EMPLOYEE UNILATERALLY TERMINATING THE LABOR CONTRACT 2025
Topic 13:
EMPLOYEE UNILATERALLY TERMINATING THE LABOR CONTRACT
MSc. Hoàng Thị Minh Tâm
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 01/2023/LĐ-ST dated January 10, 2023, of the People’s Court of Hải An District, Hải Phòng City]
Summary of the Case:
U Vietnam Co., Ltd. (hereinafter referred to as Company U) and Mr. Hoàng Công entered into a fixed-term labor contract with a duration of 36 months. In addition, Mr. Công was sent by Company U for training in China pursuant to an agreement between the two parties. On March 5, 2022, Mr. Công submitted a resignation letter citing personal reasons, specifying his last working day as April 2, 2022. However, after signing and submitting the resignation letter, Mr. Công admitted that he had ceased working as of March 29, 2022.
On April 3, 2022, Company U issued a decision to terminate the labor contract with Mr. Công. Company U argued that Mr. Công had unilaterally terminated the labor contract in violation of the law and breached his commitment regarding the duration of employment following the training. Consequently, Company U demanded that Mr. Công reimburse the training costs and provide compensation for the unlawful unilateral termination of the labor contract. The court held that Company U’s issuance of the decision to terminate the labor contract with Mr. Công was consistent with the provisions of Article 45 of the 2019 Labor Code. This decision did not indicate Company U’s consent to Mr. Công’s unilateral termination of the labor contract.
Court Decision:
[…] Mr. Công had unilaterally terminated the labor contract in violation of the law and was therefore obligated to reimburse the training costs and compensate U Vietnam Co., Ltd. […]
COMMENTARY
I. Introduction
Unilateral termination of a labor contract is understood as an action whereby one party independently decides to terminate the performance of rights and obligations under the labor relationship without depending on the will of the other party. The law recognizes and guarantees the right to unilaterally terminate a labor contract, thereby facilitating employees’ freedom to choose employment and workplaces that suit their needs and professional qualifications.
However, when unilaterally terminating a labor contract, employees must comply with the conditions stipulated under Article 35 of the 2019 Labor Code.
II. Legal Issues
- Advance Notice Procedure for Unilateral Termination of a Labor Contract
The 2019 Labor Code has provided significantly greater flexibility for employees in exercising their right to unilaterally terminate a labor contract compared to employers. In most cases, employees are entitled to unilaterally terminate their labor contract with an employer without providing a reason, provided they comply with the advance notice procedure. [Employees are not required to provide advance notice to the employer if they fall under the circumstances specified in Clause 2, Article 35 of the 2019 Labor Code.]
The duration of the advance notice depends on the nature of the job and the type of labor contract concluded by the employee. Specifically: for employees working under an indefinite-term labor contract, a minimum of 45 days’ notice is required; for employees under a fixed-term labor contract with a duration of 12 to 36 months, a minimum of 30 days’ notice is required; and for contracts with a duration of less than 12 months, a minimum of 3 working days’ notice is required
[Clause 1, Article 35 of the 2019 Labor Code]. For certain specific industries, occupations, or jobs, the notice period is at least 120 days for indefinite-term contracts or fixed-term contracts of 12 months or more, and at least one-quarter of the contract term for contracts of less than 12 months. These specific industries and occupations are detailed in Clause 1, Article 7 of Decree No. 145/2020/NĐ-CP.
The author agrees with the court’s reasoning that, at the time of termination, Mr. Công was working under a 36-month fixed-term labor contract. Accordingly, to lawfully unilaterally terminate the labor contract, Mr. Công was not required to provide a reason but had to give the employer at least 30 days’ advance notice. However, Mr. Công submitted his resignation on March 5, 2022, and ceased working on March 29, 2022, failing to meet the minimum notice period under Clause 1, Article 35 of the 2019 Labor Code. Consequently, Mr. Công was deemed to have unilaterally terminated the labor contract unlawfully [Article 39 of the 2019 Labor Code].
Mr. Công claimed that he was unable to work after March 29, 2022, due to illness, but he failed to provide any documents or evidence to substantiate this assertion. Thus, Company U’s decision to terminate the labor contract with Mr. Công was based on the employee’s prior unlawful unilateral termination, rather than an indication of mutual agreement to terminate the contract.
In summary, the requirement for advance notice when an employee unilaterally terminates a labor contract is designed to allow the employer sufficient time to prepare for personnel changes and work arrangements, minimizing potential harm to the employer. This also implies that during the notice period, the labor relationship remains in effect, and the employee is still obligated to perform their duties. Only upon the expiration of the notice period may the employee terminate the labor relationship.
- Legal Consequences of an Employee Unilaterally Terminating a Labor Contract Unlawfully
If an employee unilaterally terminates a labor contract lawfully, they may be entitled to severance pay from the employer, provided they have worked regularly for that employer for at least 12 months. [However, employees who unilaterally terminate their labor contract upon reaching retirement age and meeting the conditions for pension entitlement under social insurance laws are not eligible for severance pay.] The period used to calculate severance pay excludes the time during which the employee participated in unemployment insurance.
Conversely, an employee is deemed to have unilaterally terminated a labor contract unlawfully if they fail to comply with the advance notice obligation, except in cases exempted under Clause 2, Article 35 of the 2019 Labor Code. In such instances, the employee is not entitled to severance pay and must compensate the employer with an amount equal to half a month’s salary under the labor contract, plus an additional amount corresponding to the salary for the days they failed to provide notice. Furthermore, the employee must reimburse any training costs (if applicable) to the employer [Article 40 of the 2019 Labor Code].
In Mr. Công’s case, his unilateral termination was deemed unlawful, and the court’s decision to require him to reimburse training costs and compensate the employer for damages was entirely reasonable. However, the court only mandated reimbursement of training costs proportional to the time Mr. Công had worked, which the author views as a flexible approach that safeguards the legitimate rights and interests of the employee.
III. Conclusion
As the labor market continues to develop, achieving a balance between employees’ needs for income and employment and employers’ demands for flexibility in management and operations becomes increasingly challenging. Consequently, regulations on unilateral termination of labor contracts constitute a critical and indispensable component of labor law. The 2019 Labor Code has introduced flexible adjustments to employees’ rights to unilaterally terminate labor contracts while also ensuring protections for employers, thereby harmonizing the interests of the parties in the labor relationship.
Moreover, the goodwill of the parties, particularly the employee, in performing and terminating the labor contract significantly contributes to compliance with laws on unilateral termination, reducing the likelihood of labor disputes.
If you need legal consulting, please Contact Us at NT International Law Firm (ntpartnerlawfirm.com)
You can also download the .docx version here.
“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.”
LEGAL CONSULTING SERVICES
090.252.4567NT INTERNATIONAL LAW FIRM
- Email: info@ntpartnerlawfirm.com – luatsu.toannguyen@gmail.com
- Phone: 090 252 4567
- Address: B23 Nam Long Residential Area, Phu Thuan Ward, District 7, Ho Chi Minh City, Vietnam