Due to intricate occurrence of Covid 19, many enterprises are forced themselves
to reduce the number of employees for maintaining the operation financially.
Specifically, the employer has to make difficult decision to terminate
the labor contract with the employee.
The termination of the labour contract has to be considered carefully
because of potential legal risks brought up which dispute lawyers in labour should
be consulted before execution. Within this post, we are not trying to
resolve all cases but only aiming to brief some matters of concern for
preparation.
The employer could refer
to the regulation in the Labor Code which allows “an employer may unilaterally
terminate a labor contract if as a result of natural disaster, fire or another
force majeure event as prescribed by law, the employer, though having applied
every remedial measure, has to scale down production and cut jobs. Force
majeure in this case is understood as (i) Enemy-inflicates destruction,
epidemics (ii) Relocation or narrowing of the production and business sites, at
the request of competent State agencies.
In particular, after
applying corrective measures, over the time, considering enterprise’s financial
potential is insufficient as well as the business production is reduced
significantly due to epidemic, the employer may consider unilaterally terminate
labor contract with employee. However, employer still have to abide by or
ensure the rights to employee regarding the interests which employee is entitle
to receive when being unilaterally terminated labor contract includes salary,
severance allowance, social insurance, payment for untaken leave days, the tax
payment which employer must paid for employee. Besides, employer also is
subject to pay a compensation if consented by both sides are employer and
employee.
Firstly, employer is
obliged to pay salary to employee timely and fully as in the agreed labor
contract by both parties;
Secondly, employer is
responsible for paying the severance allowance to employee whom has worked
regularly for full 12 months or longer at the rate of half of a month’s wage
for each working year.
Thirdly, social
insurance, employer is responsible for the fulfill payment of social insurance
and perform the closing insurance book for employee after terminate the labor
contract according to the law of social insurance.
Fourthly, if the income
of employee subject to personal income tax, employer must extract from the
income of employee to submit the tax to tax agency according to law on personal
income tax.
If the client needs any
other information or requires for further advice, our lawyers at ANT Lawyers
in Vietnam will be available for service.
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