PARTIES TO A LABOR DISPUTE 2025
Topic 38:
PARTIES TO A LABOR DISPUTE
Senior Lecturer, Dr. Nguyễn Thị Bích
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 01/2023/LĐ-ST dated March 3, 2023, of the People’s Court of Dĩ An City, Bình Dương Province.]
Summary of the Case:
Mr. Nguyễn Đức began working at the Lý Hùng Forklift and Ladder Facility in 2012. On July 1, 2022, the Lý Hùng Forklift and Ladder Facility was converted into Lý Hùng Forklift One Member Limited Liability Company (hereinafter referred to as “Company LH”). Following the conversion of the business type, Company LH entered into an indefinite-term employment contract with Mr. Nguyễn Đức for the position of vehicle repair technician.
Due to financial losses and ineffective operations, Company LH could no longer sustain its business. On September 27, 2022, the Director of Company LH, Mr. Nguyễn Văn, summoned Mr. Nguyễn Đức and informed him that his employment would terminate effective that same day. After Mr. Nguyễn Đức ceased working, Company LH fully paid his wages and social insurance contributions and submitted its business dissolution documents to the Department of Planning and Investment of Hải Dương Province.
Believing his termination was unjustified and lacked prior notice, Mr. Nguyễn Đức filed a lawsuit, requesting the Court to compel Company LH to compensate him for the unlawful termination of his employment contract.
Decision of the Appellate Court:
The Court rejected Mr. Nguyễn Đức’s claim, reasoning that Company LH had dissolved, falling under the case of termination of an employment contract due to the cessation of operations by an employer that is not an individual.
COMMENTARY
I. Introduction
A labor dispute is a conflict over rights, obligations, and interests arising between parties in an employment relationship. Labor disputes include: (i) individual labor disputes between an employee and an employer, and (ii) collective labor disputes between a group of employees and an employer.
In practice, labor disputes predominantly occur between individual employees and employers. Labor disputes arise and persist in connection with employment relationships. This connection is reflected in two fundamental aspects: the parties to the dispute are always the subjects of the employment relationship, and the subject matter of the dispute pertains to the content of that employment relationship.
When a labor dispute arises, accurately identifying the parties involved requires correctly determining the subjects of the employment relationship. Every social or legal relationship comprises three essential elements: the subjects (parties) of the relationship, the object of the relationship, and the content of the relationship. In an employment relationship, the element of the subjects plays a particularly crucial role.
Precisely determining the roles of the subjects in an employment relationship ensures the proper protection of the rights and interests of the parties both during their participation in the employment relationship and when a labor dispute emerges.
However, in practice, identifying the parties to an individual labor dispute can be complex and prone to confusion, even for the subjects of the employment relationship themselves. In this case, the author will analyze and comment on the legal standing of the parties in the employment relationship.
II. Legal Issues
- Determining the Legal Standing of the Parties in the Case
In a civil case, the parties include agencies, organizations, or individuals, encompassing the plaintiff, the defendant, and persons with related rights and obligations. The plaintiff is the party initiating the lawsuit, requesting the Court to resolve a civil case when they believe their lawful rights and interests have been infringed. The defendant is the party against whom the plaintiff files the lawsuit, requesting the Court to resolve the case, based on the belief that the defendant has infringed the plaintiff’s lawful rights and interests.
In this case, Mr. Nguyễn Đức, believing his lawful rights and interests were violated by Company LH, filed a lawsuit with the People’s Court of Dĩ An City and was identified as having the legal standing of a plaintiff. Company LH, being the entity sued by Mr. Nguyễn Đức to request judicial resolution, was identified as having the legal standing of a defendant in the civil case. At the time Mr. Nguyễn Đức initiated the lawsuit (October 17, 2022), Company LH had not yet completed its business dissolution procedures. Therefore, the Court’s recognition of Company LH as a defendant in the civil case was consistent with legal provisions.
- Identification of the parties in labor disputes
Labor disputes refer to conflicts over rights, obligations, and benefits arising between parties during the establishment, performance, or termination of employment relations; disputes among employee representative organizations; or disputes arising from relations directly related to employment relations.
In the case mentioned above, the labor dispute between Mr. Nguyễn Đức and LH Company arose during the termination of their employment relationship.
Based on Labor Contract No. 01-22/HĐLĐ dated July 1, 2022, between LH Company and Mr. Nguyễn Đức (indefinite-term labor contract, salary: 5,007,600 VND/month), it can be affirmed that an employment relationship was established between the two parties. Therefore, in this labor dispute, LH Company and Mr. Nguyễn Đức are the disputing parties.
Case Details:
LH Company asserted that it had been operating inefficiently and had to cease its operations. To complete the dissolution procedures, in late September 2022, LH Company invited employees to attend meetings, settled all wages, paid social insurance for workers, and announced the company’s dissolution. At the same time, LH Company engaged an accounting institute as a service provider to handle the dissolution procedures.
On February 23, 2023, pursuant to Official Letter No. 107/ĐKKD issued by the Business Registration Office of Hải Dương Department of Planning and Investment, LH Company’s legal status was recorded as dissolved.
According to Article 34 of the 2019 Labor Code regarding cases of labor contract termination: “… Employers who are not individuals shall cease their operations….” In this case, LH Company is a legal entity, established and operating under enterprise law.
Article 45 of the 2019 Labor Code stipulates:
“In cases where employers who are not individuals cease operations, the termination date of the labor contract is calculated from the date of the cessation notification.”
The employment relationship between Mr. Nguyễn Đức and LH Company was terminated under Clause 7 of Article 34 of the 2019 Labor Code. LH Company was not required to issue a written notice to Mr. Nguyễn Đức regarding the termination of the labor contract. The termination date of the labor contract between LH Company and Mr. Nguyễn Đức was counted from the date LH Company informed Mr. Nguyễn Đức about the cessation of operations for the purpose of dissolution procedures.
Key Issue in the Case:
The pivotal issue in this case is whether the dissolution procedures of LH Company complied with legal regulations. During the arguments, the plaintiff’s representative argued that LH Company’s dissolution did not comply with legal requirements but did not request a review. Consequently, the Trial Panel, based on Clause 1, Article 5 of the 2015 Civil Procedure Code, did not consider the issue.
If the plaintiff had requested a review of the legality of the company dissolution procedures, the provisions of Article 208 of the 2020 Law on Enterprises would have been applicable, as follows:
“Article 208: Procedures for Enterprise Dissolution
The dissolution of enterprises, as stipulated in Points a, b, and c of Clause 1, Article 207 of this Law, shall follow the steps below:
- Approve a resolution or decision on enterprise dissolution. The resolution or decision must include the following:
- a) Name and headquarters address of the enterprise;
- b) Reason for dissolution;
- c) Time frame and procedures for contract liquidation and debt settlement;
- d) Plan for handling obligations arising from labor contracts;
- e) Full name and signature of the private enterprise owner, company owner, Chairman of the Members’ Council, or Chairman of the Board of Directors.
- The private enterprise owner, Members’ Council, company owner, or Board of Directors directly oversees asset liquidation, unless the company charter mandates the creation of a separate liquidation entity.
- Within 7 working days from the date of approval, the resolution or decision on dissolution and meeting minutes must be sent to the Business Registration Office, tax authorities, and employees. The dissolution resolution or decision must also be published on the National Enterprise Registration Portal and publicly posted at the company’s headquarters, branches, and representative offices.
If the enterprise has outstanding financial obligations, the dissolution resolution or decision and a debt settlement plan must also be sent to creditors and other relevant parties. The debt settlement plan must specify the creditor’s name, address, debt amount, payment timeline and method, and procedures for resolving creditor complaints.
- The Business Registration Office must announce the enterprise’s dissolution status on the National Enterprise Registration Portal upon receiving the dissolution resolution or decision. The announcement must include the dissolution decision and debt settlement plan (if any).
- Enterprise debts are settled in the following priority order:
- a) Wages, severance pay, social insurance, health insurance, unemployment insurance, and other employee benefits under collective agreements and labor contracts;
- b) Tax debts;
- c) Other debts.
- After settling dissolution costs and debts, remaining assets are distributed among private enterprise owners, members, shareholders, or company owners based on their capital contributions or shares.
- The enterprise’s legal representative submits dissolution documents to the Business Registration Office within 5 working days from the date of debt settlement completion.
- If, after 180 days from the date the resolution or decision on dissolution is submitted per Clause 3 of this Article, no objections are raised by the enterprise or related parties in writing, or within 5 working days from receipt of dissolution documents, the Business Registration Office updates the enterprise’s legal status as dissolved on the National Enterprise Registration Database.
- The Government provides detailed guidance on the procedures for enterprise dissolution.”
Application to the Case:
Under the above provisions, the termination of labor contracts and the settlement of wages, severance pay, social insurance, health insurance, unemployment insurance, and other employee rights must be completed after LH Company issues a dissolution decision and notifies the Business Registration Office of the company’s dissolution status on the National Enterprise Registration Portal. Only after all debts have been settled, including those owed to employees, can the employer submit dissolution documents to the Business Registration Office for updating the enterprise’s legal status as dissolved on the National Enterprise Registration Database.
III. Conclusion
In employment relations, determining the parties’ legal status is crucial to protecting both sides’ rights in employment relationships and resolving disputes. Courts, when reviewing and adjudicating labor disputes, must clearly identify the roles of the disputing parties to issue accurate rulings that safeguard the lawful rights and benefits of all parties involved in the employment relationship.
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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”
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