Right of employer to unilateral termination of labor contract

The unilateral termination of labor contract is the right of employer. However, to exercise such right, the employer should take the followings into consideration:

I. Right of employer to unilateral termination of labor contract

1. Cases in which an employer is entitled to unilateral termination of labor contract

• The employee regularly fails to perform his/her work under the labor contract that is determined according to the criteria for assessing the employees’ duties fulfillment as specified in the internal labor regulations.
• The employee who is sick or has an accident and remains unable to work after having received treatment for 12 consecutive months in the case of an indefinite-term labor contract, or for 06 consecutive months in the case of a labor contract with a fixed term of 12 to 36 months, or more than half the term of the contract in case of a labor contract with a fixed term of less than 12 months;
• In the event of a natural disaster, fire or other force majeures as prescribed by law, the employer has to reduce production, lay off employees after having applied all remedies;
• The employee is not present at the workplace after the labor contract performance suspension period as prescribed;
• The employee reaches the retirement age as prescribed;
• The employee quits job by himself/herself without acceptable excuses for at least 05 consecutive working days;
• The employee fails to provide truthful information as regulated during the conclusion of the labor contract  that affects the recruitment.

2. Advance notice period to employees:

• At least 45 days in case of an indefinite-term labor contract;
• At least 30 days in case of a labor contract with a fixed term of 12 to 36 months;
• At least 03 working days in the case of an labor contract with a fixed term of less than 12 months and in the cases the employee is sick or has an accident and remains unable to work after having received treatment for 12 consecutive months in the case of an indefinite-term labor contract, or for 06 consecutive months in the case of a labor contract with a fixed term of 12 to 36 months, or more than half the term of the contract in case of a labor contract with a fixed term of less than 12 months;
• No prior notice is required in case the employee is not present at the workplace after the suspension period of the labor contract performance and the employee quits job by himself/herself without acceptable excuses for at least 05 consecutive working days.

3. Cases in which an employer is not entitled to unilateral termination of  labor contract:

• 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 within the allowed duration;
• The employee is on annual leave, personal leave, or any other types of leave permitted by the employer;
• The employee is pregnant, on maternal leave or raising a child under 12 months of age.

II. Obligations of the employer upon unilateral termination of labor contract:

1. In case of unilateral labor contract termination in accordance with the law:

• Full payment of wages to employees;
• Completting the procedures for confirming the time of payment of social insurance and unemployment insurance premiums and return them along with the originals of other documents if the employer withheld them from the employee;
• Payment of severance allowance to employees.

2. In case of illegal unilateral termination of labor contract:

Labor contract termination that does not comply with the conditions mentioned in Section 1 is a case of illegal unilateral termination of the labor contract. Employers must perform the following obligations:

• Reinstating the employee in accordance with the original labor contract, 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 salary month specified in the labor contract. After the reinstatement, the employee must return the received severance allowance or redundancy allowance (if any) to the employer;
• If there is no longer a vacancy for the position or work as agreed in the labor contract and the employee still wishes to work, both parties shall negotiate with each other to revise and supplement the labor contract;
• In case the employer fails to comply with the advance notice period, shall pay a compensation equivalent to the employee’s salary under the labor contract for the days without advance notice;
• In case the employee does not wish to return to work, in addition to having to pay salary, pay social insurance, health insurance, unemployment insurance in the days when the employee is not able to work and an amount equal to at least 02 salary months, the employer shall pay a severance allowance as prescribed to the employee;
• In case the employer does not want to reinstate the employee and the employee agrees that, in addition to having to pay salary, pay social insurance, health insurance, unemployment insurance in the days when the employee is not able to work and an amount equal to at least 02 salary months, two parties shall negotiate an additional compensation which shall be at least 2 salary months under the labor contract to terminate the labor contract.

The foregoing is an overview of the rights of employer under the law of Vietnam. For further information on this subject, feel free to contact ALB & Partners, a professional law firm in Vietnam. With a team of experienced lawyers, we are pleased to assist Clients in any legal issues related to labor laws in Vietnam. Kindly send us your requests via our email address: [email protected]