contract termination in Vietnam in COVID

The problem of illegal termination of the contract in Vietnam

COVID Question: For the case of contract termination in Vietnam when the employer unilaterally terminates the contract because of the epidemic, he has to reduce production and business according to Point c, Clause 1, Article 36, Vietnam Labor Code.

In this case, according to Article 41 of the Vietnam Labor Code, when the employer unilaterally terminates the contract illegally with its employee, the employer must perform the following obligations:

  • The employee must be returned to work under the signed labor contract; the employer must pay salary, pay social insurance, health insurance, unemployment insurance on the days when the employee is not allowed to work and must pay the employee an additional amount equal to at least 02 months’ salary according to the Labor contract

After returning to work, the employee shall refund to the employer the severance allowance or job loss allowance if received from the employer.

In case there is no longer a position or job that was signed in the labor contract but the employee still wants to work, the two parties shall agree to amend and supplement the labor contract.

  • In case of violation of the provisions on the notice period specified in Clause 2, Article 36 of this Code, an amount corresponding to the salary under the labor contract must be paid in the days without prior notice.
  • In case the employee does not want to continue working, in addition to the amount to be paid specified in Clause 1 of this Article, the employer must pay severance allowance as prescribed in Article 46 of this Code to terminate the Labor contract.

In case the employer does not want to take back the employee and the employee agrees, in addition to the amount of money the employer must pay as prescribed in Clause 1 of this Article and the severance allowance specified in Article 46. Under the provisions of this Code, the two parties agree on an additional amount of compensation for the employee, but at least equal to 2 months’ salary under the labor contract to terminate the labor contract.

  • In case there is no longer a position or job as agreed in the labor contract, but the dismissed employee still wants to work, in addition to the compensation amount specified in Clause 1 of this Article, the two parties may negotiate to amend the contract labor contract.

In case of contract termination in Vietnam because the structure changes according to Article 42 of the Labor Code:

In this case, when the employer terminates the contract but fails to perform the obligations specified in Article 42 of the Labor Code, the labor law does not specifically provide for it, but in terms of disputes over this issue. In practice, the obligation of the employer to perform will be similar to the case of unilateral illegal termination of the contract as mentioned above.

For the transfer of employees to work other than the contract:

Due to unexpected difficulties caused by the epidemic, the employer is forced to transfer the employee to a job other than the one in the Labor contract, however, Article 29 of the Labor Code regulates that the time for this transfer is not more than 60 days, unless the employee agrees.

If this transfer is over 60 days but the employee does not agree and has to stop working, the employer must pay the salary for termination specified in Clause 1, Article 99 of the Labor Code. That is, the employer must pay full wages for the employee’s rest days because this is the employer’s fault and the employee is paid in full according to the employment contract.

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.

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