1. Overview:

Since January 1, 2021, the Labor Code 2019 has come into effect. The regulations on the employer terminating a labor contract have been amended in comparison to the previous labor law. This writing shall analyse the conditions and procedure for an employer to terminate employment contract with an employee.

2. Termination of an employment contract:

Upon the folowing cases, an employment contract shall be terminated:

– By a mutual agreement of both employer and employee: The employment contract expires (except for the fact that a member of the management board of the internal employee representative organization is under his/her term); the tasks stated in the employment contract have been completed; both parties agree to terminate the employment contract.

– One party without full legal personality and legal capacity of natural person: The employee is sentenced to imprisonment; The foreign employee working in Vietnam is expelled by a competent authority; The employee dies or is declared by the court as a legally incapacitated person, missing or dead; The employer that is a natural person dies; is declared by the court as a legally incapacitated person, missing or dead. The employer that is a juridical person ceases to operate, or a business registration authority affiliated to the People’s Committee of the province (hereinafter referred to as “provincial business registration authority”) issues a notice that the employer is not entitled to the legal representative or a person authorized to exercise the legal representative’s rights and obligations; The work permit or a foreign employee expires according to Article 156 of this Labor Code.

– The employer terminates the employment contract: when the employee commits disciplinary reasons; The employer allows the employee to resigns due to changes in structure, technology or changes due to economic reasons and (Article 42 of the Labor Code) or full division, partial division, consolidation, merger of the enterprise; sale, lease, conversion of the enterprise; transfer of the right to ownership or right to assets of the enterprise or cooperative (Article 43 of the Labor code); The employee fails to perform his/her tasks during the probationary period under the employment contract or gives up the probation. The employer unilaterally terminates the employment contract in accordance with the law

– The employee unilaterally terminates the employment contract in accordance with the law

3. The right of an employer to unilaterally terminates the employment contract. Condition and procedure

Without consent from the employee, an employer shall have the right to unilaterally terminate an employment contract. However, for those cases as follow, the employer shall inform the employer in advance:

a) at least 45 days in case of an indefinite-term employment contract;

b) at least 30 days in case of an employment contract with a fixed term of 12 – 36 months;

c) at least 03 working days in the case of an employment contract with a fixed term of less than 12 months and in the cases stipulated in Point b Clause 1 of this Article;

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

3.1. In case 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 employer shall base on the criteria established with consideration taken of opinions offered by the representative organization of employees (if any). The concept of “repeating fail to execute labor,” particularly, the time of failure equivalent to the phrase “repeatedly” shall be stated clearly in the criteria.

3.2. The employee is sick or has an accident and remains unable to work after having received treatment for the following case and period of time:

– 12 consecutive months in the case of an indefinite-term employment contract,

– 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 less than 12 months.

3.3. In the event of a natural disaster, fire, major pandemic , hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted;

For this case, the employer shall prove 2 following points:

First, there is an event of a natural disaster, fire, major pandemic , hostility, relocation or downsizing requested by a competent authority. This task is simple to show because it is inevitable event. Covid 19 is an example of a major pandemic which is also a new point of the new Labor code.

Second, having exhausted all other possibilities, the company still needs to lay off employees. Thus, revenue reduction or the choice to shrink the business area are examples of possible treatments.

3.4. The employee reaches the retirement age according to the Labor Code, unless otherwise agreed by the parties; or The employee fails to provide truthful information during the conclusion of the employment contract in a manner that affects the recruitment. These case can be proved by the clear fact and easy to confirm so

* Cases wherein the employer shall not be required to inform the employee in advance.

– The employee is not present at the workplace after 15 days from the time the temporary suspension of the employment contract is due.

– The employee is not present at work without due excuses for at least 05 consecutive working days;

4. The employer allows the employee to resigns

4.1. In case of changes in structure, technology, including :

– Changes in the organizational structure, personnel rearrangement;

– Changes in processes, technology, and equipment associated with the employer’s business lines;

– Changes in products or product structure.

4.2. In case of changes due to economic reasons, includes:

– Economic crisis: the crisis shall be announced by the State or the Global and the employer must prove them by himself too .

– Economic depression: A typical recession or economic depression is defined as two consecutive quarters (6 months) of negative economic growth.

– Changes of law and state policies upon restructuring of the economy or implementation of international commitments.

The dismissal of employees in these above 4.1 and 4.2 cases shall only be implemented after a discussion with the representative organization of employees (if any) and after giving prior notice of 30 days to the People’s Committee of the province and the employees.

5. In case of full division, partial division, consolidation, merger of the enterprise; sale, lease, conversion of the enterprise; transfer of the right to ownership or right to enjoyment of assets of the enterprise or cooperative

– In case the full division, partial division, consolidation, merger of the enterprise; sale, lease, conversion of the enterprise; transfer of the right to ownership or right to assets of the enterprise or cooperative affects the employment of a large number of employees, the employer shall develop a labor utilization plan.

– The current employer and the next employer shall implement the adopted labor utilization plan.

-The laid off employees will receive severance allowances.

6. Conclusion

The afore-stated are some points relating to the termination of employment contract, which creates a healthier working environment and betters the relationships between the employer and employees.