The right to unilaterally terminate a labor contract is a fundamental right of both employees and employers, allowing either party to end the employment relationship without the other’s consent, provided that statutory conditions are met. A correct understanding of this right helps the parties mitigate legal risks and protect their legitimate interests.
1. Key Definitions
Employee means a person who works for an employer under an agreement, is paid wages, and is subject to the management, administration, and supervision of the employer. The minimum working age is 15 years old, except as otherwise provided in Section 1, Chapter XI of the 2015 Labor Code.
Employer means an enterprise, agency, organization, cooperative, household, or individual that hires or employs workers pursuant to an agreement. Where the employer is an individual, such person must have full civil act capacity.
The right to unilaterally terminate a labor contract is the right of either the employee or the employer to terminate the labor contract without the consent of the other party, subject to legal requirements regarding the grounds for termination and the notice period (except for certain cases where immediate termination is permitted).
2. Employer’s Right to Unilaterally Terminate a Labor Contract
An employer has the right to unilaterally terminate a labor contract in the following cases:
- The employee regularly fails to fulfill the job requirements as specified in the labor contract, which is assessed based on the performance evaluation criteria set out in the employer’s internal regulations. Such regulations must be developed with consultation from the grassroots-level employee representative organization (if any).
- The employee suffers from illness or an accident and has undergone treatment for 12 consecutive months (for indefinite-term contracts), 6 consecutive months (for definite-term contracts of 12 to 36 months), or more than half of the contract term (for definite-term contracts of less than 12 months), but remains unable to resume work. Once the employee’s health recovers, the employer shall consider re-entering into a labor contract with the employee.
- Due to natural disasters, fires, dangerous epidemics, war or hostilities, or relocation or downsizing required by competent authorities, and despite all remedies, the employer is still forced to reduce the workforce.
- The employee fails to return to work after the timeframe prescribed in Article 31 of the 2019 Labor Code.
- The employee reaches the retirement age as provided in Article 169 of the 2019 Labor Code, unless otherwise agreed.
- The employee is absent from work without legitimate reasons for five consecutive working days or more.
- The employee provides false information under Clause 2, Article 16 of the 2019 Labor Code during contract conclusion, affecting the recruitment process.
When unilaterally terminating the labor contract under Points a, b, c, đ, and g, Clause 1, Article 36 of the 2019 Labor Code, the employer must provide prior notice to the employee as follows:
- At least 45 days for indefinite-term labor contracts;
- At least 30 days for definite-term contracts of 12 to 36 months;
- At least 3 working days for definite-term contracts of less than 12 months and in the case of Point b, Clause 1 of this Article;
- For specific sectors, industries, or jobs, the notice period shall comply with Government regulations.
In the cases stipulated at Points d and e, Clause 1 of this Article, the employer is not required to give prior notice.
3. Cases Where the Employer May Not Exercise the Right to Unilaterally Terminate the Contract
An employer is prohibited from unilaterally terminating a labor contract in the following circumstances:
- The employee is undergoing treatment or convalescence for illness, accident, or occupational disease as prescribed by a competent medical institution, except for the case under Point b, Clause 1, Article 36 of the 2019 Labor Code;
- The employee is on annual leave, personal leave, or any other leave permitted by the employer;
- The employee is a pregnant woman, or is on maternity leave or caring for a child under 12 months of age.
In conclusion, employers are legally entitled to unilaterally terminate labor contracts, but such actions must strictly comply with statutory provisions to ensure fairness and avoid potential disputes. A clear understanding of the legal grounds, proper procedures, and obligations concerning notice and financial settlement is essential. In a regulatory environment that is increasingly transparent and stringent, employers must act prudently and professionally to protect their reputation and minimize legal risks.
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