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Contract Termination and
Severance Obligations
By Dezan Shira & Associates, Ho Chi Minh City
Editor: Maxfield Vandel Brown
For employers in Vietnam, blossoming foreign
investment and emerging oppor tunities
throughout cities such as Ho Chi Minh City and
Hanoi often provide existing staff with a variety of
alternative work destinations. At the same time, the
increasingly educated pools of labor within these
cities and across Vietnam provide ever increasing
levels of talent from which to staff operations. To
mitatigate the risks associated with labor retention
and to maxminize flexibility in hiring, it is of great
importance for employers inVietam to understand
the circumstances under which termination of
contracts can be achived as well as the financial
obligation that may arise in these sitations.
Contract termination
Following the establishment of a labor 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 themost widely seen contract termination
triggers currently outlined in Vietnam’s labor code:
• The labor contract expires;
• The work stated in the contract has been
completed;
• Both parties agree to terminate the labor
contract;
Grounds for the Unilateral Termination of Contracts in Vietnam
Employee
Employer
1.
Employee is not assigned to the job or workplace or is not given the
working conditions as agreed in the labor contract*.
2.
Employee is not paid in full or on time as agreed in the labor contract.
3.
Employee is maltreated, sexually harassed, or is subject to forced labor.
4.
Employee is elected to perform a full-time duty in a people-elected
office or is appointed to hold a position in the state apparatus.
5.
A female employee who is pregnant and must take leave as
prescribed by a competent health establishment.
6.
If he/she is sick or has an accident and remains unable to work after
having received treatment for 90 consecutive days, in case he/she
works under a definite-term labor contract, or for a quarter of the
contract’s term, in case he/she works under a labor contract for a
seasonal job or a specific job of under 12 months.
1.
The employee often fails to perform his/her job stated in the labor
contract.
2.
The employee is sick or has an accident and remains unable to work
after having received treatment for 12 consecutive months, in
case he/she works under an indefinite-term labor contract, or for 6
consecutive months, in case he/she works under a definite-term labor
contract, or more than half the term of the labor contract, in case he/
she works under a labor contract for a seasonal job or a specific job of
under 12 months.
3.
If, as a result of natural disaster, fire or another force majeure event as
prescribed by law, the employer, though having applied every
remedial measure, has to scale down production and cut jobs.
4.
The employee is absent from the workplace after the time limit
specified in Article 33* of this Code.
Source: Limitations as prescribed under Law No. 10/2012/QH13
*Article 33 allows for a 15 day grace period for all employees returning to work following a temporary suspension of their contracts.