Recently, due to the impact of Covid-19 pandemic, many employers faced difficulties on business and caused a huge increment of force labor cut in Vietnam. Although the law regulated conditions for employers to unilaterally terminate labor contracts with employees, but in some cases, employers breached the law.
BLawyers Vietnam would analyze underneath 02 questions for an illegal unilateral termination of labor contracts according to Labor Code 2012 (“LC”). Of note, the LC is effective until 31 December 2020 before being replaced by the 2020 version.
1. What are elements of an illegal unilateral termination by employers?
Firstly, the employer violates unilateral reasons for terminating labor contracts
By law, the employer can unilaterally terminate labor contracts in 04 following cases:
(i) An employee often fails to perform his job stated in the labor contract. To determine so, the employer must specify the criteria for assessing the work completion level of employees. This serves as a basis for assessing employees who often do not complete the work under the labor contract.
(ii) The employee is sick or has an accident and remains unable to work after having received treatment for several consecutive months. This time differs for each type of signed labor contracts.
(iii) As a result of natural disasters, fire or other force majeure events (included epidemic) or relocation or narrowing of the production and business location at the request of authority state agencies. In such cases, the employer should prove it tried to implement remedial measures but failed and no choice to scale down production and cut jobs of employees.
(iv) The employee is absent from the workplace after the period of postponing labor contract performance. There are some cases of postponing labor contract performance including: (a) the employee performs the military service; (b) the employee is temporarily arrested as prescribed of criminal procedure regulations; (c) the employee has perform the decision on applying measures of sending to reformatories, compulsory detoxification establishments or compulsory education establishments; (d) a female employee is pregnant as prescribed by law; and (e) other cases as agreements of both parties.
If the employer cannot proof any of 04 above-mentioned reason, the unilateral termination could be considered as illegal.
Secondly, the employer unilaterally terminates labor contract in cases not permitted by laws
The LC regulated 04 special circumstances that the employer cannot terminate labor contract unilaterally, although it satisfied the statutory conditions above. They are:
(i) The employee is sick or has a work accident or occupational disease and is being treated under the decision of a competent health establishment. It is except for the case that the treatment has prolonged consecutively in a long time as mentioned above.
(ii) The employee is on annual leave, personal leave or any other types of leave permitted by the employer.
(iii) An unilateral termination with a female employee because of her marriage, pregnancy, maternity leave, or that she is nursing a child under 12 months of age.
(iv) The employee is on maternity leave in accordance with the Law on Social Insurance 2014.
Finally, the employer violates the regulation on prior notice time-limit
The employer must send to the employee a prior notice before terminating the labor contract. Otherwise, the termination is illegal. The prior notice time is respectively as least 45 days and 30 days for indefinite-term labor contracts and definite-term ones. For seasonal or work-specific ones of under 12 months, it is at least 3 working days in advance.
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2. Which legal consequences that the employer must bears for an illegal unilateral termination?
If the employee wants to return to work for the employer in accordance with the signed labor contract, the employer must reinstate the employment and pay for the employee:
- Wage, social insurance and health insurance premiums for the period that the employee did not work; and
- At least 02 month’s wage following the labor contract.
If the employer does not want to reinstate and the employer agrees so, the employers must pay all above payments. The employee also receives severance allowance and an amount of compensation which must be at least equal to 2 months’ wage.
Furthermore, if the employer violates the prior notice time, he must compensate the employee an amount equal to the employee’s wage for the days without prior notice.
In addition, the employer might be subject to some risks as follows:
- A fine up to VND20,000,000 if not paying or not paying enough the compensation (on case-by-case basis).
- A fine up to VND20,000,000 if the termination happens to a female employee in marriage, pregnancy, maternity leave or nursing a child under 12 months of age. Then the employer must get the employer back for work.
Of note, the fines above are applicable to individuals, the fines applicable to organizations are twice the fine for individuals.