Can a company in Vietnam lay off a large number of employees due to changes its structure?

What are regulations on changes in structure, technology or changes due to economic reasons?

According to Clause 1, Clause 2, Article 42 of the Labor Code of 2019, the regulations on technological structure or economic reasons are as follows:1.

1. Changes in structure and technology include:

a) Changes in the organizational structure, personnel rearrangement;

b) Changes in processes, technology, equipment associated with the employer’s business lines;

c) Changes in products or product structure.

2. Changes due to economic reasons include:

a) Economic crisis or economic depression;

b) Changes in law and state policies upon restructuring of the economy or implementation of international commitments.

Can a company in Vietnam lay off a large number of employees due to changes its structure?

Pursuant to Article 42 of the Labor Code 2019, the obligations of the employer in case of structural, technological changes or economic reasons are as follows:

3. If the change affects the employment of a large number of employees, the employer shall develop and implement a labor utilization plan prescribed in Article 44 of this Labor Code. In case of new vacancies, priority shall be given to retraining of the existing employees for continued employment.

4. If a change due to economic reasons threatens to cause a large number of employees to lose their jobs, the employer shall develop and implement a labor utilization plan as prescribed in Article 44 of this Code.

5. In case the employer is unable to create provide employment and has to resort to dismissing employees, the employer shall pay them redundancy allowances in accordance with Article 47 of this Labor Code.

6. The dismissal of employees in the cases mentioned in this Article shall only be implemented after a discussion with the representative organization of employees (if any) and after giving prior notice of 30 days to the People’s Committee of the province and the employees.

According to this Article, the employer upon structural change may dismiss the employee. However, there must be a labor utilization plan in Vietnam.

What are regulations on a labor utilization plan due to changes its structure?

In addition, Article 44 of this Code stipulates the plan of employing laborers as follows:

1. A labor utilization plan shall have the following contents:

a) The names and number of employees to be retained, employees to be retrained for further employment, and employees to be working on part-time basis;

b) The names and number of employees to retire;

c) The names and number of employees whose employment contracts have to be terminated;

d) Rights and obligations of the employer, employee and relevant parties regarding implementation of the labor utilization plan;

dd) The measure and financial sources to implement the plan.

2. During development of the labor utilization plan, the employer shall discuss with the representative organization of employees (if any). The labor utilization plan shall be made available to the employees within 15 days from the day on which it is adopted.

According to this Article, in case the employer in Vietnam changes the structure, it is necessary to have a plan to employ the employee as specified above.

Best Regards!