Amidst the complex Covid-19 pandemic situation in Vietnam, many enterprises have had to make decisions to temporarily suspend operations, reduce staff, and even close down, etc. In recent days, LawNet has frequently received the question whether enterprises can unilaterally terminate employment contracts with employees due to the Covid-19 pandemic, and whether it is legally permissible.
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Regarding this issue, LawNet affirms that the answer is NO.
Because: Pursuant to Point c Clause 1 Article 38 of the Labor Code 2012 of Vietnam on the right of employers to unilaterally terminate labor contracts, an employer may unilaterally terminate a labor contract in the following cases:
If, as a result of natural disaster, fire or another force majeure event as prescribed by law, the employer, though having applied every remedial measure, has to scale down production and cut jobs;
Besides, according to Clause 1 Article 156 of the Civil Code 2015 of Vietnam:
An event of force majeure is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken.
Covid-19 epidemic, classified as a Group-A infectious disease with a global pandemic risk, has been officially announced by the Prime Minister in Decision No. 447/QĐ-TTg dated April 01, 2020 on the declaration of Covid-19 epidemic.
The Covid-19 epidemic is an unforeseeable and objectively occurring event that enterprises cannot predict or overcome. In cases where an enterprise has taken necessary and feasible measures but still cannot recover from the difficult situation, such as reducing staff, scaling down production, and cutting jobs, unilaterally terminating employment contracts with employees due to the Covid-19 pandemic is completely legal.
However, when unilaterally terminating a labor contract, the employer shall notify the employee in advance:
a/ At least 45 days, for indefinite-term labor contracts;
b/ At least 30 days, for definite-term labor contracts;
c/ At least 3 working days, for seasonal or work-specific labor contracts of under 12 months as stipulated at Point b, Clause 1 of this Article.
Besides, according to Clause 1 Article 48 of the Labor Code 2012, the employer shall pay a severance allowance to the employee who has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year.
According to Clause 5 Article 14 of Decree No. 05/2015/ND-CP of Vietnam’s Government, the time frame for completing the payment of unemployment benefits is specified as follows:
Within 07 working days after the date of termination of the employment contracts, the employers shall be responsible for providing severance pay or redundancy pay to the employers. This deadline may be extended but for up to 30 days after the date of termination of the employment contract in one of the following circumstances:
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b) The employer or the employee suffers from natural disasters, conflagration, hostile acts or infectious diseases;
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Thus, employers have the right to unilaterally terminate employment contracts with employees due to the Covid-19 epidemic, as long as it does not violate legal regulations. However, employers must comply with the provisions regarding the advance notice period to inform employees about the termination of the employment contract. Additionally, employers are required to provide severance pay to employees who have worked regularly for a period of 12 months or more.
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