Vietnam

Notice periods are an essential part of employment termination in Vietnam, governed by the Labor Code of Vietnam (2019).

Minimum Notice Periods

The Labor Code stipulates minimum notice periods that an employer or employee must provide when terminating an indefinite term contract or a fixed-term contract exceeding 12 months, unless the employment contract specifies a longer period. The minimum notice period is:

• 120 days: For both employer and employee with an indefinite term contract or a fixed-term contract exceeding 12 months.

Notice Periods for Specific Contracts

The Labor Code also outlines notice periods for different types of contracts:

• Fixed-Term Contracts Less Than 12 Months: At least one quarter (¼) of the contract term for both employer and employee.
• Definite Term Contracts Ending Naturally: No notice period is required as the contract naturally expires on the designated date.

Exceptions to Notice Periods

There are exceptions to the mandatory notice periods. An employer can dismiss an employee without notice for reasons constituting "serious violations of labor discipline" as outlined in the Labor Code, such as:

• Fraud
• Causing serious damage to the employer's property
• Abandoning work for more than five consecutive working days without a legitimate reason

Notice in Writing

Written notice of termination must be provided, specifying the reason for termination (if applicable) and the effective date.

Payment in Lieu of Notice

The employer can choose to pay the employee an amount equivalent to their wages for the notice period instead of providing actual notice.

In Vietnam, severance pay is a legal right for employees under specific circumstances, as governed by the Labor Code of Vietnam (2019).

Eligibility for Severance Pay

An employee qualifies for severance pay in the following situations:

• Involuntary Termination: This includes changes to the company's organizational structure or technology, economic difficulties, failure to meet job performance requirements, or suffering an occupational disease or work-related injury resulting in reduced working capacity.
• Resignation under Certain Conditions: An employee may resign and still be eligible for severance pay if they have a medical condition that impedes their ability to continue working, experience mistreatment by the employer, are pregnant or taking care of a child under 12 months old, or if the employer fails to pay wages on time or in full.

Non-Eligibility for Severance Pay

The Labor Code specifies when severance pay is not due:

• Summary Dismissal: Employees dismissed for serious violations of labor discipline.
• Resignation Without Legitimate Reason: Employees leaving voluntarily without justifiable reason provided by the Labor Code.
• Expiration of Fixed-Term Contract: Employees on fixed-term contracts that expire without renewal.

Calculation and Payment of Severance Pay

Severance pay equals half a month's salary for each year of employment. The salary used for calculation includes the average monthly salary and allowances for the previous six months. The employer must pay severance directly to the employee within seven working days from the termination of the employment contract.

It's important to note that the Labor Code outlines the minimum severance pay requirements. Specific severance pay terms may be negotiated and included in employment contracts or Collective Labor Agreements.

The termination of an employment relationship in Vietnam is governed by the Labor Code of Vietnam (2019) and other relevant decrees. The process involves several key legal requirements.

Types of Employment Termination

• Mutual Agreement: This occurs when the employer and employee mutually agree to terminate the contract. A written agreement outlining the terms of separation is often used.
• Termination with Notice: Either party can terminate the contract by giving at least the minimum notice period outlined in the Labor Code or contract. The reason for employer-initiated termination must be valid per the Labor Code.
• Summary Dismissal (Termination for Cause): Employers can terminate without notice due to serious violations of labor discipline such as stealing or repeated absence, as defined in the Labor Code.
• Termination Due to Force Majeure: This includes events outside the control of either party, like natural disasters. Such terminations usually follow specific regulations.
• Termination Due to Contract Expiry: Fixed-term contracts end naturally on the specified date.

General Termination Procedures

1. Written Notice: Unless in the case of summary dismissal, the terminating party must provide written notice of termination. This should include the reason for termination (if applicable), the effective termination date, and compliance with relevant notice periods as stipulated in the Labor Code or employment contract.
2. Opportunity to Respond (Employer-Initiated): The employee has the right to provide explanations or contest the termination if they deem it wrongful.
3. Labor Union Consultation (If Applicable): Employers are obligated to notify the trade union at the workplace about the termination decision.
4. Documentation: Every step of the process, including the reason for termination, notice provided, employee responses, and consultations, should be thoroughly documented.
5. Final Payments: The employer must ensure complete settlement of all outstanding wages, unused annual leave, and relevant social insurance contributions within seven days of the termination date.

Additional Considerations

• Labor Disputes: Employees can file disputes with local labor authorities or People's Courts if they contest a termination.
• Employment Contracts: Contracts may specify additional termination procedures or enhanced benefits, but they cannot be less favorable than the Labor Code.
• Collective Labor Agreements: Some industries or companies may have Collective Labor Agreements that define specific clauses on termination.

For complex or sensitive termination situations, it's highly advisable to seek legal counsel specializing in Vietnamese labor law.