Legal procedure for terminating labor contract

Procedures for terminating labor contracts is an important legal process, requiring strict compliance with the provisions of the Labor Code 2019 to ensure the rights of both employees and employers. Understanding the cases and procedures for terminating labor contracts helps avoid unnecessary legal disputes. This article provides detailed information on the necessary steps to terminate a labor contract in accordance with the law.

Cases of terminating labor contracts

According to Article 34 of the Labor Code 2019, the labor contract terminates in the following cases:

• Expiration of the labor contract, except for the cases specified in Clause 4, Article 177 of this Code.
• Completed work according to labor contract.
• Both parties agree to terminate the labor contract.
• The employee is sentenced to imprisonment but is not entitled to a suspended sentence or is not subject to release, death penalty or is prohibited from doing the job stated in the labor contract according to a legally effective judgment or decision of the Court.
• Foreign workers working in Vietnam are deported according to legally effective court judgments or decisions or decisions of competent state agencies.
• Workers die; declared by the Court to have lost civil act capacity, to be missing or to have died.
• The employer is a deceased individual; declared by the Court to have lost civil act capacity, to be missing or to have died. The employer who is not an individual terminates its operations or is notified by the specialized business registration agency under the Provincial People’s Committee that it does not have a legal representative or person authorized to exercise the rights and obligations of the legal representative.
• The employee was disciplined and fired.
• The employee unilaterally terminates the labor contract according to the provisions of Article 35 of this Code.
• The employer unilaterally terminates the labor contract according to the provisions of Article 36 of this Code.
• The employer terminates the employee’s job according to the provisions of Article 42 and Article 43 of this Code.
• Work permits expire for foreign workers working in Vietnam according to the provisions of Article 156 of this Code.
• In case the probation agreement is written in the labor contract but the probation is not met or one party cancels the probation agreement.

Procedures for legally terminating labor contracts

Procedures for terminating labor contracts are divided into two main cases:

Agreement to terminate the labor contract

The employer and employee can agree to terminate the labor contract. Specifically as follows:

Step 1: The parties agree to terminate the labor contract.

Step 2: Prepare a minutes of agreement to terminate the labor contract.

Content of the agreement: Clearly state the termination time, salaries, allowances, insurance, other benefits of the employee and the employee’s responsibilities upon termination.

Step 3: The parties sign the written agreement to terminate the labor contract, each party keeps 01 copy.

Unilateral termination of labor contract

For employees:

Before terminating labor contracts, the employee must notify the employee in advance. Specifically, the notice period is as follows:

• At least 45 days if working under an indefinite-term labor contract;
• At least 30 days if working under a fixed-term labor contract with a term from 12 months to 36 months;
• At least 03 working days if working under a fixed-term labor contract with a term of less than 12 months;
• For some specific industries, occupations, and jobs, the notice period is implemented according to the Government’s regulations.

However, in the following cases, prior notice is not required:

• Not being assigned to the right job, working location or not guaranteed working conditions as agreed upon;
• Not being paid in full or not paid on time;
• Being mistreated, beaten, or subjected to humiliating words or actions by the employer, or acts that affect health, dignity, or honor; forced labor;
• Being sexually harassed at work;
• Pregnant female employees must take leave from work according to the provisions of Clause 1, Article 138 of this Code;
• Full retirement age as prescribed in Article 169 of this Code, unless the parties agree otherwise;
• The employer provides dishonest information as prescribed in Clause 1, Article 16 of this Code, affecting the implementation of the labor contract.

For employers:

When unilaterally terminating a labor contract, enterprises need to comply with the following procedures:

Step 1: Clearly determine the reason and grounds for termination

Enterprises need to clearly identify the reason for terminating the contract and ensure that this reason is consistent with the provisions of labor law.

Step 2: Notify employees in advance:

The notice period depends on the type of employment contract.

• At least 45 days for indefinite term labor contracts.
• At least 30 days for fixed-term labor contracts from 12 to 36 months.
• At least 03 working days for labor contracts with a fixed term of less than 12 months.
• For some specific occupations, the notice period may be different according to Government regulations.

In case the employee voluntarily quits his job or is not present at the workplace after the prescribed time limit, the enterprise does not need to notify in advance.

>>> See more: Company Terminates Labor Contract Before Expiration: What Should You Note?

Step 3: Make a decision to terminate the labor contract

This decision must clearly state the reason for termination, termination time and the amounts the enterprise must pay to the employee.

Step 4: Fulfill financial obligations

• Pay severance benefits, pay related amounts and complete social insurance and unemployment insurance procedures for employees.
• Complete insurance procedures and return documents: Complete procedures related to social insurance, unemployment insurance and return original documents to employees.

Responsibility for terminating labor contracts in violation of the Law

According to Article 40 and Article 41 of the Labor Code 2019, when illegally unilaterally terminating a labor contract, the employee or employer must perform the following obligations:

For workers:

• Not entitled to severance pay.
• Compensate the employer for half a month’s salary according to the labor contract.
• Compensate an amount of money corresponding to the salary according to the labor contract for days without prior notice.
• Refund of training costs (if any).

For employers:

In case the employee wants to return to work:

• Pay salaries, pay social insurance, health insurance, and unemployment insurance during days when employees are not allowed to work.
• Pay the employee an additional amount of money at least equal to 02 months’ salary according to the labor contract.
• If you violate the notice period, you must pay compensation corresponding to the salary for the days without notice.
• After accepting the employee back to work, the employee returns the previously received money.

In case the employee does not want to return to work: in addition to the amount the employer must pay above and the severance allowance, the two parties agree on an additional compensation amount for the employee but at least equal to 02 months’ salary according to the labor contract to terminate the labor contract.

Consulting services and guidance on procedures for legally terminating labor contracts

Long Phan provides consulting services and detailed guidance on legal procedures for terminating labor contracts. We will support customers in:

• Consulting on cases of terminating labor contracts;
• Consulting on the notice period before unilaterally terminating the contract;
• Consulting on benefits as well as responsibilities when terminating the contract;
• Assist in drafting termination agreement documents, notices or termination decisions;
• Instructions on procedures for effectively terminating labor contracts;
• Guidance on the process of unilaterally terminating labor contracts in accordance with the law;
• Consulting on resolving arising conflicts (if any);
• Consulting and answering other related issues.

Frequently asked questions about procedures for terminating labor contracts

Below are frequently asked questions about procedures for terminating labor contracts, customers can refer to:

How is severance pay calculated?

Severance pay is calculated as half the average salary of the 6 consecutive months before contract termination for each year of employment.

Do employees have the right to request the employer to provide copies of documents related to their work history?

Yes, employees have the right to demand and employers have the responsibility to provide.

If the company goes bankrupt, will workers be compensated?

In case the company goes bankrupt, employees will have priority in paying salary debts, severance pay, social insurance, health insurance, and unemployment insurance according to the provisions of law.

Are employees working under seasonal contracts entitled to benefits upon termination of the contract?

Employees working under seasonal contracts are still entitled to benefits as prescribed by the Labor Code, depending on each specific case.

Does the employer have the right to keep the employee’s original documents after terminating the contract?

The employer does not have the right to keep the employee’s original documents.

Can an employee sue the employer if the contract is unilaterally terminated illegally?

The employee has the right to sue the employer if there are grounds to believe that the termination of the contract is illegal.

What to note when agreeing to terminate a labor contract?

It is necessary to clearly state the terms of contract termination, salary, allowances, insurance and other benefits related to employees.

What are the benefits of employees when the company changes its organizational structure and personnel?

When changing the structure, if employees lose their jobs, the company needs to provide benefits to employees in accordance with the law.

Conclude

Terminating labor contracts should be carried out in accordance with the law to ensure the rights of both employees and employers. If you need advice or support regarding this procedure, please contact Long Phan Consulting Company via the hotline: 0906735386 for timely support.