Unilateral termination of labor contract in violation of the law

During the course of employment, termination of a labor contract is inevitable. However, not all terminations comply with the law. In particular, the unilateral termination of a labor contract in violation of legal provisions is a common cause of disputes between employees and employers. This article will help you better understand the concept, consequences, and legal obligations associated with such situations.

What is termination or unilateral termination of a labor contract?

📌 Legal Basis: Article 34 of the 2019 Labor Code

Termination of a labor contract refers to the ending of the employment relationship between the employee and the employer, rendering the labor contract legally ineffective from the moment of termination. Once terminated, both parties are no longer bound to fulfill obligations such as job performance, salary payment, or compliance with contractual terms—except for certain post-contract obligations like handover, settlement, confidentiality, etc., if stipulated.

A labor contract is considered terminated under the following circumstances:

Expiration of the labor contract.
Completion of the work specified in the contract.
Mutual agreement between the parties to terminate the contract.
The employee is sentenced to imprisonment, capital punishment, or is banned from performing the work in the contract.
The employee is expelled or no longer allowed to reside/work in Vietnam.
The employee dies, is declared missing, or loses civil act capacity.
The employer (as an individual) dies, is missing, or loses legal status.
The employee is dismissed as a disciplinary measure.
The employee unilaterally terminates the contract.
The employer unilaterally terminates the contract.
The employer lays off the employee as prescribed by law.
Work permit expires for foreign employees working in Vietnam.
Probation is not satisfactory or the probation agreement is canceled.

When is it considered an unlawful unilateral termination of a labor contract?

📌 Legal Basis: Article 39 of the 2019 Labor Code

According to the law, in certain situations, the employee or employer must give prior notice before unilaterally terminating the labor contract, and in some cases, unilateral termination is not permitted at all. If the employee or employer fails to comply with these legal requirements—either by not providing proper notice or by terminating the contract when not allowed—it is deemed an unlawful unilateral termination of the labor contract.

Such actions can cause damage to the other party, triggering liability for compensation or forfeiting certain rights, such as severance pay or the right to return to work.

Obligations when unlawfully unilaterally terminating a labor contract

If the employee unlawfully unilaterally terminates the contract

📌 Legal Basis: Article 40 of the 2019 Labor Code

They must:

Compensate half a month’s salary as stated in the contract;
Compensate an amount equivalent to the number of days without prior notice;
Reimburse training costs (if any);
Not be entitled to severance pay.

If the employer unlawfully unilaterally terminates the contract

📌 Legal Basis: Article 41 of the 2019 Labor Code

Case 1: Both employee and employer wish to continue the contract

Reinstate the employee;
Pay full salary and social/health/unemployment insurance for the period the employee was not working;
Compensate at least two months’ salary;
Pay an additional amount if the termination violated the notice period.

Case 2: The employee does not wish to return to work

The employer must still pay the above compensations;
Additionally, severance pay must be provided.

Case 3: Neither party wishes to continue the labor contract

In addition to the payments listed in Cases 1 and 2, the employer must compensate an additional amount equivalent to at least two months’ salary.

In both Case 2 and Case 3, the employee is still entitled to outstanding payments such as wages, bonuses, allowances, etc.

Unemployment benefits owed to the employee due to the employer’s unlawful unilateral termination will be calculated accordingly.

Responsibilities after termination of the contract

📌 Legal Basis: Article 48 of the 2019 Labor Code

The deadline for settling all related payments is 14 days from the termination date. In special cases, this may be extended up to 30 days, such as:

The employer (not an individual) ceases operations;
Structural changes, mergers, or business transfers;
Natural disasters, fires, epidemics;
The employer ceases to operate.

In addition to payment obligations, the employer must:

Complete procedures for confirming social insurance contributions;
Return original documents to the employee;
Provide copies of relevant documents upon request (at the employer's expense).

👉 If you need support with unilaterally terminating a labor contract or seek legal advice regarding lawful termination procedures, please contact our legal team for detailed consultation.