Vietnam - termination and work regulations
Terminating an
employee in Vietnam is a sensitive matter that must be handled carefully by
employers to avoid legal risks and reputational damage.
It is
important to follow the legal procedures and grounds for termination, as well
as to provide fair compensation to the employee. Employers should also ensure
that their actions are in line with their company values and maintain good
communication with their employees throughout the process.
Termination Process
The termination process is standard in Vietnam and is based on the Labor Law
requirements unless an employer can provide sufficient cause for dismissal
without notice (due to misconduct, etc.)
The Labor Code of Vietnam requires employers to have a valid
reason for terminating an employee, such as a serious violation of company
rules or a failure to meet job requirements. Employers must follow the proper
procedures for termination as outlined in the Labor Code.
Notice of termination must be in writing and sent to the
relevant governmental authorities.
Mass Layoff Rules
Mass layoff rules apply in case of termination of employment
due to restructuring, change of technology or change of economic reasons. The
employer must pay severance to those employees. The employer must have
discussions with the organization representing the labor collective at the at
the grassroots level and provide 30 days’ advance notice to the provincial
state administrative body for labor and to the impacted employees.
Notice Period
Notice periods within Vietnam are generally between 30 and 45 days, but differ
based on the type of contract:
3 working days for the seasonal contract (contract of
less than one year);
30 days for a definite labor contract (between 1-3
years)
45 days for an indefinite labor contract.
Severance Pay
In Vietnam, severance pay is mandatory if applicable and determined by the
employee’s contract terms and length of service.
Statutory severance pay is calculated at 50.00% of an employee’s regular
monthly salary rate for each year of service. However, suppose the severance
payment is due to changes in the company structure, technology, or economic
reasons. In that case, the severance pay is calculated at one month’s salary
for each year of service.
“Salary” for purpose of calculating severance, refer to the
average salary including:
1. Wage rates
2. Allowances
3. Other additional items specified in the contract which
are regulary paid each pay period in 6 months immediately preceding
termination.
Probation Period
For permanent employees, the probation period in Vietnam is generally based on
the complexity and skill required to do the role and varies between 6 to 60
days. The wage for an employee during the probation period must be agreed upon
in writing but cannot be less than 85.00% of the full-time permanent salary for
the role.
Employees working under seasonal labor contracts are not subject to
probation.
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