How to Terminate an Employee in Vietnam
Terminating an employee can be challenging for foreign investors in Vietnam. Vietnamese labour law is generally considered employee friendly and the termination process must be based on statutory grounds, subject to formal requirements and procedures.
The Vietnamese labour law applies to all employers working in Vietnam under labour contracts regardless of whether such employees are Vietnamese or foreign nationals.
However, the law does not apply to foreign national working in Vietnam via an internal company transfer under a foreign labour contract.
To mitigate the risks associated with labour retrenchment and to maximize flexibility in hiring, it is of significant importance for employers in Vietnam to understand the circumstances under which termination of contracts can be achieved as well as the financial obligation that may arise in these situations.
Following the establishment of a labour contract between an employer and an employee, there are a number of events which can trigger, or be used to trigger, the contract’s termination. The following are some of the most widely seen contract termination triggers currently outlined in Vietnam’s labour code:
- The labour contract expires;
- The work stated in the contract has been completed;
- Both parties agree to terminate the labour contract;
- The employee reaches the legal age of retirement;
- The employee is sentenced to prison;
- The employee dies;
- The employee is ruled to have lost the capacity to act in a civil capacity;
- Layoffs related to economic conditions or structural changes to the company including merger, acquisition, consolidation, or division;
- Unilateral termination on the part of the employee; or
- Unilateral termination on the part of the employer
This is an excerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.