Labor law in Vietnam: in which cases a labor contract can be terminated?

Undeniably, a mutual-beneficial labor relationship is one important aspect affecting the development of an enterprise. Even though we all aim to invest in a long-term and qualified human resources, it’s necessary to acknowledge when a company is allowed by law to terminate the labor relationship with an under-qualified employee, or vice versa. 

First of all, it’s worth mentioning that in all cases, a contract can be terminated upon mutual decision of both parties. It’s recommended to the parties to negotiate, and reach a written agreement to avoid future legal disputes. For these cases, a written agreement should include: exact date of terminating labor contract, compensation, dispute resolution, etc.

Moreover, general speaking, the Law on Labor of Vietnam and its guideline regulations state all circumstances when the labor contract termination is acceptable.In principle, termination of a labor contract could be made in cases of which the work stated in the labor contract has been completed; the employee reaches retirement age; the employee is in imprisonment, missing or dead, or legally prohibited from performing the job stated in the labor contract or in any cases lost civil act capacity. In particular, employee who works under a definite-term labor contract, a seasonal labor contract or a labor contract to perform a certain job of under 12 months may unilaterally terminate the labor contract in the following situations: he or she isn’t assigned the tasks or working condition as stated in labor contract; experiences lack of salary or late payment, is maltreated, sexually harassed or is subject to forced labor; unable to perform the work due to personal or family difficulties, or long period of sickness. Prior notice to the employer is required by law. In cases an employee is working under an indefinite-term labor contract, he or she may unilaterally terminate the labor contract provided that he or she informs such to the employer at least 45 days in advance, except in special circumstances.

On the employer side, contract can be terminated if the employer lawfully dismissed the employee; the employer has to lay off employees due to structural or technological changes or economic reasons, such as terminating its operation, merger, consolidation or division of the enterprise. Enterprise can also legally and unilaterally terminate labor contract in the following cases: employee continuously fail to complete the assigned tasks, or doesn’t return to work within 15 days after the expiry after suspension period; employee experiences long period of sickness, except work accident or occupational disease; employer experiences force majeure event as prescribed by law, and even though having applied every remedial measure, has to scale down production and cut jobs. Depending on the type of contract, a prior notice must be sent to employee within 3 to 45 days. The notice period by law shall be respected in any cases.

In cases readers need clarifications regarding any labor matters, we advise readers to contact our specialist before making a decision based on this short summary article.