Labor Code Restrictions on Employer Termination

Jan 21, 2025

HR & Payroll

Labor Code Restrictions on Employer Termination

Navigating the legal landscape of labor contracts is crucial for both employers and employees. The 2019 Labor Code in Vietnam outlines specific cases where employers cannot unilaterally terminate contracts, aiming to protect employees’ rights. This article explores the concept of unlawful termination and details the obligations employers face when they unlawfully terminate contracts. Understanding these regulations helps promote fair workplace practices and ensures compliance.

Understanding Employment Contract Termination

Table of Contents

Restrictions on Employer Terminations

Article 37 of the 2019 Labor Code outlines situations where employers cannot unilaterally end a labor contract:

The employee is receiving treatment or recovery for an illness, injury, or occupational disease as prescribed by an authorized medical facility. This excludes cases mentioned in Point b, Clause 1, Article 36 of this Code.
The employee is on annual leave, personal leave, or any other type of leave approved by the employer.
The employee is pregnant, on maternity leave, or nursing a child under 12 months old.

If the employer terminates the contract under these circumstances, they commit an unlawful termination.

Employer’s Obligations for Unlawfully Termination

Under Article 41 of the 2019 Labor Code, if an employer unlawfully terminates a contract, they must:

Reinstate the Employee

The employer must reinstate the employee in their original position. They must pay the employee’s salary and contribute to social insurance, health insurance, and unemployment insurance for the time the employee was not allowed to work. They must also pay at least two months’ salary as compensation.

If the employer reinstates the employee, they must return any severance or job-loss allowances received earlier. Should the original position no longer exist, and if the employee still wishes to work, both parties should negotiate adjustments to the labor contract.

If the employer fails to meet the notice period requirements under Clause 2, Article 36, they must pay the employee an amount equal to the salary for the days they failed to notify.

Employee Doesn’t Wish to Continue

If the employee chooses not to return to work, the employer must pay severance in line with Article 46, along with the compensation from Clause 1, Article 41.

Employer Doesn’t Want to Rehire

If the employer doesn’t want to reinstate the employee and the employee agrees, the employer must provide additional compensation. This amount must be at least two months’ salary, along with the payments from Clause 1, Article 41, and severance under Article 46.

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Legal Disclaimer: The information provided is for general informational purposes only and does not constitute legal advice. For specific legal advice on compliance in Vietnam, schedule a consultation with NetViet or consult legal counsel.

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