Vietnam: Think Twice Before Firing Staff, Lawyers Warn

The global solution for human resource professionals, combines custom research, strategic white papers, country primers, webinars and OnDemand educational programs, and the expert guidance...

By Lien Hoang

Firing staff in Vietnam is no easy job, so employers should approach the task carefully and avoid legal pitfalls, lawyers say.

While the communist country has transformed itself into a capitalist economy starting in the 1980s, it has retained a stronger regime of labor protections than most countries, says Angie Ngoc Tran, a political economist at California State University, Monterey.

That regime includes limits on when an employee can be sacked, and there's a special class of protected workers who cannot be fired at all— those who are on sick leave, in jail, absent with permission, pregnant, or raising a child 12 months old or younger.

Reasons to Fire

Vietnamese law doesn't recognize the concept of employment at will, but there are four situations in which termination is legal, according to lawyer Trung Khuat, vice chairman of the European Chamber of Commerce in Vietnam's human resource committee. They involve employees who:

  •   miss work without leave for five consecutive days in a month or 20 in a year;
  •   repeat an offense during a disciplinary period for that offense;
  •   commit a serious breach, such as embezzlement, disclosure of trade secrets, or drug use; or
  •   commit other serious breaches causing financial loss as outlined in company rules.

“The damages of the breaches must be quantifiable,” Khuat said, but cautioned: “The law is not clear on the threshold of damages for dismissal.”

Different from Europe

The challenge of dismissing an employee in Vietnam invites comparison to France, Belgium, and other rich countries where it's also not easy to dismiss employees. The difference is that for European economies difficulty in firing can also mean difficulty in hiring because employers may be cautious about bringing on new staff they will later have to let go. That is not the case for Vietnam, said Colin Blackwell, head of the Vietnam Business Forum's HR committee.

“The economy in Vietnam is booming, so there is strong demand for good staff in most sectors,” Blackwell told Bloomberg Law.

“Many young employees in Vietnam do not stay with one employer for as long as in developed countries, as they can relatively easily find employment somewhere else,” Manfred Otto, senior associate at Duane Morris Vietnam, told Bloomberg Law. “So even if it isn't easy to let staff go under Vietnam's employment regulations, the need to do so might be less pronounced than in developed countries with stagnant growth.”

Risks of Lawsuits

One common misstep is illegally firing an employee, who may respond with a lawsuit. Workers generally don't incur fees for litigation, Khuat said. The former employee could have grounds for a suit if the employer didn't provide enough notice, have legal cause for the termination, or hold a disciplinary meeting with a union representative present.

Successful plaintiffs receive backpay, two months' pay for emotional distress, and the right to return to the job.

“No one really wants their problem employee to come back to work,” Baker McKenzie special counsel Sarah Galeski said, but “no matter how bad the relationship has gotten, that employee is coming back.”

She said companies usually avoid this by settling on a payout.

Better to forestall a lawsuit altogether and work out a mutual termination agreement, Khuat said, adding that, while there will be a cost, this solution is faster and requires no union presence.

Grunkorn & Partner senior associated lawyer Nguyen Thi Quynh Nhu agrees disputes tend to be “settled in an informal way” but for a different reason. She said it's the employee who doesn't want to go to court.

“Not many Vietnamese would feel comfortable to publicly oppose the decision of the employer to terminate the labor contract,” she told Bloomberg Law.

Regular Staff Appraisals

If employers want to think more long term, they should consider their broader workforce strategy when drafting their internal labor regulations, according to Khuat, who recommended an internal code that lists causes for dismissal, prohibitions on sharing confidential information, and job descriptions. Businesses need to register these regulations with their local Department of Labor, Invalids, and Social Affairs.

Some of the frictions leading to an unpleasant separation could be prevented if companies made formal appraisals a habit, Galeski said. She suggested meeting regularly with staff for feedback, keeping minutes, and having them acknowledge their appraisals with a signature.

“Employers feel kind of shy,” she said, so they might prefer casual feedback, but “that's not good enough.”

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Vietnamese HR law and regulation, see the Vietnam primer.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International HR Decision Support Network