Vietnam: Notes About The Unilateral Termination Of The Labor Contract In Vietnam

Due to the outbreak of the Covid-19 pandemic, many employees have had to quit their job and many employers have had to forcibly lay off their employees to relieve the burden weighing on their backs without the employees' consent. These circumstances, on both sides, are known as unilaterally terminate the labor contract. Is it legal? What are the consequences? What are the notes about the unilateral termination of the labor contract in Vietnam?

In what cases can the labor contract between the employer and the employee be unilaterally terminated?

Although a labor contract is an agreement between the parties, one party doesn't need the consent of the other party if they want to unilaterally terminate the contract between them. 

This means that both the employee and the employer can unilaterally terminate the labor contract without the consent of the other side. Accordingly, the unilateral termination of the contract can be divided into 2 situations:

1. The employee unilaterally terminates the contract

According to the provisions of Article 35 of the Labor Code 2019, the employee has the right to unilaterally terminate the contract without reason. In other words, as long as the employee wants to, he or she will have the right to unilaterally terminate the labor contract, provided he/she notices the employee in advance:

• At least 45 days in case of an indefinite-term employment contract;
• At least 30 days in case of an employment contract with a fixed term of 12 – 36 months;
• At least 03 working days in case of an employment contract with a fixed term of under 12 months;

The notice period in certain fields and jobs shall be specified by the government.

Accordingly, to be considered a legal termination of a labor contract, the employee must ensure that they have notified the employer in advance to allow the employer and the business to have time to arrange, replace or recruit new personnel to replace the position that employee will have left vacant. 

2. The employer unilaterally terminates the contract

Pursuant to Article 36 of the Labor Code, the employer also has the right to unilaterally terminate the labor contract but he/she can only exercise this right in the following cases:

• The employee repeatedly fails to perform his/her work according to the criteria for assessment of employees' fulfillment of duties established by the employer. The criteria for assessment of employees' fulfillment of duties shall be established by the employer with consideration taken of opinions offered by the representative organization of employees (if any);
• The employee is sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive months in the case of an indefinite-term employment contract, for 06 consecutive months in the case of an employment contract with a fixed term of 12 – 36 months, or more than half the duration of the contract in case of an employment contract with a fixed term of fewer than 12 months.
• In the event of a natural disaster, fire, major epidemic, hostility, relocation, or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted;
• The employee is not present at the workplace after 15 days from the expiration of the contract suspension period or after the time agreed by the parties;
• The employee reaches the retirement age specified in Article 169 of the Labor Code 2019 unless otherwise agreed by the parties;
• The employee fails to go to work without acceptable excuses for at least 05 consecutive working days (The acceptable excuses may include: natural disaster, fire, illness, self or sick relatives certified by medical examination and treatment establishments and other cases in labor regulations);
• The employee fails to provide truthful information during the conclusion of the employment contract in accordance with Clause 2 Article 16 of the Labor Code 2019 in a manner that affects the recruitment.

Accordingly, if the employer lays off the employee in one of the above-mentioned cases, it will be considered a legally unilateral termination of the contract.

The notification period for unilateral termination of labor contract

When an employee or employer wants to unilaterally terminate the contract, he/she must notify the other parties and comply with the regulations about the termination of the contract of each business. For instance, a business might require the employee to train a replacement to their position before they leave or to hand over all the accounts that they are currently using under the company's name and resources, etc.

Consequently, the notification period is extremely important and according to each employee's different position, the term of the labor contract, the business's current situation, etc., the notification period may be different.

So, what are the notification period for unilateral termination of labor contract for employee and employer?

The notification period for employees

When unilaterally terminating the labor contract, the employee must notify the employer in advance within this certain period of time for each different situation:

1. At least 120 days notice: Applicable to employees who sign labor contracts with an indefinite term or with a term of 12 months or more to do specific jobs.
2. At least ¼ period of the term of the labor contract: Applicable to employees doing specific jobs under labor contracts with a term of fewer than 12 months.
3. At least 45 days notice: Applicable to employees working under labor contracts of the indefinite term.
4. At least 30 days notice: Applicable to employees working under labor contracts with a term of 12 – 36 months.
5. At least 03 working days notice: Applicable to employees working under labor contracts of less than 12 months.
6. Without prior notice: The employees won't have to notify or announce to the employer about their departure if:

• They are not being assigned to the right job, working location, or not guaranteed working conditions as agreed, except in the case of transferring employees;
• They are not being paid in full or not paying on time;
• They are being abused, beaten by the employer, or having insulting words or actions affecting health, dignity, and honor;
• They are being forced to labor against their will;
• They are being sexually harassed at work;
• They are pregnant female employees who must take leave from work because their work adversely affects the fetus;
• They are of full retirement age unless otherwise agreed between the employer and the employee;
• They are being granted dishonest information related to the work that affects the performance of the contract by the employer.

The notification period for employers

When unilaterally terminating the contract with the employee, the employer has the responsibility to notify the employee in advance within this certain period of time for each different situation:

1. At least 120 days notice: If the employer signs a labor contract with an indefinite term or with a term of 12 months with an employee doing a specific job.
2. Equal to ¼ of the contract term: If the employer signs a labor contract of fewer than 12 months with an employee doing a specific job.
3. At least 45 days notice: If the employer signs an indefinite term labor contract with an employee.
4. At least 30 days notice: If the employer signs a labor contract with a term of 12 – 36 months with the employee.
5. At least 03 working days notice: If the employer signs a labor contract of fewer than 12 months with the employee or the employee has been treated for an illness or accident but their health has not yet recovered.
6. Without prior notice: If the employee is not present at the workplace after the contract suspension period or voluntarily quits without an acceptable excuse from 05 consecutive working days.

Consequences for the unilateral termination of the contract

To some people, the unilateral termination of a contract might sound like a breach of contract and may be followed up with dire consequences. So, will there be any consequences if one party unilaterally terminates the contract and if there is, what are they?

If the employer and the employee unilaterally terminate the contract according to the above circumstances, it will be considered legal action and therefore, doesn't break the law or suffered any consequences.

Nonetheless, if the termination of the contract doesn't fall into one of the above cases or if the notification requirements are not met, it will be considered an unlawful termination of the contract and an action that violates the law.

When conducting an unlawful termination of the contract:

• The employee will have to compensate half a month's salary, the amount of money corresponding to the salary in the days absent without notice (if the notice period is violated), the training costs (if vocational training is provided from the employer's budget).
• The employer will have to reinstate the employee to work and compensate wages, pay compulsory insurances during the days when employees are not allowed to work, pay an amount of money corresponding to the salary in the days absent without notice (if the notice period is violated), pay the employee an additional amount equal to at least 2 months' salary.