How to Distinguish Legal vs. Wrongful Termination in Vietnam

Introduction: Legal vs. Wrongful Termination in Vietnam – Know the Difference 

Termination disputes are among the most complex issues in Vietnamese labor law, and a clear understanding of the difference between legal and wrongful termination is essential for both employers and employees. Whether you’re an employee facing unexpected dismissal or an employer wanting to avoid legal pitfalls, knowing the boundaries of lawful termination protects both parties from costly disputes and ensures compliance with the Labor Code of Vietnam (2019). 

In this article, we’ll outline the criteria for lawful termination, signs of wrongful termination, and offer guidance on how to respond to termination disputes. LTS LAW, a leader in employment law, is here to provide you with clear, actionable advice.

1. Key Criteria for Legal Termination Under Vietnamese Labor Law

In Vietnam, the Labor Code provides strict regulations on lawful termination to protect employees’ rights while allowing employers to manage their workforce appropriately. Here are the main grounds for legal termination: 

• Employee Misconduct or Breach of Contract: When an employee engages in serious misconduct, such as theft, harassment, or damaging company property, an employer can legally terminate the contract. 

• Poor Performance: If an employee consistently fails to meet job requirements despite warnings, the employer may terminate the contract lawfully. 

• Company Restructuring or Economic Difficulties: Employers can terminate contracts due to restructuring, economic hardship, or business mergers, provided they follow proper procedures. 

• Force Majeure Events: Natural disasters, fires, or government changes that impact business operations can justify termination under force majeure clauses. 

Statutory Notice Periods: For a termination to be considered legal, the employer must provide written notice according to the statutory period—typically 30 days for indefinite contracts and 45 days for definite contracts.  

2. Recognizing Wrongful Termination: What Employers and Employees Should Know

Wrongful termination refers to the illegal dismissal of an employee where the employer fails to adhere to lawful procedures, lacks a valid reason, or acts in violation of employee rights. 

Common Indicators of Wrongful Termination: 

• Lack of Just Cause: Termination without valid reasoning or evidence of misconduct. 
• Discrimination or Retaliation: Dismissal based on race, gender, age, or as retaliation for exercising workplace rights. 
• Failure to Provide Statutory Notice: Immediate termination without the legally required notice period. 
• Violation of Contract Terms: Ignoring terms specified in an employment contract, such as agreed-upon warning procedures or specified severance conditions. 

Statistics: According to MOLISA, over 60% of termination disputes in Vietnam are rooted in wrongful termination claims, with common cases involving lack of due process or unsubstantiated dismissal reasons.  

3. How to Verify Legal Termination: Key Steps for Employers

To ensure compliance and avoid claims of wrongful dismissal, employers should follow these steps: 

Step 1: Document Valid Reasoning 

• Detailed Record-Keeping: Employers must document the grounds for termination, such as written performance reviews, disciplinary warnings, or restructuring plans. 

• Adherence to Contractual Obligations: Employers should reference the terms agreed upon in the employment contract and confirm that the reason for dismissal aligns with legal grounds. 

Step 2: Issue Statutory Notices 

• Follow Required Notice Periods: Employers must provide employees with a formal, written notice in line with Decree 90/2019/NĐ-CP, observing the minimum notice periods based on contract type. 

Step 3: Conduct a Fair Investigation 

• Independent Review of Misconduct Claims: For misconduct cases, employers should conduct an impartial investigation and gather necessary evidence to support the termination decision. 

Step 4: Offer Severance or Final Pay 

• Compensate According to Tenure: Provide severance pay, social insurance contributions, or any final wages owed to the employee in accordance with Decree 145/2020/NĐ-CP. 

Example Case: In a recent case, an employer terminated an employee for alleged misconduct without conducting an investigation. The court ruled it a wrongful dismissal and ordered back pay and damages, underscoring the need for due process.  

4. Employee Rights in Wrongful Termination Cases

Vietnam’s Labor Code includes several protections for employees who believe they have been wrongfully terminated. Key rights include: 

• Right to File a Complaint: Employees can file a complaint with the local Department of Labor, Invalids, and Social Affairs (DOLISA) or escalate to district-level mediation if internal negotiations fail. 

• Right to Seek Compensation: Wrongfully terminated employees are entitled to claim severance, back pay, or damages for emotional distress. 

• Right to Reinstatement: In cases where dismissal is proven unlawful, employees may request reinstatement along with back pay for the time they were unable to work. 

Legal Context: 

The Labor Code of Vietnam (2019) and Civil Procedure Code (2015) govern these rights, providing employees with clear pathways for legal recourse and protection.  

5. Resolving Termination Disputes: Mediation, Arbitration, and Litigation

If a termination dispute arises, both parties can resolve the issue through the following steps: 

Step 1: Workplace Mediation 

Workplace mediation serves as the initial step for dispute resolution, allowing both parties to reach an amicable solution without formal proceedings. 

Step 2: District-Level Labor Mediation 

If workplace mediation fails, employees may escalate their case to a district-level mediator through DOLISA, where a neutral third party facilitates resolution efforts. 

Step 3: Arbitration Council 

For cases that remain unresolved, either party can request arbitration. The Labor Arbitration Council provides a structured approach, with arbitrators issuing a binding decision. 

Step 4: Civil Court Proceedings 

As a final step, employees may pursue litigation through Vietnam’s civil courts, where judges rule on complex cases or those involving significant financial damages. 

For more on dispute resolution methods, see DOLISA Mediation Guidelines.  

6. Key Considerations for Employers and Employees

Considerations for Employers: 

• Follow Written Procedures: Adhere to termination steps as outlined in the employee handbook or company policy. 

• Consult a Labor Attorney: Work with a labor law expert, such as LTS LAW, to ensure full compliance with the Labor Code. 

Considerations for Employees: 

• Document All Communications: Keep copies of contracts, warnings, and notices as evidence in case of a dispute. 

• Know Your Rights: Familiarize yourself with legal protections and consult professionals if you believe the termination is wrongful. 

Practical Example: 

In a recent case, a dismissed employee who documented all correspondence and evidence of discriminatory dismissal successfully obtained compensation and reinstatement, highlighting the importance of record-keeping. 

For detailed guidance, visit our LTS LAW Labor Dispute Services.  

7. How LTS LAW Assists with Termination Disputes

With a strong focus on protecting clients’ rights, LTS LAW provides tailored legal support for termination disputes, including: 

• Comprehensive Case Analysis: Reviewing all documentation and context to advise on the best legal course of action. 

• Representation in Mediation and Arbitration: Our lawyers assist in negotiation and arbitration sessions, working towards favorable resolutions. 

• Court Representation: For cases that proceed to court, LTS LAW’s experienced attorneys provide representation and strategic litigation support. 

LTS LAW’s team is committed to upholding client rights and ensuring fair treatment in employment matters. 

Contact us today for expert guidance on termination disputes. Get Legal Advice Now  

Conclusion: Ensuring Lawful Termination in Vietnam 

Understanding the distinction between lawful and wrongful termination is essential to prevent disputes and uphold the rights of both employees and employers. By following Vietnam’s Labor Code and consulting with legal experts like LTS LAW, parties can navigate terminations effectively and within legal boundaries.