.

It can thus be seen that the fundamental distinction between dismissal and the other forms of disciplinary action lies in the following: for the first three forms, the law grants the Employer relative autonomy in defining the specific violations, provided they are set out in the duly registered Internal Labor Rules, whereas for dismissal alone – because its legal consequence is termination of the labor relationship – the law does not allow the Employer to freely define the grounds, but requires compliance with the closed list set out in a dedicated article. This design shows that the legislature calibrates the degree of control to the severity of the legal consequences that each disciplinary form imposes on the Employee.

4. Statute of Limitations for Handling Labor Discipline

Under Clause 1, Article 123 of the Labor Code, the general statute of limitations for handling a disciplinary violation is 06 months from the date the violation occurred; for violations directly related to finance, property, or the disclosure of the Employer’s technological or business secrets, the limitation period is extended to 12 months, owing to the complexity of such matters, which typically requires a longer time for investigation and verification. This limitation-period provision reflects a balance between the Employer’s right to take disciplinary action and the need for stability in the labor relationship: the Employee should not be left indefinitely exposed to the risk of discipline for an act that occurred long ago, while the Employer is at the same time compelled to act promptly rather than delay disciplinary action for other purposes.

Clause 2, Article 123 of the Labor Code addresses the situation where the limitation period overlaps with the periods during which disciplinary action is suspended under Article 122 of the Labor Code: if, at the time of handling, the Employee falls within a category not yet subject to disciplinary action and the limitation period has expired or has less than 60 days remaining, the limitation period is extended, but by no more than 60 days from the date the Employee returns to work or the reason for the suspension ceases. This extension mechanism shows that the two articles are designed to operate in tandem, preventing the Employer from losing its right to take disciplinary action merely because the Employee falls within a temporarily protected category.

The greatest difficulty in applying Article 123 in practice lies in determining the point at which “the violation occurred.” For violations of a continuing nature, or ones only discovered after a long period – such as accounting-record fraud or embezzlement concealed through sophisticated means  rigidly applying the “date the act was committed” rather than the “date the act was discovered” may cause the limitation period to expire before the Employer manages to discover the violation and complete its verification, leaving a serious violation without any remaining legal basis for disciplinary action.

5. 
   

   Order and Procedures for Handling Labor Discipline

Pursuant to Article 70 of Decree 145, the order and procedures for handling labor discipline are provided as follows:

(1) Identifying the Violation

Upon discovering that the Employee has committed a disciplinary violation, at the time the violation occurs, the Employer prepares a written record of the violation and notifies the grassroots employee representative organization of which the Employee is a member, or the legal representative of an Employee under 15 years of age. Where the Employer discovers a disciplinary violation after the violation has occurred, it proceeds to collect evidence proving the Employee’s fault.

(2) Notice of the Disciplinary Hearing

Within the limitation period for handling labor discipline, the Employer conducts the disciplinary hearing as follows:

– At least 05 working days before the date of the disciplinary hearing, the Employer notifies the content, time, and venue of the hearing, the name of the person subject to disciplinary action, and the violation for which discipline is being handled, to the parties required to attend the hearing under Points b and c, Clause 1, Article 122 of the Labor Code, namely: (i) the grassroots employee representative organization, (ii) the lawyer defending the Employee (if any), and (iii) the legal representative of an Employee under 15 years of age (if any) (the “required attendees”), ensuring that these parties receive the notice before the hearing takes place;

– Upon receiving the Employer’s notice, the required attendees must confirm their attendance at the hearing with the Employer.

Where one of the required attendees is unable to attend at the notified time or venue, the Employee and the Employer shall agree to change the time or venue of the hearing; where the two parties fail to reach agreement, the Employer shall decide the time and venue of the hearing.

(3) Conducting the Disciplinary Hearing

The Employer conducts the disciplinary hearing at the notified time and venue.

Where one of the required attendees fails to confirm attendance or is absent, the Employer still proceeds with the disciplinary hearing.

The content of the disciplinary hearing must be recorded in written minutes, which must be adopted before the hearing concludes and signed by the participants; where a participant does not sign the minutes, the person preparing the minutes shall clearly record that person’s full name and the reason for not signing (if any) in the minutes.

(4) Issuance and Delivery of the Disciplinary Decision

Within the limitation period for handling labor discipline, the person with authority to handle labor discipline issues the disciplinary decision and sends it to the required attendees.

6. 
   

   Conclusion

In general, the provisions from Article 122 to Article 125 of the Labor Code establish a relatively comprehensive mechanism for handling labor discipline, spanning the principles, procedures, and limitation periods through to the forms of disciplinary action and the conditions for applying dismissal. These provisions help balance the Employer’s right to manage labor with the lawful rights and interests of the Employee, while limiting arbitrary disciplinary action. In practice, however, certain difficulties persist, such as proving the Employee’s fault, determining the degree of violation in order to select the appropriate disciplinary form, correctly applying the limitation period, and fully complying with the requirements as to order and procedure. Accordingly, to ensure the lawfulness of disciplinary decisions and to limit the occurrence of labor disputes, the Employer should develop clear Internal Labor Rules, refine its disciplinary process, and strictly comply with the provisions of the Labor Code and its implementing guidance.