Vietnam Business Law

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Termination of an employment contract

Under the new Labour Code, an employer may terminate an employment contract in the following circumstances, among others:

  • the contract duration expires except in the case the employee who is a part-time trade union officer is still within the term of such office;
  • the employee has contributed to the social insurance fund for a sufficient period and has reached pension age (60 for male and 55 for female). It is not clear if the employer can terminate the contract if employee reaches pension age only but has not contributed to the social insurance fund sufficiently;
  • the employee is sentenced to a jail term or to the death penalty, or is prohibited from performing the job prescribed in the labor contract by a legally enforceable decision of a court;
  • the employee dies; or is declared by a court to have lost legal capacity for civil acts, to be missing or to be deceased;
  • the employer terminates its operation;
  • the employee is disciplined in the form of dismissal in accordance with the law;
  • the employee repeatedly fails to perform the work in accordance with the terms of the labor contract;
  • the employee is ill or injured and remains unable to work after having received treatment for a period of twelve consecutive months in the case of an indefinite term labor contract, or six consecutive months in the case of a definite term contract, or more than half the duration of the contract in the case of a seasonal or specific job labor contract with a duration of less than twelve months;
  • where as a result of a natural disaster, fire or for any other reason of force majeure as prescribed by law, the employer needs to narrow production;
  • the employee fails to attend the workplace within 15 days from expiry of the term of suspension of performance of the labor contract;
  • the employer terminates employment contracts due to restructuring, change of technology, economic reasons, or due to merger, consolidation or separation; and
  • when the employer transfers ownership or right to use assets.
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