Termination of a labor contract is an event that terminates the employment
relationship between the employee and the employer. In particular, there are
many cases of termination of labor contracts such as the labor contract
expires, the work stated in the labor contract has been completed, both parties
agree to terminate the labor contract, the employer lays off the employee due
to structural or technological changes or because of economic reasons, merger,
consolidation or division of the enterprise or cooperative,…
In case more than one
employee face the risk of unemployment for economic reasons, the employer shall
propose and implement a labor utilization plan in accordance with labour code.
Specifically, the labor utilization plan must contain the following main
contents: list and number of employees who continue to be employed, employees
sent for re-training to continue using; list and number of retired employees;
list and number of employees transferred to work part-time; employees must
terminate labor contracts and measures and financial sources to ensure the
implementation of the plan.
In case the employer
cannot employ and have to dismiss employees, the employer shall pay job-loss
allowances to the employees. Accordingly, the employer shall pay a job-loss
allowance to an employee who loses his/her job and has worked regularly for the
employer for 12 months or longer. The job-loss allowance is equal to 1 month’s
wage for each working year, but must not be lower than 2 months’ wage.
The working period used
for the calculation of job-loss allowance is the total time during which the
employee actually works for the employer minus the time during which the
employee benefits from unemployment insurance in accordance with the Law of
Social Insurance and the working period for which the employer has paid a
severance allowance to the employee. The wage used for the calculation of
job-loss allowance is the average wage in accordance with the labor contract
during 6 months preceding the time the employee loses his/her job.
The dismissal of more than
one employee in accordance with this regulation may be implemented only after
discussion with the representative organization of the grassroots-level
employees’ collective and notification 30 days in advance to the
provincial-level state management agency of labor.
It is important for the
employer to consult with dispute lawyers specializing in labour matters for the avoidance of potential
dispute with the employee, and cause negative social impact when deciding to
terminate contract due to economic reasons.
ANT Lawyers in a law
firm in Vietnam, recognized by
Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the
global law firm network covering more than 150 jurisdictions. The firm provides
a range of legal services to multinational and domestic clients. For advice or
services request, please contact us via email ant@antlawyers.vn
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