Illegal termination of labor contract in Vietnam

by Quang Minh

Currently, unlawful unilateral termination of the contract, also known as illegal termination of the contract, appears a lot in the labor market. This may damage the interest of employers and employees at various levels. Individuals do not always know how to protect their rights when facing this situation. In this article, LSX legal firm will provide you with information regarding: “Illegal termination of labor contract in Vietnam”

  • Labor Code 2019
  • Civil Code 2015

Unilateral termination of labor contract

Unilateral termination of a contract means the right to “withdraw” from a signed contract. In principle, breaking commitments is always discouraged, if not forbidden. However, the law provides cases that unilateral termination of labor contracts from employees (employees) as an important right of employees, equally important as the right to enter into labor contracts.

Labor Code 2019 stipulates: employee has the right to unilaterally terminate the employment contract.

Looking at the overall cases of termination of labor contracts recorded in Vietnam, three groups of causes that lead to labor termination:

  • Termination of labor contract due to unavoidable reasons.
  • Unilateral termination of labor contracts.
  • Termination of labor contracts due to labor reduction (including termination of labor contracts due to structural or technological changes, termination of labor contracts for economic reasons, and termination of labor contracts due to merger, consolidation, division of enterprises or cooperatives).

In particular, unilaterally terminating the contract is a case recorded with a lot of caution from the legislator. From a comparative legal perspective, the regulations on termination of labor contracts regulated with considerable differences between countries.

For example, the labor code of the French Republic divides cases of termination of labor contracts into 3 types: termination from the employee’s side, from the employer’s side, or according to agreement from both sides. Thus, an indefinite-term labor contract in French law can be terminated by the unilateral will of the parties or by agreement. So, in this country, unilateral termination of the labor contract plays a key role in terminating the legal validity of the labor contract. Meanwhile, labor relations in Thailand are governed by many laws, including the Labor Code, the Labor Protection Act BE 2541, and Civil-Commercial Code; regarding the termination of labor contracts, the current regulations only refer to the termination of labor contracts with indefinite-term.

Illegal termination of labor contract

Unilateral termination of the labor contract may be legal or illegal based on the provisions of the law.
First of all, unilateral termination of the labor contract means the case where the employee or the employee himself or herself terminates the validity of the labor contract agreed and signed by both parties (in accordance with the law).
Illegal unilateral termination of a labor contract means an employee or employer fails to comply with the cases where the law does not allow each party to have the right to unilaterally terminate.

When an employee or an employer illegally terminates a labor contract unilaterally, he/she must perform the obligations prescribed by law as follows:

For the case of the employer

The employer that illegally unilaterally terminates an employment contract with an employee shall reinstate the employee in accordance with the original employment 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 months’ salary specified in the employment contract.
After the reinstatement, the employee must return the severance allowance or redundancy allowance (if any) to the employer.
If no longer having a vacancy for the position or work as agreed in the employment contract and the employee still wishes to work, the employer shall negotiate revisions to the employment contract.
Where the employer fails to comply with the provisions on notice period in Clause 2 Article 36 of the Labor Code, the employer shall pay a compensation that worth the employee’s salary for the remaining notice period from the termination date.
In case the employee does not wish to return to work, in addition to the compensation, the employer shall pay a severance allowance in accordance with Article 46 of the Labor Code in order to terminate the employment contract.
Where the employer does not wish to reinstate the employee and the employee agrees, in addition to the compensation and the severance allowance, both parties shall negotiate an additional compensation which shall be at least 2 months’ salary under the employment contract in order to terminate the employment contract.

For the case of employees

The employee who unilaterally terminates the contract illegally will have to perform the obligations specified in Article 40 of the Labor Code 2019.

Article 40. Illegal unilateral termination of the employment contract insurance the employee

The employee who illegally unilaterally terminates his/her employment contract shall:
Not receive the severance allowance.
Pay the employer a compensation that is worth his/her half a month’s salary plus (+) an amount equal to his/her salary for the remaining notice period from the termination date.
The employee shall reimburse the employer with the training costs in accordance with Article 62 of this Code.

Accordingly, the employee will not receive severance allowance and must compensate the employer for half a month’s salary according to the labor contract.
In case the employee violates the regulations on the notice period, the employer must compensate the employer an amount corresponding to the employee’s salary for the unannounced days and must reimburse the employer for training costs.

Cases the employee has the right to unilaterally terminate the contract but must give advance notice

An employee shall have the right to unilaterally terminate the employment contract, provided he/she notices the employee in advance:

  • Firstly, at least 45 days in case of an indefinite-term employment contract;
  • Secondly, at least 30 days in case of an employment contract with a fixed term of 12 – 36 months;
  • Thirdly, at least 03 working days in case of an employment contract with a fixed term of under 12 months;
  • Fourthly, the notice period in certain fields and jobs shall be specified by the government.

Cases the employee has the right to unilaterally terminate the contract without prior notice

When having reasons listed below, the employee has the right to unilaterally terminate the labor contract without prior notice:

  • Firstly, not assigned to the work or workplace or not provided with the working conditions as agreed in the employment contract, except for the cases specified in Article 29 of the Labor Code.
  • Secondly, not paid adequately or on schedule, except for the case specified in Clause 4 Article 97 of the Code.
  • Maltreated, assaulted, physically or verbally insulted by the employer in a manner that affects the employee’s health, dignity, or honor; forced to work against his/her will.
  • Sexually harassed in the workplace.
  • Pregnant and has to stop working in accordance with Clause 1 Article 138 of the Labor Code.
  • Reaches the retirement age specified in Article 169 of the Labor Code, unless otherwise agreed by the parties.
  • Finds that the employer fails to provide truthful information in accordance with Clause 1 Article 16 of the Labor Code in a manner that affects the performance of the employment contract.

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

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Contact LSX

Finally, hope this article is useful for you to answer the question about “Illegal termination of labor contract in Vietnam”. If you need any further information, please contact  LSX Law firm+84846175333 or Email: hoangson@lsx.vn

What is illegal dismissal?

Unlawful dismissal or dismissal means the most severe form of labor discipline of the employers. They use their management rights to issue disciplinary decisions on dismissal incompatible with the provisions of the law, forcing employees to quit regardless of the validity of the labor contract.

Which court to file a lawsuit for labor disputes?

Point a, Clause 1, Article 39 of the 2015 Civil Procedure Code stipulates:
“1. Territorial jurisdiction of Courts to settle civil lawsuits shall be determined as follows:
a) The Courts of the localities where the defendants reside or work, applicable to defendants being individuals, or where the defendants are headquartered, applicable to defendants being agencies or organizations, shall have the jurisdiction to settle according to first-instance procedures for civil, marriage- and family-related, business, trade or labor disputes prescribed in Articles 26, 28, 30 and 32 of this Code;”
So, for labor disputes, individuals should file a lawsuit in Courts of localities as regulated above.

Responsibility of employers when terminating labor contracts with indefinite term?

Complete the procedures for verification of duration of participation in social insurance and unemployment insurance, return them and original copies of the employee’s other documents (if any);
Provide copies of the documents relevant to the employee’s work if requested by the employee. The employer shall pay the cost of copying and sending the documents.

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