1. Unilateral termination of an employment contract is only permitted in cases provided by law

Unlike employees – who have the right to unilaterally terminate an employment contract without providing reasons, provided that the statutory notice period is complied with – labor law imposes stricter conditions on employers. Accordingly, an employer may only unilaterally terminate an employment contract in the following specific circumstances (Article 36 of the 2019 Labor Code):

• The employee regularly fails to perform the work under the employment contract, as determined based on the criteria for assessing the level of work completion stipulated in the employer’s internal regulations. Such regulations on assessment of work completion are issued by the employer but must be consulted with the employees’ representative organization at the grassroots level where such an organization exists;
• The employee has been ill or injured and has undergone treatment for 12 consecutive months in the case of an employee working under an indefinite-term employment contract, or for 06 consecutive months in the case of an employee working under a definite-term employment contract with a term from 12 months to 36 months, or for more than half of the contract term in the case of an employee working under a definite-term employment contract with a term of less than 12 months, and the employee’s working capacity has not yet recovered. When the employee’s health recovers, the employer shall consider continuing to conclude an employment contract with the employee;
• Due to natural disasters, fires, dangerous epidemics, enemy sabotage, or relocation or downsizing of production and business activities at the request of a competent state authority, where the employer has taken all remedial measures but is still compelled to reduce jobs;The employee fails to be present at the workplace within 15 days from the expiry date of the suspension period of the employment contract;
• The employee has reached the retirement age in accordance with Article 169 of the 2019 Labor Code, unless otherwise agreed;The employee voluntarily abandons the job without legitimate reasons for 05 or more consecutive working days;
• The employee provides dishonest information as prescribed in Clause 2, Article 16 of the 2019 Labor Code when entering into the employment contract, which affects the recruitment of the employee.

Therefore, before officially issuing a decision on unilateral termination of an employment contract, the employer should carefully review and assess whether its case falls within one of the legal grounds mentioned above. Otherwise, such unilateral termination may be determined to be unlawful, leading to potential dispute risks and corresponding compensation obligations.

2. The right to unilaterally terminate an employment contract must not be exercised in special circumstances

However, employers should note that even where they have determined that their case falls within the aforementioned circumstances and therefore have the right to unilaterally terminate an employment contract, such right may still be temporarily restricted in certain situations. Article 37 of the 2019 Labor Code provides several special circumstances in which an employer is not permitted to exercise the right to unilaterally terminate an employment contract, even where such right otherwise exists, as follows:

• The employee is ill or suffers from an accident or occupational disease and is undergoing treatment or rehabilitation as prescribed by a competent medical establishment, except in cases where the employee has been ill or injured and has undergone treatment for 12 consecutive months in the case of an employee working under an indefinite-term employment contract, or for 06 consecutive months in the case of an employee working under a definite-term employment contract with a term from 12 months to 36 months, or for more than half of the contract term in the case of an employee working under a definite-term employment contract with a term of less than 12 months, and the employee’s working capacity has not yet recovered;
• The employee is on annual leave, personal leave, or other leave approved by the employer;
• A female employee is pregnant; an employee is on maternity leave or raising a child under 12 months of age.

These provisions are established to protect employees in special circumstances where they are in a vulnerable condition or are unable to effectively protect their own rights and interests. Losing employment during periods such as medical treatment, lawful leave, pregnancy, or raising a young child may not only directly affect the employee’s income but may also seriously impact the employee’s health, psychological well-being, and the living conditions of both the employee and their family.

3. Collect sufficient evidence supporting the unilateral termination of the employment contract

When exercising the right to unilaterally terminate an employment contract, the employer must not only identify the correct legal grounds but also has the obligation to substantiate such grounds with specific documents and evidence, particularly in cases where a dispute arises and the matter is brought before the Court for resolution.

If the employer relies on a particular ground to terminate the employment contract, it must proactively collect, retain, and present the corresponding evidence substantiating such ground. For example, in cases where the employee regularly fails to complete assigned work, the employer should have an evaluation system, meeting minutes, warning notices, or documents reflecting the assignment of tasks and the results of work performance... Similarly, for other grounds, the employer must also possess appropriate supporting documentation ensuring objectivity and legality.

In practice, many disputes arise not because the employer lacks grounds, but because it fails to adequately prepare the necessary records and evidence to substantiate those grounds. Where evidence is unavailable or insufficient, the Court may not accept the employer’s arguments. In such circumstances, the unilateral termination of the employment contract may easily be determined to be unlawful. As a consequence, the employer may be required to bear compensation obligations, reinstate the employee to work, or assume other legal liabilities as prescribed by labor law.

4. Comply with the notice obligation when unilaterally terminating an employment contract

One of the important obligations when an employer exercises the right to unilaterally terminate an employment contract is to comply with the statutory notice period. This requirement is not only procedural in nature but also serves as a mechanism to protect employees’ rights, allowing them time to prepare and seek new employment.

However, there are two circumstances in which an employer may unilaterally terminate an employment contract without prior notice, including:

• The employee is not present at the workplace within 15 days from the expiry date of the suspension period of the employment contract;
• The employee voluntarily abandons the job without legitimate reasons for 05 or more consecutive working days.

Apart from the two circumstances mentioned above, the employer is required to comply with the notice period when unilaterally terminating an employment contract, as follows:

• At least 45 days for an employee working under an indefinite-term employment contract;
• At least 30 days for an employee working under a definite-term employment contract with a term from 12 months to 36 months;
• At least 03 working days for an employee working under a definite-term employment contract with a term of less than 12 months;
• For certain specific sectors, occupations, or jobs, the notice period shall be implemented in accordance with the regulations of the Government.

Where the employer fails to comply with the notice obligation, the unilateral termination of the employment contract may be determined to be unlawful, and the employer may be required to compensate the employee in accordance with Article 39 of the 2019 Labor Code.

5. Fulfill the employer’s obligations after the unilateral termination of the employment contract

After carrying out the unilateral termination of an employment contract, the employer is responsible for fulfilling the obligations prescribed in Article 48 of the 2019 Labor Code, specifically including:

First, within 14 working days from the date of termination of the employment contract, the employer must fully settle all payments related to the employee’s entitlements, except in the following cases where the time limit may be extended but must not exceed 30 days:

• The employer ceases operations;
• The employer changes its structure or technology, or for economic reasons;
• Division, separation, consolidation, merger; sale, lease, or conversion of the type of enterprise; transfer of ownership or the right to use assets of the enterprise or cooperative;
• Due to natural disasters, fires, enemy sabotage, or dangerous epidemics.

Second, wages, social insurance, health insurance, unemployment insurance, severance allowance, and other benefits of the employee under the collective labor agreement and the employment contract shall be given priority for payment in cases where the employer ceases operations, is dissolved, or becomes bankrupt.

Third, in addition to the two responsibilities above, the employer has the following responsibilities:

• Completing procedures for certification of the period of payment of social insurance and unemployment insurance and returning such certification together with other original documents if the employer has retained them from the employee;
• Providing copies of documents related to the employee’s working process if requested by the employee. The costs of copying and sending such documents shall be borne by the employer.

6. Consequences of an employer’s unlawful unilateral termination of an employment contract

Where the employer fails to comply with the above principles and is determined to have unlawfully unilaterally terminated the employment contract, corresponding legal obligations shall arise in accordance with the law, including:

First, the employer must reinstate the employee to work under the employment contract that was previously concluded; or, if the employer does not wish to reinstate the employee and the employee agrees, the employer must pay an additional compensation amount to the employee of at least 02 months’ salary under the employment contract in order to terminate the employment contract.

Second, the employer must pay the employee’s salary and make contributions to social insurance, health insurance, and unemployment insurance for the days during which the employee was not allowed to work, and must additionally pay the employee an amount of at least 02 months’ salary under the employment contract.

Third, where the employer violates the statutory notice period requirement, it must pay an amount corresponding to the salary under the employment contract for the days of non-compliance with the notice period.

Fourth, where the employee does not wish to continue working, the employer must pay severance allowance to the employee in order to terminate the employment contract.

The above are 05 principles that employers should pay attention to and comply with when exercising the right to unilaterally terminate an employment contract in order to avoid such termination being determined as unlawful, thereby limiting the risk of disputes and potential compensation obligations. Should you require further advice or clarification, please contact Phong & Partners Law Firm via telephone at 02363.822.678 or hotline 0905.503.678 for timely and effective assistance from our team of lawyers.

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