Labour Law Compliance in Vietnam – Handling Labour Discipline

In recent years, labour law compliance has become a focal point for both local and foreign-invested enterprises operating in Vietnam. Ensuring adherence to the country’s labour regulations is not only a legal obligation but also essential for fostering a transparent and productive workplace. Among various compliance aspects, handling labour discipline is particularly sensitive, as it directly relates to employees’ rights and employers’ authority.

Legal Framework on Labour Discipline in Vietnam

Labour discipline is regulated primarily under the Labour Code 2019, which took effect on January 1, 2021 and its guiding document, Decree No. 145/2020/ND-CP. These legal instruments provide a comprehensive framework governing the rights and obligations of employers (the “Employer”) and employees (the “Employee”) in disciplinary proceedings.

Handling labour discipline must strictly adhere to several fundamental legal principles[1]:

• The Employer must prove the fault of the Employee.
• The Employee must be present and has the right to self-defence or be represented by a lawyer or the grassroots-level employee representative organisation (typically a trade union).
• The grassroots-level employee representative organisation must attend.
• The entire disciplinary content must be recorded in written minutes.

The Employer must also comply with legal requirements as follows[2]:

• Only one disciplinary measure can be imposed for a single violation.
• When multiple violations occur simultaneously, only the most serious disciplinary measure applicable can be applied.
• Not infringing upon the body or dignity of the Employee.
• Not applying a fine or wage reduction, instead of a disciplinary measure;
• Disciplinary action can only be based on violations expressly defined in internal labour regulations or agreed upon in the labour contract.

Additionally, certain situations prohibit the imposition of disciplinary measures, such as when the Employee is[3]:

• on sick leave or on approved leave;
• pregnant, on maternity leave, or caring for a child under 12 months old;
• in custody or detention, or pending the results of an investigation related to theft, embezzlement, gambling, assault, drug use, disclosure of trade secrets, or sexual harassment at the workplace;
• violating while suffering from a mental illness that causes them to be incapable of understanding or controlling their behaviour.

The prescriptive period for handling labour discipline is 6 months from the date of occurrence of violations. In case the violation is directly related to finance, property, and technology or business secrets of the Employer, the period extends to 12 months[4].

Labour Disciplinary Measures[5]

Under Vietnamese law, the Employer may impose one of the following four disciplinary measures, depending on the nature and severity of the Employee’s violation, listed in order of increasing seriousness:

• Reprimand
• Deferral of wage increase for a maximum of six months
• Demotion
• Dismissal

Among these, dismissal shall only be applied under specific statutory circumstances, including when the Employee:

• commits acts such as theft, embezzlement, gambling, intentional infliction of injury, or use of illegal drugs at the workplace;
• discloses business or technological secrets, infringes on the Employee’s intellectual property rights, causes serious damage or threat of severe damage to the Employer’s property or interests, or commits sexual harassment at the workplace;
• has been disciplined with deferral of wage increase or demotion, and repeats the same misconduct before the prior disciplinary record is expunged;
• unjustifiably absent from work for an accumulated total of 5 days within 30 days, or 20 days within 365 days.

The law does not specify cases where the first three labour disciplinary measures could be applied. Therefore, it is recommended that the parties should clearly agree on the cases or levels of violations that apply these measures in the internal labour regulation or labour contracts.

Procedures of Labour Disciplinary Handling[6]

The labour laws prescribe a strict disciplinary process. A labour disciplinary meeting (the “Meeting”) must be held with the participation of the Employee and the grassroots-level employee representative organisation (the “Participants“). The steps include:

Stage 1. Detecting the violation of the Employee

• At the time of violation: Record minutes of the incident and notify the grassroots-level employee representative organisation; or
• After the violation: Gather evidence proving the fault of the Employee.

Stage 2. Notification of the Meeting

• Notify the Participants at least 5 working days before the Meeting. The notice includes the content, time, venue of the Meeting, the Employee’s name, and the violation.
• The Participants must confirm their participation. If any party refuses or is unavailable, the Employer and Employee must attempt to agree on rescheduling. Failing agreement, the Employer shall decide the Meeting schedule.

Stage 3. Conducting the Meeting

• The Meeting must proceed as scheduled, with all Participants present.
• The Meeting Minutes must be written and signed by all Participants.

Stage 4. Issuance of Labour Disciplinary Decision

The Decision must be issued within the applicable prescriptive period and circulated to the Participants.

Conclusion

Handling labour discipline in Vietnam requires a thorough understanding of the legal framework and meticulous adherence to procedural requirements. Employers that fail to comply risk having their disciplinary decisions overturned and may face costly and reputationally damaging labour disputes. By adopting a proactive and compliant approach, establishing robust internal policies, training relevant personnel, and consulting legal experts when necessary, employers can ensure that labour discipline is conducted lawfully, fairly, and effectively.

In D’Andrea & Partners Legal Counsel we have authored innovative publications exploring Vietnam, produced in order to provide foreign investors and businesses with more practical guidance on how to do business in Vietnam, as it requires a specific context of the economic and legal framework of the country, including tailor-made consultancy for labour sector in Vietnam.

The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.

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[1] Article 122.1 of Labour Code 2019

[2] Article 122.2, 122.3 and Article 127 of Labour Code 2019

[3] Article 122.4 and 122.5 of Labour Code 2019

[4] Article 123.1 of Labour Code 2019

[5] Article 124 and Article 125 of Labour Code 2019

[6] Article 70 of Decree 145/2020/ND-CP