Vietnam: Is it legally for enterprises to unilaterally terminate labor contracts due to COVID-19?

Currently, Covid-19 epidemic has become too complicated that leads to the fact that many businesses are being forced to close, cut costs, cut personnel, etc. In this situation, in accordance with Vietnam’s regulations, can the enterprise unilaterally terminate the labor contract due to the COVID-19 epidemic? Are employees entitled to compensation or benefits when their labor contracts are terminated?

có được đơn phương chấm dứt HĐLĐ do dịch COVID-19

Is it legally for enterprises to unilaterally terminate labor contracts due to COVID-19?

According to Decision No. 447/QĐ-TTg dated April 01, 2020, the Prime Minister of Vietnam declared that COVID-19 (novel coronavirus acute respiratory disease) is a group A infectious disease at the level of a global pandemic.

Concurrently, according to Clause 1 Article 3 of the Law on Prevention and Control of Infectious Diseases 2007 of Vietnam, group A infectious disease consists of extremely dangerous infectious diseases that can transmit very rapidly and spread widely with high mortality rates or with unknown agents.

In this case, COVID-19 is considered a force majeure event, an event that occurs objectively and unforeseeable.

According to  Point c Clause 1 Article 38 of the Labor Code 2012 of Vietnam, an employer may unilaterally terminate a labor contract 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.

According to Clause 2 Article 12 of the Decree No. 05/2015/NĐ-CP of Vietnam’s Government, employer’s unilateral termination of the employment contract in cases of other force majeure is in one of the following cases:

- Enemy-inflicates destruction, epidemics;

- Relocation or narrowing of the production and business sites, at the request of competent State agencies.

Thus, according to the above provisions, an employer may unilaterally terminate a labor contract 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 and the enterprise can prove that it has tried all remedies but still could not fix it.

Notably, according to Clause 2 Article 38 of the Labor Code 2012 of Vietnam, when unilaterally terminating a labor contract, the employer shall notify the employee in advance:

- At least 45 days, for indefinite-term labor contracts;

- At least 30 days, for definite-term labor contracts;

- At least 3 working days, for seasonal or work-specific labor contracts of under 12 months.

Are employees entitled to severance pay and redundancy pay in cases of termination of the employment contract?

According to Clauses 1 and 2 Article 14 of the Decree No. 05/2015/NĐ-CP of Vietnam’s Government, severance pay and redundancy pay are as follows:

- The employer shall pay employment severance pay as prescribed in Article 48 of the Labor Code 2012 of Vietnam to employees regularly working for 12 months or more if employment contracts are terminated as specified in Clauses 1, 2, 3, 5, 6, 7, 9 of Article 36 and the employers shall unilaterally terminate the employment contract in accordance with the provisions of Article 38 of the Labor Code 2012 of Vietnam.

- The employer shall give redundancy pay as prescribed in Article 49 of the Labor Code 2012 of Vietnam to employees regularly working for 12 months or more but losing their jobs due to technological, structural change or economic reasons or a merger, amalgamation, split or separation of enterprises or cooperatives as specified in Clause 10, Article 36, Article 44 and Article 45 of the Labor Code 2012 of Vietnam.

Thus, based on the above provisions, employees are entitled to severance allowance when the enterprise terminates the labor contract due to the COVID-19 epidemic if the employee has worked regularly for that enterprise for full 12 months or more.

Enterprises only pay unemployment benefits to employees if they have worked regularly for that enterprise for 12 months or more and are being laid off due to changes in structure, technology or economic reasons or merger, consolidation or separation of enterprises. However, if the enterprise unilaterally terminates the labor contract with the employee for economic reasons caused by the COVID-19 epidemic, the enterprise must pay the unemployment allowance to the employee.

Ty Na

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