Terminating employees in Vietnam

How does an employment contract end in Vietnam?

A Vietnamese employment contract ends in one of several defined ways: the fixed term simply expires, both sides agree to end it, the employee resigns, the employer terminates unilaterally on a statutory ground, the employee is dismissed for misconduct, or the job is made redundant. Each route carries its own notice and payment rules.

Expiry and mutual agreement are the straightforward routes: a fixed-term contract ends when its term runs out — though continued work can convert it to indefinite-term, as covered in Vietnam employment contracts and labour law — and the two sides can agree to end the relationship at any time. Separately, during a probationary period either side may cancel the trial without notice or severance.

The employee side is simple. An employee may resign on 45 days’ notice (indefinite-term), 30 days (12-to-36-month term) or 3 working days (sub-12-month term), and in defined situations — unpaid wages, abuse, or not being given the agreed work — may leave with no notice (Labour Code 2019, Article 35).1 The difficulty lies on the employer’s side.

What are the lawful grounds for unilateral termination?

An employer in Vietnam may end a contract unilaterally only on the specific grounds set out in Article 36 of the Labour Code; there is no at-will dismissal. The grounds form a closed list covering repeated underperformance, long-term illness, force majeure, defined absences and dishonest hiring information, and nothing outside it will do.1

In practice the Article 36 grounds an employer can rely on are:

• the employee repeatedly fails to perform the work under the criteria in the registered internal labour regulations;
• the employee is ill and has not recovered after a statutory treatment period;
• force majeure or a natural disaster forces downsizing after the employer has sought remedies;
• the employee is absent from work for 15 or more days after a lawful suspension of the contract;
• the employee is absent for five or more consecutive working days without a legitimate reason;
• the employee gave dishonest information when hired that affected the recruitment decision.

Because the list is closed, a commercially obvious reason — a personality clash, or a performer who merely meets the letter of their targets — is not a lawful ground. Where the real reason is that the role has disappeared, the correct route is redundancy, below.

When can an employer not terminate an employee?

Even with a valid Article 36 ground, an employer cannot unilaterally terminate while an employee is on certified sick leave or being treated for a work injury, on leave the employer has agreed to, or is pregnant, on maternity leave or raising a child under 12 months old (Labour Code 2019, Article 37).1 A dismissal served during one of these protected periods is unlawful, however sound the underlying ground.

How much notice must you give to terminate an employee?

To terminate an employee lawfully in Vietnam you must give notice that matches the contract: at least 45 days on an indefinite-term contract, 30 days on a 12-to-36-month fixed term, and 3 working days on a sub-12-month term. Two grounds need no notice at all: five consecutive working days’ unexcused absence, and failure to return to work within the statutory time limit after a lawful suspension of the contract (Labour Code 2019, Article 36.3).1

The periods mirror those an employee gives to resign. Notice is procedural, not a substitute for a valid ground: serving 45 days’ notice does not make an unlawful dismissal lawful, and skipping notice where it is required exposes the employer to a claim even where the ground was sound.

When can you dismiss an employee for misconduct?

Dismissal for misconduct in Vietnam is tightly controlled. Labour discipline is limited to four measures — reprimand, deferment of a pay rise, demotion and dismissal — and fining an employee or docking wages as punishment is banned. Dismissal is available only on a closed list of serious grounds, applied through a documented process (Labour Code 2019, Articles 124 and 125).1

The statutory grounds for disciplinary dismissal include theft, embezzlement, gambling, a deliberate injury or drug use at the workplace; disclosure of business or technology secrets, or an intellectual-property infringement, causing serious harm; re-offending while already under a live disciplinary penalty such as a pay-rise deferment or demotion; and unexcused absence of five cumulative days in 30, or 20 cumulative days in a year.1 Anything short of those grounds is not a basis for dismissal.

Process matters as much as grounds. Disciplinary action must follow the employer’s registered internal labour regulations, which an employer with 10 or more staff must have — see Vietnam employment contracts and labour law. A dismissal on a valid ground can still be overturned if the process was not followed, which is why the paperwork decides most disputes.

What must you pay when employment ends?

A lawful exit can carry a statutory payment. An employee with at least 12 months’ service whose contract ends lawfully — not by disciplinary dismissal — is owed severance of half a month’s wage for each qualifying year of service; where the role genuinely disappears through restructuring, a change of technology, economic difficulty or a merger, the payment is instead job-loss allowance of one month’s wage per year, with a minimum of two months. Both use the average wage of the six months before termination (Labour Code 2019, Articles 46–47).1

The figure that surprises foreign employers is how small statutory severance usually is: qualifying service excludes any period already covered by unemployment insurance, which has been compulsory since 2009, so for most staff hired in the past decade the employer’s severance bill is small or nil (Decree 145/2020, Article 8).2 The full method — the 2009 offset, a worked example and how job-loss allowance compares — is set out in severance pay in Vietnam. A “contractor” later found to be an employee accrues this qualifying service too, one of the costs of a misclassified engagement.

Why is it hard to terminate employees in Vietnam?

Termination is hard by design, and the difficulty is not the severance cheque — the unemployment-insurance offset keeps that small for recent hires. It is the closed grounds list, the evidenced procedure and the burden of proof, all sitting on the employer. Dismiss on a reason outside Article 36, skip the registered process or fail to serve notice, and a court can order the employer to reinstate the employee, pay their wages and social, health and unemployment insurance for the days they were not allowed to work, and pay compensation of at least two months’ wage (Labour Code 2019, Article 41).1 That exposure, not the headline payment, is what makes planning the exit worthwhile.

How does an EOR manage a compliant exit?

An employer of record manages the exit as the legal employer. Because EOR Vietnam holds the registered contract and internal labour regulations as the employing entity, it applies the correct ground, serves the right notice, runs the final payroll and pays any severance or job-loss allowance — keeping the offboarding to the Labour Code’s grounds, notice and payment rules while you direct the business decision. See what an employer of record does, how an EOR is structured lawfully in Vietnam, or the full set of Vietnam employer guides.