Termination of a
labor contract is an event that terminates the employment
relationship between the employee and the employer. In particular, there are
many cases of termination of labor contracts such as the labor contract
expires, the work stated in the labor contract has been completed, both parties
agree to terminate the labor contract, the employer lays off the employee due
to structural or technological changes or because of economic reasons, merger,
consolidation or division of the enterprise or cooperative,…
In case more than one employee face the risk of unemployment for
economic reasons, the employer shall propose and implement a labor utilization
plan in accordance with labour code. Specifically, the labor utilization plan
must contain the following main contents: list and number of employees who
continue to be employed, employees sent for re-training to continue using; list
and number of retired employees; list and number of employees transferred to
work part-time; employees must terminate labor contracts and measures and
financial sources to ensure the implementation of the plan.
In case the employer cannot employ and have to dismiss employees,
the employer shall pay job-loss allowances to the employees. Accordingly, the
employer shall pay a job-loss allowance to an employee who loses his/her job
and has worked regularly for the employer for 12 months or longer. The job-loss
allowance is equal to 1 month’s wage for each working year, but must not be
lower than 2 months’ wage.
The working period used for the calculation of job-loss allowance
is the total time during which the employee actually works for the employer
minus the time during which the employee benefits from unemployment insurance
in accordance with the Law of Social Insurance and the working period for which
the employer has paid a severance allowance to the employee. The wage used for
the calculation of job-loss allowance is the average wage in accordance with
the labor contract during 6 months preceding the time the employee loses
his/her job.
The dismissal of more than one employee in accordance with this
regulation may be implemented only after discussion with the representative
organization of the grassroots-level employees’ collective and notification 30
days in advance to the provincial-level state management agency of labor.
It is important for the employer to consult with dispute lawyers specializing in labour matters for the
avoidance of potential dispute with the employee, and cause negative social
impact when deciding to terminate contract due to economic reasons.
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