Following on from the last post in this series on labor contract termination cases, in the previous article we discussed the agreement to terminate the labor contract, which is the termination of the contract based on the parties’s permission. So, what about the scenario of one party unilaterally terminating a labor contract? The following article will discuss legal concerns which develop in the case of the Employer unilaterally terminating the labor contract with the employee, procedure and connected circumstances.

1. Case that a company has the right to unilaterally terminate the labor contract

An employer has the right to unilaterally terminate the labor contract instead of waiting for the labor contract to expire. However, for the unilateral termination of the Labor Contract to be considered legal and not to cause any disadvantage to the enterprise, the Employer shall ensure that the employee falls into one of the following cases:

– The employee regularly fails to complete the work as defined in the labor contract, which is determined based on the criteria for evaluating job completion in the employer’s statute. The statute for assessing job completion is issued by the employer but shall consult the opinions of the employee representative organization at the grassroots level where there is employee representative organization at the grassroots level;

– The employee is sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive months in the case of an indefinite-term employment contract, for 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 fewer than 12 months which the ability to work has not yet recovered;

Upon recovery, the employer may consider concluding another employment contract with the employee;

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

– The employee is not present at the workplace after the period of suspension of the performance of the labor contract;

– The employee reaches the retirement age of this Labor Code unless otherwise agreed by the parties;

– The employee voluntarily quits his/her work without acceptable excuses for at least 05 consecutive working days or more;

– The employee provides truthful information when entering into labor, affecting the recruitment of employee

2. Steps to unilaterally terminate the Labor Contract by the law

Unilaterally terminating the labor contract in violation of the law means that the company terminates the labor contract without meeting 2 mandatory conditions: (i) being in one of the cases allowed for unilateral termination and (ii) the enterprise had complied with the notification procedures (form and time of notification).

If the corporation fails to meet both standards, it will be assessed to be defying the law by unilaterally terminating the Labor Contract and faces legal consequences. To unilaterally terminate the Labor Contract by the law, the Employer shall pay attention to the following steps:

Step 1. Determining which case the Employee falls under according to the cases listed in Section 1 above and the documents to prove that the employee falls into one of those cases.

Although the law does not stipulate this, it is mandatory because the Employer is responsible for proving that the employee falls into the case that the company is allowed to unilaterally terminate, for example:

• With the reason that the employee routinely fails to complete the work. The company should have statute in place to assess the degree of incomplete work and the employee’s current situation, such as how many times the employee did not complete the work and whether the work that the employee did not finish is mentioned in the job description or the Labor Contract;
• With the reason that the employee voluntarily quits the job for 05 consecutive working days or more, the company shall demonstrate that the employee was not present at the place of employment for any justifiable reason.

And similarly, for other cases, the Company needs to prove that the employee falls into one of the cases that the Company is allowed to unilaterally terminate.

Step 2. Performing the obligation of prior notice

The employer is responsible for providing prior notice to the employee depending on the type of Labor Contract and the case of unilateral termination that the Employee falls into:

– At least 45 days in case of an indefinite-term employment contract;

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

– At least 03 working days in the case of an employment contract with a fixed term of fewer than 12 months and in the cases stipulated in point b clause 1 Article 36 of the Labor Code.

When unilaterally terminating a labor contract because the Employee has reached retirement age and the employee voluntarily quits for 5 consecutive days or more, the employer shall not give prior notice to the employee.

It is true that unilaterally termination of the Labor Contracts has serious legal ramifications, as a result, each enterprise shall establish its procedure for terminating the labor contracts, including mutual agreement termination, unilateral termination, or expiration, as well as the appropriate actions and documents. It enables the enterprise to be more proactive in resolving difficulties that may take place during labor management. Furthermore, it is critical to strengthen the human resources department’s ability to detect hazards and implement suitable risk management techniques.

Time of writing: 11/04/2023

The article contains general information which is of reference value, in case you want to receive a legal opinion on issues you need clarification on, please contact our Lawyer at info@cdlaf.vn.