Important considerations on the unilateral termination of a labor contract in Vietnam

Although the labor contract is a contractual agreement between the parties, you do not need the consent of the other party to terminate the contract unilaterally. So, what should employers and employees consider when unilaterally terminating a labor contract in Vietnam?

In what circumstances can a contract in Vietnam be terminated unilaterally?

A contract of employment is a written agreement between an employee and his or her employer. As a result, each side has the right to unilaterally terminate the labor contract. Specifically:

The employee unilaterally terminates the contract in Vietnam

The employee has the right to unilaterally end the labor contract in Vietnam without reason, according to Article 35 of the Vietnam Labor Code 2019. In other words, the employee will have the ability to unilaterally terminate the labor contract for as long as he or she desires. However, in order for a labor contract to be considered lawful, the employee must ensure that the method for unilaterally terminating the contract is to notify the employer in advance. This regulation has made it possible for employees to use their right to freely pick their jobs in order to improve their career opportunities. At the same time, requiring employees to follow pre-termination procedures before unilaterally terminating a contract allows businesses to plan for replacement or new personnel.

The employer unilaterally terminates the contract in Vietnam

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

• The employee regularly fails to complete the work according to the labor contract. This will be determined according to the criteria for assessing the level of work completed in the regulations of the employer.
• The employee has been treated for an illness or accident but has not yet recovered his working capacity.
• Due to natural disasters, fires, dangerous epidemics, enemy sabotage or relocation, downsizing of production and business at the request of competent agencies, which have tried all remedies but still have to reduce working places.
• The employee is not present at the workplace 15 days after the expiration of the contract suspension period or after the time agreed by the parties.
• Employees reach retirement age unless otherwise agreed.
• The employee voluntarily quits his job without a valid reason for 05 consecutive working days or more.
• The employee provides dishonest information about that person when entering into a contract, affecting the recruitment of employees.

Procedures for unilateral termination of labor contract in Vietnam

Procedures for employees

When an employee unilaterally terminates a labor contract, he or she must tell the employer in advance and within a particular time period: At least 120 days advance notice: Applies to employees who sign labor contracts with an indefinite term or with a term of 12 months or more to do specific industries, trades, and jobs. Notice at least ¼ of the term of the labor contract: Applies to employees doing specific jobs under labor contracts with a term of fewer than 12 months. At least 45 days advance notice: Applies to employees working under indefinite-term labor contracts. At least 30 days advance notice: Applies to employees working under labor contracts with a term of 12 – 36 months. At least 03 days advance notice: Applies to employees working under labor contracts of less than 12 months. Without prior notice: Applies to employees for the following reasons:

• Except in the case of transferring personnel, not being assigned to the correct job, working location, or guaranteed working conditions as agreed.
• Not being paid in full or not paying on time.
• Being abused, beaten by the user or having insulting words or acts, acts affecting health, dignity, and honor; forced labor.
• Being sexually harassed at work.
• Pregnant female employees have to quit their jobs because their work adversely affects the fetus.
• Full retirement age, unless otherwise agreed.
• The user provides dishonest information related to the work that affects the performance of the contract.

Pursuant to: Article 35 of the 2019 Labor Code and Article 7 of Decree 145/2020/ND-CP.

Procedures for employers

When an employer unilaterally terminates a contract with an employee, he/she must also carry out prior notice procedures. At least 120 days advance notice: If signing a labor contract with an indefinite term or with a term of 12 months with an employee doing a particular job. Notice at least ¼ of the term of the labor contract: If you sign a labor contract of fewer than 12 months with an employee doing a particular job. At least 45 days advance notice: If signing an indefinite term labor contract with the employee. At least 30 days advance notice: If signing a labor contract with a term of 12 – 36 months with the employee. At least 03 days advance notice: If the employee signs a labor contract of fewer than 12 months with the employee or the employee has been treated for an illness or accident but his health has not yet recovered. Without prior notice: If the employee is not present at the workplace after the contract suspension period or voluntarily quits without a valid reason from 05 consecutive working days. Pursuant to: Article 36 of the Labor Code 2019 and Article 7 of Decree 145/2020/ND-CP.

Benefits of terminating a contract unilaterally in accordance with the law

The unilateral termination of the labor contract in accordance with the law will help the parties realize their desire to end the labor relationship while still receiving legitimate rights and reducing the responsibility to perform. Because the employee is always the weaker party in the employment connection, whether this person unilaterally cancels the legal contract or is unilaterally terminated, the majority of them will benefit from the following:

• To receive severance allowance, unless the employee is eligible for pension or the employee’s contract is unilaterally terminated due to voluntarily quitting for 5 consecutive working days.
• Get paid salary and other benefits.
• Get confirmation of a time to pay social insurance premiums and get other documents back.

Meanwhile, the employer can only ask the employee to hand over the work and pay the money that is still owed to the business. Corresponding to the rights of one party is the responsibility of the other party when the labor contract is terminated. If they fail to do so, violators will be administratively sanctioned according to Decree 28/2020/ND-CP.

Can the individual who illegally terminated a contract unilaterally be compensated?

Both the employee and the employer are regarded as unilaterally terminating the labor contract if they do not fall into one of the above groups or if they do fall into those categories but fail to provide the required notice time. Contract cancellation that isn’t legal. When unilaterally terminating the contract illegally, the violating party will have to compensate the other party as follows: The employee unilaterally terminates the contract illegally: Compensation:

• Half month salary.
• The amount corresponding to the salary in the days without notice (if the notice period is violated).
• Training costs (if vocational training is provided from the user’s budget).

The employer unlawfully terminates the contract unilaterally: Employees must be reinstated and compensated:

• Wages, payment of compulsory insurances in the days when employees are not allowed to work.
• Pay an amount equivalent to salary for unannounced days (if the notice period is violated).
• To pay the employee an additional amount equal to at least 2 months’ salary.

If the employee does not want to work, in addition to the above amounts, the employer must also pay a severance allowance to the employee. If the employee does not want to receive it and the employee agrees, then compensate the employee at least equal to 02 months’ salary. ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.