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Vietnam employee dismissal rules under the Labor Code

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Vietnam employee dismissal rules come from the Labor Code of 2012 (Law No. 10/2012/QH13) and the guiding Decree 05/2015/ND-CP. An employer can end a contract only on lawful grounds and only by following set steps. If it skips either one, the dismissal is unlawful. This guide covers the main routes, the notice periods and the common mistakes.

Two different routes to ending a job

The Labor Code treats ending a contract and punishing an employee as two separate things. Article 36 lists the ways a contract can end. They include agreement by both sides, expiry of the term, finished work, and one side leaving on its own. Dismissal as a penalty under Articles 125 and 126 is also on that list.

The route matters because each has its own proof and its own steps. A manager who wants to remove a weak performer cannot use the discipline route. A manager who wants to punish theft cannot use the performance route. Pick the wrong one and the whole process can fail.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Articles 36, 38, 125 and 126, National Assembly of Vietnam.

Lawful grounds for the employer to end a contract

Article 38 allows an employer to end a contract on its own in a short list of cases.

  • The employee often fails to do the job. The test is the standard set in the company's internal rules.
  • The employee is ill and has not recovered after long treatment. The limit is 12 months for an indefinite contract, six months for a contract of 12 to 36 months, and more than half the term for a shorter contract.
  • A natural disaster or fire forces the company to cut jobs, even after it has tried other fixes.
  • The employee does not return to work within 15 days after a temporary suspension ends.

The "often fails" ground needs written proof. Decree 05/2015/ND-CP says the company must set clear, written criteria for judging work, and it must do so after consulting the staff union where one exists. Without such criteria, an employer will struggle to defend this ground.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Article 38; Decree 05/2015/ND-CP, Government of Vietnam.

Notice periods

Under Article 38, an employer must give notice before it ends a contract on these grounds. The length depends on the contract type.

  • Indefinite contract: at least 45 days.
  • Contract of 12 to 36 months: at least 30 days.
  • Seasonal or short contract under 12 months: at least three working days.
  • Ending a contract for long illness: at least three working days, whatever the contract type.

Keep a written record of each step.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Article 38.

Dismissal as a disciplinary penalty

Article 126 lets an employer dismiss an employee as a penalty in three cases.

  • Theft, embezzlement, gambling, deliberately hurting someone, drug use at work, leaking trade or technology secrets, or other serious harm to the company.
  • Repeat offences after a pay-rise delay or a demotion.
  • Missing work for five days in a month, or 20 days in a year, with no good reason.

Discipline has procedure too. The employer must prove the employee is at fault. A meeting must be held with the union representative present, and the employee may bring a lawyer or another person to speak for them. The meeting must be minuted. There are also time limits for acting after a violation, and the Code bars discipline while an employee is on sick leave or is pregnant or on maternity leave. Check the full Code text before starting.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Articles 123, 124 and 126; Decree 05/2015/ND-CP.

When an employer may not end the contract

Article 39 bars an employer from ending a contract on its own in some cases. It cannot do so while the employee is ill or injured and under treatment, on approved leave, or on maternity leave. The one exception is the long-illness ground in Article 38. The law also protects an employee who is pregnant or raising a child under 12 months. Giving notice in these periods is a common error.

Ending a contract the wrong way is costly. Article 41 calls it unlawful when these rules are broken. Under Article 42, the employer must then take the employee back, pay the wages for the days lost, and pay at least two months of wages as extra compensation. If the employee does not want to return, the employer also pays severance on top of that. If the employer gave too little notice, it also pays wages for the missing days.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Articles 39, 41 and 42.

Final pay and severance

Within seven working days of the contract ending, both sides must settle all sums owed. Longer periods are allowed in special cases such as restructuring or disasters. Article 48 sets severance at half a month of wages for each year worked, for staff with at least 12 months of work. The employee's years under unemployment insurance are not counted. Severance is not due if the employee is dismissed for discipline.

Employers should also hand back the employee's social insurance book and papers. A short checklist helps: grounds, proof, notice, union step, final pay, papers. Staff should ask for the reason in writing and keep their own copy of the contract.

This is general information, not legal advice. Facts vary, so check the full law or ask a qualified adviser.

Source: Labor Code 2012 (Law No. 10/2012/QH13), Articles 47 and 48.

Sources

  • Labor Code 2012, Law No. 10/2012/QH13, National Assembly of Vietnam, effective 1 May 2013.
  • Decree 05/2015/ND-CP, Government of Vietnam, effective 10 March 2015.