Employer’s Right to Unilaterally Terminate an Employment Contract

General Principle

The employer may unilaterally terminate an employment contract only in the circumstances prescribed by law. Unlawful termination may give rise to employee lawsuits, compensation liabilities, and, in certain cases, criminal prosecution (e.g., Article 162 of the 2015 Criminal Code, as amended in 2017).

Legal Grounds for Termination

The employer is entitled to lawfully terminate an employment contract under the following circumstances:

1. Repeated non-performance of work under the employment contract, as determined by performance evaluation criteria set out in the employer’s internal regulations (with consultation of the employee representative organization, if any).

2. Prolonged illness or accident, where the employee has undergone continuous treatment for:

   • 12 months (for an indefinite-term contract);

   • 06 consecutive months (for a definite-term contract of 12–36 months);

   • More than half of the contractual term (for a definite-term contract under 12 months);
     and is still unable to work. Once recovered, the employer shall consider re-entering into a contract.

3. Force majeure events (natural disasters, fire, dangerous epidemics, war, or relocation/reduction of production/business activities as required by a competent authority), after all remedial efforts have been exhausted.

4. Failure to return to work within 15 days after expiration of a temporary suspension of the contract, unless otherwise agreed or provided by law.

5. Attainment of statutory retirement age.

   • Retirement age will gradually increase to 62 years for men (by 2028) and 60 years for women (by 2035).

   • As from 2021: 60 years 03 months (male) and 55 years 04 months (female), with annual increases of 03 months (male) and 04 months (female).

6. Voluntary abandonment of work without legitimate reasons for 05 or more consecutive working days. Legitimate reasons include natural disasters, fire, illness of the employee or family member (certified by a competent medical facility), or other cases specified in internal labor regulations.

7. Provision of false information affecting recruitment, including health, qualifications, skills, personal information, or other directly relevant details.

Notice Requirements

Advance notice must be given in the following cases:

• 45 days (indefinite-term contract);

• 30 days (definite-term contract of 12–36 months);

• 03 working days (definite-term contract under 12 months).

For certain jobs/industries, notice periods follow Government regulations.

No prior notice is required for termination due to retirement age or abandonment of work without legitimate reasons for 05 or more consecutive working days.

Prohibited Circumstances

The employer may not unilaterally terminate contracts when the employee is:

• Undergoing treatment or convalescence due to illness, accident, or occupational disease;

• On annual leave, personal leave, or other approved leave;

• Pregnant, on maternity leave, or nursing a child under 12 months of age.

Special Cases: Employee Representatives

Where the employee concerned is a member of the leadership of a grassroots employee representative organization, the employer must either:

1. Reach written agreement with the organization’s leadership; or

2. Failing such agreement, report to the provincial labor authority. After 30 days, the employer may decide.

Procedural Requirements

The employer must comply with due process, including workplace dialogue, meetings with employee representatives (if any), and notice obligations. Termination must be formalized in a Decision on Unilateral Termination.

• If the decision is revoked, the employment relationship must be reinstated.

Settlement of Entitlements

Within 14 days of termination (extendable to 30 days in special cases such as dissolution, restructuring, merger, transfer of ownership, or force majeure), the employer must settle:

• Remaining salary;

• Compensation for unused annual leave;

• Severance allowance (½ month’s salary per year of service);

• Other outstanding entitlements.

The employer must also complete procedures for social insurance and unemployment insurance and return all employee documents.

Legal Basis

• Labor Code 2019.

• Decree No. 145/2020/NĐ-CP (guiding the Labor Code on working conditions and labor relations).