EMPLOYER UNILATERALLY TERMINATES LABOR CONTRACT WITHOUT LEGAL GROUNDS 2025
Topic 14:
EMPLOYER UNILATERALLY TERMINATES LABOR CONTRACT WITHOUT LEGAL GROUNDS
Main Lecturer, Dr. Nguyễn Thị Bích
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 01/2022/LĐ-PT dated July 27, 2022, of the People’s Court of Nghệ An Province regarding a dispute over termination of a labor contract.]
Summary of the Case:
On September 1, 2007, Mr. Lê Văn commenced employment at BSGBTB Commercial Joint Stock Company (hereinafter referred to as Company B) under Labor Contract No. 23/2007/HĐLĐ-TC, with a term of one year, for the position of security employee. During the performance of the labor contract, Mr. Lê Văn received a salary increase as per Appendix 05, amounting to 6,000,000 VND per month.
On July 26, 2021, during his shift, Mr. Lê Văn engaged in conduct that disrupted internal order, displayed an impolite attitude in communication with colleagues, made reckless statements, threatened others, and wore attire not in compliance with company regulations during working hours (specifically, a tank top and shorts). Consequently, Company B convened a meeting to address Mr. Lê Văn’s behavior. On August 16, 2021, the Director of Company B issued Decision No. 280/QĐ-BSG.BTB, terminating the labor contract with Mr. Lê Văn effective October 1, 2021, on the grounds that Mr. Lê Văn had failed to adhere to proper standards of conduct in communication.
Deeming Company B’s termination of the labor contract unjust and non-compliant with legal provisions, Mr. Lê Văn initiated a lawsuit, requesting that Company B retract the termination decision and reinstate him to his position under the previously concluded labor contract.
Court Decision:
Both the trial and appellate courts upheld Mr. Lê Văn’s claims, determining that Company B’s unilateral termination of the labor contract lacked legal grounds.
COMMENTARY
I. Introduction
The establishment of a labor relationship always requires the participation of two parties: the employer and the employee. Within this relationship, the employee is typically the “weaker” and more “passive” party compared to the employer. As a result, the law imposes stricter conditions on employers regarding the termination of labor contracts than on employees.
For instance, when unilaterally terminating a labor contract, an employee under an indefinite-term contract need only comply with the advance notice period. In contrast, an employer, in all cases, must fully satisfy both the legal grounds for termination and the procedural requirements for prior notice. This regulation aims to curb arbitrary terminations by employers and ensure job security for employees.
Nevertheless, in practice, numerous disputes arise due to employers unilaterally terminating labor contracts without legal basis. The most common scenario is where an employer provides grounds for termination but fails to substantiate their legality, resulting in a determination of unlawful unilateral termination.
Within the scope of this article, through an analysis of a labor judgment from Nghệ An Province, adjudicated at both trial and appellate levels, we will offer commentary and perspectives on this issue. The author focuses on evaluating whether the decision by Company B to terminate the labor contract with Mr. Lê Văn was legally grounded.
II. Legal Issues
- Legality of Decision No. 280/QĐ-BSG.BTB Dated August 16, 2021, Issued by Company B Terminating the Labor Contract with Mr. Lê Văn
The termination of the labor contract between Company B and Mr. Lê Văn is unlawful because it lacks a basis under the provisions of the law, for the following reasons:
First, the reason for termination stated in Decision No. 280/QĐ-BSG.BTB does not comply with legal requirements.
Pursuant to Clause 1, Article 36 of the 2019 Labor Code, an employer may unilaterally terminate a labor contract with an employee under the following circumstances:
i) The employee frequently fails to complete work as stipulated in the labor contract, as determined by the performance evaluation criteria set forth in the employer’s regulations. Such performance evaluation regulations are issued by the employer but must be developed in consultation with the employee representative organization at the workplace, where such an organization exists;
ii) The employee is ill or injured and has undergone treatment for 12 consecutive months for an indefinite-term labor contract, 6 consecutive months for a definite-term labor contract with a duration of 12 to 36 months, or more than half the contract term for a definite-term labor contract of less than 12 months, and their working capacity has not recovered;
iii) Due to natural disasters, fires, dangerous epidemics, enemy actions, or the relocation or downsizing of production or business operations as required by a competent state authority, the employer has exhausted all remedial measures but is still compelled to reduce jobs;
iv) The employee fails to return to work after the time limit specified in Article 31 of this Code;
v) The employee reaches retirement age as prescribed in Article 169 of this Code, unless otherwise agreed;
vi) The employee abandons their job without justifiable reason for 5 consecutive working days or more;
vii) The employee provides dishonest information as stipulated in Clause 2, Article 16 of this Code when entering into the labor contract, which affects their recruitment.
The reason for termination under Decision No. 280/QĐ-BSG.BTB states that Mr. Lê Văn “failed to adhere to proper standards of conduct in communication.” Company B alleged that at 10:00 p.m. on July 26, 2021, during his shift, Mr. Lê Văn disrupted internal order, displayed an impolite attitude in communication with colleagues, made reckless statements, threatened others, and wore attire not in compliance with company regulations during working hours (specifically, a tank top and shorts). Consequently, Company B convened a meeting to address Mr. Lê Văn’s conduct.
However, this behavior does not substantiate that Mr. Lê Văn was determined to have frequently failed to complete his work under the labor contract, as assessed by the performance evaluation regulations of Company B. In the case file, there is no evidence that Company B had issued such performance evaluation regulations, nor is there clarity regarding the issuance process, procedures, or the specific criteria used to determine when an employee is deemed to have frequently failed to complete their work.
Second, Decision No. 280/QĐ-BSG.BTB issued by Company B does not fall within the circumstances permitting the application of the disciplinary measure of dismissal.
Pursuant to Article 125 of the 2019 Labor Code, which provides:
“Article 125. Application of the Disciplinary Measure of Dismissal
The disciplinary measure of dismissal may be applied by the employer in the following cases:
- The employee commits acts of theft, embezzlement, gambling, intentional infliction of injury, or drug use at the workplace;
- The employee discloses business secrets, technological secrets, infringes the intellectual property rights of the employer, engages in conduct causing serious harm or threatening particularly serious harm to the employer’s property or interests, or commits sexual harassment at the workplace as stipulated in the internal labor regulations;
- The employee, while subject to a disciplinary measure of deferment of salary increase or demotion, reoffends during the period before the prior disciplinary record is expunged. Reoffense refers to the employee repeating a violation for which they were previously disciplined, and such discipline has not yet been expunged under Article 126 of this Code;
- The employee abandons their job without justifiable reason for a total of 5 days within a 30-day period or 20 days within a 365-day period, calculated from the first day of unauthorized absence.
Cases considered to have justifiable reasons include natural disasters, fires, illness of the employee or their immediate family confirmed by a competent medical facility, and other circumstances specified in the internal labor regulations.”
Mr. Lê Văn’s conduct does not fall under any of the grounds listed in Article 125 of the 2019 Labor Code, nor is it covered by Clause 3, Article 21 of Company B’s Internal Labor Regulations.
On July 31, 2021, Company B held a meeting and concluded that Mr. Lê Văn’s actions on the evening of July 26, 2021, constituted a violation of professional conduct standards, failure to comply with the uniform policy during working hours, and repeated offenses. Previously, on July 20, 2020, Company B had imposed a disciplinary measure on Mr. Lê Văn in the form of a 6-month deferment of salary increase.
Under Company B’s Internal Labor Regulations, Point c, Clause 3, Article 21 stipulates dismissal as a disciplinary measure in cases where an employee, subject to a deferment of salary increase, reoffends during the period before the prior disciplinary record is expunged. However, Mr. Lê Văn’s deferment of salary increase was imposed on July 20, 2020, and after 6 months—by January 20, 2021—he had not reoffended. Consequently, his prior disciplinary record was automatically expunged pursuant to Article 126 of the 2019 Labor Code.
Until March 20, 2021, Mr. Lê Văn had not reoffended, and thus his disciplinary record was deemed expunged. Therefore, his conduct on July 26, 2021, does not constitute a reoffense. Company B’s imposition of dismissal as a disciplinary measure against Mr. Lê Văn contravenes both Company B’s Internal Labor Regulations and Clause 1, Article 126 of the 2019 Labor Code, which states: “An employee reprimanded shall have their disciplinary record automatically expunged after 3 months, or after 6 months in the case of a deferment of salary increase, or after 3 years in the case of demotion, from the date of imposition, provided they do not commit further labor discipline violations.”
Regarding the Process and Procedure for Labor Discipline:
Prior to imposing disciplinary measures, Company B convened a meeting on July 31, 2021, and issued Decision No. 268/QĐ-BSG.BTB on the same date, temporarily suspending Mr. Lê Văn from work for a period of 10 days.
Pursuant to Article 128 of the 2019 Labor Code, which provides:
“Article 128. Temporary Suspension from Work
- An employer may temporarily suspend an employee from work when the violation involves complex circumstances, and allowing the employee to continue working would hinder verification efforts. Temporary suspension may only be implemented after consulting the employee representative organization at the workplace of which the employee under consideration is a member.
- The duration of temporary suspension shall not exceed 15 days, or 90 days in exceptional cases. During the suspension period, the employee shall receive an advance of 50% of their salary prior to suspension. Upon expiration of the suspension period, the employer must reinstate the employee to work.
- If the employee is subjected to labor discipline, they are not required to repay the advanced salary.
- If the employee is not subjected to labor discipline, the employer must pay the employee full salary for the suspension period.”
Company B’s temporary suspension of Mr. Lê Văn, not exceeding 15 days, complies with the above provisions.
On August 10, 2021, Company B issued a notice regarding participation in a labor discipline meeting, sent to both the Executive Committee of the grassroots Trade Union and Mr. Lê Văn individually. At the labor discipline meeting held on August 16, 2021, both Mr. Lê Văn and the Executive Committee of the grassroots Trade Union attended, and the disciplinary process was documented in minutes, consistent with Article 122 of the 2019 Labor Code and Clause 2, Article 70 of Decree No. 145/2020/NĐ-CP dated December 14, 2020.
However, during the case proceedings and at trial, the authorized representative of the defendant admitted that, at the time Mr. Lê Văn committed the alleged labor discipline violations on the evening of July 26, 2021, Company B did not immediately prepare a violation report. Additionally, Company B failed to notify the employee representative organization at the workplace, namely the Company Trade Union, thereby failing to comply with Clause 1, Article 70 of Decree No. 145/2020/NĐ-CP.
Based on the foregoing, Decision No. 280/QĐ-BSG.BTB issued by Company B does not fall within the circumstances permitting the disciplinary measure of dismissal under Article 125 of the 2019 Labor Code. It lacks legal grounds for unilateral termination of the labor contract and violates procedural requirements. Consequently, Mr. Lê Văn’s lawsuit demanding that Company B retract Decision No. 280/QĐ-BSG.BTB dated August 16, 2021, terminating the labor contract, is well-founded. The court’s acceptance of Mr. Lê Văn’s claim is in accordance with the law.
- Assessment of Company B’s Termination of the Labor Contract with Mr. Lê Văn
Based on Mr. Lê Văn’s conduct as analyzed above, Company B determined that he “failed to adhere to proper standards of conduct in communication.” However, this does not fall under the circumstances outlined in Article 36 or Article 125 of the 2019 Labor Code, nor is it covered by Company B’s Internal Labor Regulations. Thus, the termination of the labor contract stemmed solely from Company B’s unilateral intent.
In this context, Company B’s actions are deemed an unlawful unilateral termination of the labor contract with Mr. Lê Văn, as they lack a legal basis under labor law provisions.
- Legal Consequences of Company B’s Unlawful Unilateral Termination of the Labor Contract with Mr. Lê Văn
Since Company B unilaterally terminated the labor contract with Mr. Lê Văn in violation of the law, it must fulfill its obligations under Article 41 of the 2019 Labor Code. Company B will face legal consequences for this action, specifically:
(i) Company B is required to issue a decision retracting Decision No. 280/QĐ-BSG.BTB regarding the termination of the labor contract with Mr. Lê Văn;
(ii) Company B is obligated to reinstate Mr. Lê Văn to his position under the previously concluded labor contract.
Additionally, with respect to claims for compensation for damages arising from the unlawful termination—such as salary for the days he was unable to work, compensation equivalent to two months’ salary, and contributions to social insurance (BHXH), health insurance (BHYT), and unemployment insurance (BHTN) as stipulated in Article 41 of the 2019 Labor Code—since Mr. Lê Văn did not request these remedies, the court did not address them. However, Mr. Lê Văn retains the right to initiate a separate civil lawsuit to demand that Company B compensate him for damages caused by the unlawful termination.
Hypothetically, if Mr. Lê Văn had sought compensation for damages resulting from Company B’s unlawful termination, he could have been entitled to:
i) Payment of salary and contributions to BHXH, BHYT, and BHTN for the days he was unable to work;
ii) An additional payment of at least two months’ salary under the labor contract;
iii) Payment equivalent to his salary under the labor contract for the days during which prior notice was not provided.
The decisions of the trial and appellate courts to uphold Mr. Lê Văn’s claims are well-founded and fully consistent with legal provisions.
III. Conclusion
The law provides clear regulations regarding the legal grounds and procedures for terminating a labor contract by both employers and employees. When employers and employees adhere to these regulations, the rights of both parties can be safeguarded, disputes can be avoided, and time and costs can be minimized, fostering a harmonious resolution of labor relations. For employers, it is essential to accurately identify the circumstances justifying termination and the corresponding legal provisions to ensure that the termination is lawful. Terminating a labor contract without legal grounds will lead to adverse legal consequences for the employer.
Therefore, when unilaterally terminating a labor contract, employers must exercise caution in establishing the grounds for termination and fully comply with the required processes and procedures.
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