Author:

• Nguyen Thi Huyen Anh – Senior Asociate
• Tran Nguyen Phuong thanh – Paralegal

During the course of employment management, employers have the right to impose disciplinary measures on employees who violate workplace rules through four forms: reprimand, deferment of wage increase for up to six months, demotion, and dismissal. Among these, disciplinary dismissal may only be applied when fulfilling the legal grounds stipulated in Article 125 of the 2019 Labor Code. Notably, Clause 2, Article 125 of the Labor Code stipulates that employers have the right to apply disciplinary dismissal against employees who commit violations that “cause serious damage to the employer’s assets or interests.”

In practice, determining what constitutes “serious damage” for the purpose of disciplinary dismissal remains a challenging issue for many enterprises. The failure to clearly identify the threshold and extent of damage can lead to diverse interpretations and simultaneously increase the risk of disputes during labor disciplinary proceedings.

1. Legal Framework for Determining Serious Damage in Disciplinary Dismissal

Clause 2, Article 125 of the Labor Code stipulates that an employer is entitled to dismiss an employee who commits an act that “causes serious damage or threatens to cause exceptionally serious damage to the employer’s assets or interests.”

Evidently, the grounds for dismissal in this context are not limited solely to property damage but also encompass damages to the legitimate interests of the enterprise. Depending on the nature of the employer’s business operations, damage may arise in various forms, such as property loss, remedial costs, loss of business opportunities, or other adverse impacts on the enterprise’s operations.

However, the Labor Code and current guiding implementation documents have not explicitly stipulated criteria to determine what constitutes “serious damage” or “exceptionally serious damage” in labor discipline, nor have they established a universal damage threshold applicable to all enterprises.

Consequently, the assessment of the extent of damage in each case must be considered based on the nature of the violation, the actual consequences incurred, and the specific characteristics of the enterprise’s operations. Concurrently, enterprises should clearly specify in their Internal Labor Regulations the acts and levels of damage deemed serious or exceptionally serious to serve as a basis for labor disciplinary actions when necessary.

2. The Role of Internal Labor Regulations in Determining the “Serious Damage” Threshold

One of the common practical issues enterprises encounter is determining what damage threshold suffices to be considered “serious damage” serving as grounds for disciplinary dismissal.

In practice, when drafting Internal Labor Regulations, many enterprises often refer to Clause 1, Article 129 of the Labor Code regarding the employee’s liability for damage compensation. According to this provision, in cases where an employee causes non-serious damage due to negligence with a value not exceeding 10 months’ regional minimum wage announced by the Government at the employee’s workplace, they shall only be required to compensate up to three months’ salary.

Nevertheless, it should be noted that Article 129 of the Labor Code governs the employee’s liability for damage compensation, whereas Article 125 regulates the grounds for disciplinary dismissal. Therefore, the provision in Article 129 does not serve as a direct legal basis for determining “serious damage” pursuant to Clause 2, Article 125 of the Labor Code. In other words, the benchmark of 10 months’ regional minimum wage is not a mandatory criterion under the law but merely holds reference value when enterprises develop their Internal Labor Regulations.

Currently, pursuant to Decree 293/2025/ND-CP, the monthly minimum wage in Region I is 5,310,000 VND/month. Accordingly, should an enterprise choose to refer to the aforementioned criterion, the threshold for determining serious damage may be set at VND 53,100,000 or higher; the remaining regions may be determined correspondingly based on the applicable regional minimum wage.

Explicitly stipulating damage thresholds through specific quantitative criteria in the Internal Labor Regulations is important for mitigating dispute risks. The rationale is that, upon the emergence of a labor dispute, the Court examines not only whether the employee caused damage but also assesses whether such damage level suffices to be deemed “serious” under Clause 2, Article 125 of the Labor Code. If the Internal Labor Regulations lack clear criteria for determining the extent of damage, the enterprise will encounter difficulties in proving the grounds for disciplinary dismissal and may face the risk of the dismissal decision being judged as lacking sufficient legal basis.

Conversely, if the Internal Labor Regulations specifically prescribe the damage threshold deemed serious, the enterprise will possess an objective basis to prove that the employee violated a legitimately promulgated and previously disseminated internal regulation. This also constitutes a crucial foundation assisting in safeguarding the legality of the disciplinary dismissal decision should a dispute arise.

3. Conclusion

Dismissal is the most severe form of labor discipline and directly affects the employment and income of the employee. Therefore, the application of the grounds of “causing serious damage to the employer’s assets or interests” must be applied cautiously and supported by sufficient evidence.

In the context where current prevailing laws do not explicitly stipulate criteria for determining “serious damage” or “exceptionally serious damage,” enterprises should not merely stop at citing the provisions of the Labor Code but must proactively construct clear criteria within their Internal Labor Regulations. This serves not only as a basis for the consistent enforcement of labor discipline but also as an important legal safeguard for the validity of a dismissal decision in the event of a dispute.

Time of writing: June 09, 2026

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