04 faults employers frequently make when unilaterally terminating labor contracts with employees

Unilaterally Terminating Labor Contract

Unilateral termination of a labor contract is a legal act by an entity to terminate the labor relationship based on a labor contract. Currently, production and businesses are facing many difficulties, and enterprises have been forced to lay off some of their employees. However, instead of complying with current regulations in cases where the employers unilaterally terminate the labor contract in accordance with the law, the employers may commit faults that will lead to compensation for damages to employees when there are disputes or complaints.

In this article, BLawyers Vietnam briefly describes the faults that employers need to pay attention to.

1. The first fault: Violation of grounds for unilateral termination of labor contract with employees

The Labor Code 2019 (“Labor Code”) clearly stipulates the cases in which employers have the right to unilaterally terminate labor contracts with employees, so employers must ensure that they have the grounds to do so. At the same time, employers must prepare documents and evidence to suit each prescribed case. In particular, employers need to pay attention to the following:

(i) In the case of unilateral termination of a labor contract because of the belief that the employees frequently fail to complete the work, the employer must consider the labor contact’s content (such as job description parts, progress requirements, and quality of performance); score sheet, evaluation and classification of work completion; minutes detailing specific unfinished work continuously over a certain period of time; regulations on criteria for evaluating the level of work completion; statements of litigants and related persons, etc.

(ii) In the case of unilateral termination of a contract because the employees voluntarily stopped working the job without a legitimate reason for 05 consecutive working days or more, the employers need documents such as time records; violation reminder minutes; and camera extracted data (if any).

Of note, employers may become confused with cases in which a disciplinary form of dismissal is applied: for example, the employee voluntarily quits work for 05 cumulative days within a 30-day period or 20 cumulative days within 365 days from the first day the employee voluntarily quits the job without a valid reason. Although dismissal is also a form of unilateral termination of a labor contract, it must be applied according to a separate process.

(iii) In the case of unilateral termination of a contract because of an illness treatment period prescribed under the Labor Code, the employers need to have documents and evidence about the employee’s illness treatment period and confirmation results from the relevant medical agency about the employee’s “unrecovered working ability”.

2. The second fault: Violation of the notice period

One of the other common faults, besides violating the grounds when unilaterally terminating a contract with an employee, is violating procedures for terminating the labor contract. Specifically, employers need to comply with procedures for notice periods prescribed, depending on the type of labor contract or grounds for terminating the labor contract in the Labor Code, as follows:

(i) At least 45 days in the case of an indefinite-term employment contract;

(ii) At least 30 days in the case of an employment contract with a fixed term of 12 – 36 months;

(iii) At least 03 working days in the case of an employment contract with a fixed term of less than 12 months;

(iv) For some specific industries, professions and jobs (such as aircraft crew members, seafarers, business managers, etc.), the notice period will be longer according to regulations. In the case of business managers, many disputes have occurred because employers have often ignored this regulation.

3. The third fault: Violation of cases in which the employers are not allowed to unilaterally terminate the labor contract

Employers also need to pay attention to cases in which they cannot unilaterally terminate labor contracts with employees, including:

(i) The employee is suffering from an illness or work accident, or occupational disease and is being treated or nursed under the decision of a competent health institution, excluding cases stipulated in the Labor Code;

(ii) The employee is on annual leave, personal leave, or any other type of leave permitted by the employer; or

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

4. The fourth fault: Violation of the deadline for signing a new labor contract after the expiration of a fixed-term labor contract

There are many cases in which the employer signs a definite-term labor contract with an employee, but when the definite-term labor contract expires, the employee continues to work within 30 days from the expiration date of the definite-term labor contract. If the employer and employee have not signed a new contract, the signed contract will become an indefinite-term labor contract.

For example: Ms. T and company H sign a labor contract with a definite term of 12 months from 01 January 2021 to 01 January 2022, for the position of accountant. On 01 January 2022, Ms. T’s labor contract ends, but company H has not notified her about the contract signing, so Ms. T continues to work until 05 February 2022. After that, company H and Ms. T agree to sign a new contract, but the two sides cannot reach an agreement on the terms of the new contract. Pursuant to provisions in the Labor Code, the labor contract between Ms. T and company B has thus become a labor contract with an indefinite term. Therefore, in this case, company H will fall into the situation of illegally unilaterally terminating the contract.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 18 November 2023

Writer: Minh Truong


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