Get to know your new Labour Code 2019

Termination of
employment
contracts

Viet Nam has modernized its Labour Code to better protect workers’ rights,
reduce bureaucracy for employers, and help support the Government’s drive for
international integration, economic growth and prosperity for all. The new law,
which was passed by the National Assembly in November 2019, is the result of
extensive consultations with experts, national and local stakeholders, and the
public at large. It will come into effect in January 2021.

This information sheet is an introduction to the provisions in the Labour Code

2019 on when and how employment can be lawfully brought to an end and the
June 2020 responsibilities of the two parties at that point.
When and how can employment be terminated?

The Labour Code lists the grounds upon which an

employment contract can come to an end:
• The employment contract expires.
• The tasks stated in the employment contract have
been completed.
• Both parties agree to terminate the employment contract.
• Unsatisfactory probation or cancellation of a proba-
tion agreement by either party.
• The worker is imprisoned and not subjected to
discharged sentence; is subject to capital punishment
or is prohibited from performing the work under a
court’s decision.
• The worker is missing, or is declared missing, deceased
or has lost the capacity for civil acts by the court.
• The employer is missing or deceased (if an individual) However, the law provides that a worker can lawfully termi-
or ceases to operate, officially or in practice. nate an employment contract without giving notice where:
• The foreign worker is engaged under a labour permit • The worker is not being paid in full or on time as
that expires. agreed in the employment contract (except in rare
• The foreign worker is deported. circumstances where payment can lawfully be delayed.
• The worker unilaterally terminates the employment See Information Sheet: Wages).
contract. • The worker is assigned a type of work or to a work-
• The employer unilaterally terminates the employ- place, or being subjected to working conditions,
ment contract. different from those agreed upon by the parties in the
The grounds upon which termination of employment is employment contract.
effected determines the procedures that must be • The worker is being mistreated, sexually harassed or
followed under the Labour Code. subject to forced labour.
• The worker is pregnant and required to take leave
When and how can a worker unilateraly terminate an (on the advice of a competent health care institution).
employment contract? • The worker fully qualifies for retirement, as
prescribed in the Labour Code.
A worker can terminate their employment contract • The employer provided inaccurate information that
providing they give the employer advance notice of affects the implementation of employment contract.
their intention to do so. The period of notice required
depends on the type of employment contract the When can an employer unilaterally terminate an
person is working under: employment contract?

An employer may unilaterally terminate an employment

contract on a number of grounds set out in the Labour
Code. The Code sets out procedural requirements that
the employer must follow, which vary according to the
grounds on which termination is taking place.

(i) Termination of employment contract for poor

performance, prolonged sickness and other certain
reasons

Minimum
Type of employment contract
notice period

Workers on indefinite term contracts 45 days

Workers on definite term employment contracts, with a duration of 12 – 36 months 30 days

Workers on definite term employment contracts with a duration of under 12 months 3 working days

Note: No notice is required during probation periods. Government regulations may impose longer periods of
notice for specific occupations or types of work.
An employer may terminate an employee’s employment where:
1. The worker has reached the age of retirement;
2. The worker consistently performs the work below the standard of work performance detailed in the employer’s
internal rules;
3. The worker is sick or injured for a certain period of time and has not recovered;
4. The worker fails to return to work following temporary suspension;
5. The worker fails to attend work (without justification) for more than 5 consecutive days;
6. The worker has dishonestly provided inaccurate information that has impacted upon the recruitment process;
7. The worker has no alternative but to scale down production and reduce the workforce due to one of the follow-
ing situations: a natural calamity; fire; epidemic; enemy-inflicted devastation or; where the employer has been
ordered to move or downsize production by a competent State agency.

In all above cases of unilateral termination by the employer, the employer must give notice to the worker, as follows:

Type of employment contract Minimum period of notice

Worker on indefinite term contract 45 days

Worker on definite term contract with a duration of 12 – 36 months 30 days

Worker on definite term employment contract with a duration of less than 12 months 3 working days

Where a worker is absent from work due to sickness or injury, termination is only lawful if the worker has received
specified periods of treatment as set out below.

Type of employment contract Requirement period of treatment

Indefinite term contract 12 consecutive months

Definite term contract with a duration of 12 – 36 months 6 consecutive months

Definite term contract with a duration of less than 12 months More than half of the contract period

(ii) Dismissal of a worker for wrong-doing

A worker may be dismissed as a disciplinary measure where:

1. The worker has committed an act of theft, embezzlement or gambling, intentionally injured another person or
used illicit drugs in the workplace
2. The worker has disclosed technological or business secrets or infringed the intellectual property rights of the
employer
3. The worker has committed other acts seriously detrimental or posing seriously detrimental threat to the assets
or interests of the employer
4. The worker has engaged in sexual harassment in the workplace; or
5. The worker has committed the same breach of labour discipline for which he or she is already subject to the
disciplinary measure of deferred wage increase or demotion, in the period when that has not yet been repealed.
6. The worker does not present at work for 05 days within a period of 30 days, or for 20 days within a period of 365
days, as calculated from the first day of absence without justification.

The Labour Code sets out processes that the employer must follow to carry out such a dismissal.

First, to prevent unjustified dismissal and ensure that workers have the chance to defend themselves, the employ-
er must provide evidence of employee’s wrongdoing and (where the worker is a member of a workers’ representa-
tive organization (WRO)) consult with the worker’s WRO. The worker must be physically present at any disciplinary
hearing and have the chance to defend themselves and to have a lawyer or WRO representative present.
(iii) Termination of employment contracts due to
natural emergencies, State-imposed changes,
changes in structure, technology or economic The Labour Code specifies a number of situations in
reasons which an employer cannot dismiss a worker.

Unilateral termination of an employment contract due to

An employer may lawfully terminate an employment
illness/injury: An employer can only lawfully terminate
contract because of:
an employment contract on the basis of a worker’s
1. changes in organizational or work structure,
illness or injury where the worker has received
2. changes in technological process/orders, machines,
treatment but remains unable to work for a certain
equipment and system of production relating to period of time. This period of time depends on the type
business of such employer, and duration of the employment contract.
3. changes in products, An employer may not lawfully terminate an employment
4. an economic crisis or recession, or contract if the worker is:
5. State policies on restructuring the economy or • taking annual leave, personal leave, or any other type
realizing international commitments of leave permitted by the employer
• pregnant, or on parental leave, or caring for a child
When terminating contracts for any of these reasons, who is less than 12 months old
the employer must formulate a labour utilization plan, • is sick or injured, and receiving treatment under the
in consultation with the WRO(s). This utilization plan prescription of a competent health institution (subject to
must be made publicly available to the workers within the exception above).
15 days from the date of approval and must be imple-
mented. In the case of job loses due to changes in Also, an employer must not dismiss a worker for
structure or technology, if a new vacancy is created, discriminatory reasons. This includes on the basis of
employers must give priority to retraining workers for trade union activity. See further Information Sheet:
the purpose of re-employment. Discrimination and Sexual Harassment at Work.

If the employer cannot re-employ a worker and intends

to terminate contracts of multiple workers, they can What happens if an employer or worker unlawfully
only do so after consulting with the WRO of which the terminates an employment contract?
workers are members. The employer must also provide
at least 30 days prior notice of the termination to the Where an employer terminates an employment
worker(s) and to the provincial People’s Committee. relationship unlawfully, the employer must:
• Reinstate the worker in accordance with the original
(iv) Termination of employment contracts due to employment contract
merger, consolidation, division, or separation of • Pay the worker wages, social insurance, unemploy-
enterprises and cooperatives, transfer of ownership, ment insurance and health insurance for the period
or right to usage of assets during which the worker was prevented from working
• Pay the worker an additional sum of at least 2
An employer may terminate an employment contract months wages; and
due to merger, consolidation, division or separation, • If the employer has failed to comply with the
transfer of total ownership, or right to usage of assets minimum notice period, compensate the worker with
of the enterprise or a cooperative. an amount equivalent to the period of notice that was
not given.
In such cases, the employer must establish and imple-
ment a labour utilization plan which includes the Following an unlawful termination by an employer, if
quantity and names of workers to be made redundancy. the worker chooses not to re-establish the employment
This plan must be prepared in consultation with WROs relationship, the employer must pay the worker
in the enterprise, and must be made publicly available severance allowance. This allowance is in adition to the
to the workers within 15 days after its formulation. payments identified above.

Following an unlawful termination by an employer, if

the employer does not want to reinstate the worker
and the worker agrees, the employer must pay the
worker a severance allowance and compensation
equivalent to least 2 months wages. This is in addition
to the payments identiifed above.

Where a worker unlawfully terminates an employment

contract or does not give the requisite notice:
• The worker must compensate the employer half of
the worker’s monthly wage (as specified in the employ-
ment contract)
• The worker will be ineligible for a severance allow- Final payments, entitlements and obligations upon
ance contract termination
• Where the worker has failed to comply with the
minimum notice requirements, he/she must compen- Upon termination of an employment contract, both
sate the employer with a sum equivalent to the work- parties should settle all payments owed to the other
er’s wages coresponding to the number of days during party within 14 working days. In exceptional circum-
which notice was not given. stances, this period may be extended but must not
exceed 30 days.
Severance allowance and job-loss allowance
An employer should complete the verification process
Severance allowance or job-loss allowance is paid to for social insurance contributions, unemployment
workers upon termination of their employment in insurance contributions and return any of the worker’s
certain cases. A worker is only entitled to these allow- original documents to the worker. Upon the worker’s
ances once he/she has worked on a regular basis for request, the employer should also provide copies of the
the employer for at least full 12 months. The Labour worker’s employment record. Any expense associated
Code specifies in detail how these allowances are to be with copying and sending such documents are to be
calculated. borne by the employer.

Job-loss allowance is paid to the worker by the employ- Where an employer terminates operations, or is
er in case of redundancy, or merger, consolidation, dissolved or bankrupt, all wages, social insurance,
division, or separation or transfer of ownership, right health insurance, unemployment insurance and other
to usage of assets of enterprises and cooperatives. incentives provided for in the employment contract
Severance allowance is paid to the worker by the (and collective bargaining agreement if applicable)
employer in all the cases of termination of employment should be paid as a priority.
contract, except for the following:
• The foreign worker is deported
• The worker is dismissed as a disciplinary measure
• The worker is entitled to job-loss allowance
• The worker retires
• The worker unlawfully terminates the employment
contract

Note: The qualifying period of work for the calculation

of severance and job-loss allowance is the total work-
ing period of the worker minus the period in which the
worker participated in the unemployment insurance
scheme and the period in which the worker has already
been paid severance or job-loss allowance.
 Photo@ILO

For more information

This leaflet describes the basic rights and duties provided under the Labour Code 2019. More details all of the above matters, are
set out in the following chapters of the Code: Chapter I: General Provisions; Chapter III: Employment Contract; Chapter VIII: Labour
Disciplinary Regulations and Responsibilities regarding Equipment; Chapter XI: Separate Provisions Concerning Minor Workers
and Certain Types of Workers; Chapter XIII: Workers’ Representative Organization(s) at Grassroots Level.

This is a product of the New Industrial Relations Framework project. Funding for the New Industrial Relations Framework
project is provided by the United States Department of Labor under cooperative agreement number IL- 29690-16-75-K-11. One
hundred percentage of the total costs of the project or program is financed with Federal funds, for a total of 5.1 million dollars.
This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of
trade names, commercial products, or organizations imply endorsement by the United States Government.

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