Terminating an employment contract is an essential right of employees protected by labor laws. However, to ensure legality and avoid legal consequences, employees must clearly understand the specific regulations and their responsibilities in each case of unilateral termination of an employment contract.
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1. The Right to Legally Terminate an Employment Contract
Employees have the right to unilaterally terminate an employment contract without stating a reason, provided they comply with the required notice period. According to Clause 1, Article 35 of the 2019 Labor Code, the notice period depends on the type of contract:
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Indefinite-term contract: At least 45 days’ notice.
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Fixed-term contract (12 to 36 months): At least 30 days’ notice.
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Fixed-term contract (less than 12 months): At least 3 working days’ notice.
Specialized Industries:
Certain industries have different notice periods as stipulated in Article 7 of Decree 145/2020/ND-CP, including:
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Aviation and maritime industries: A minimum notice period of 120 days or 1/4 of the contract duration if the contract is less than 12 months.
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Corporate management positions: As regulated by the Enterprise Law and other relevant regulations.
Cases Where Advance Notice Is Not Required:
According to Clause 2, Article 35 of the 2019 Labor Code, employees may unilaterally terminate an employment contract without prior notice in the following cases:
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The employer fails to assign the correct job, workplace, or working conditions as agreed, except as specified in Article 29 of the 2019 Labor Code.
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The employer fails to pay wages in full or on time, except as stipulated in Clause 4, Article 97 of the 2019 Labor Code.
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The employee is mistreated, assaulted, insulted, or subjected to actions affecting their health, dignity, or honor, or is forced to work.
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The employee is sexually harassed at the workplace.
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A pregnant female employee must stop working as stipulated in Clause 1, Article 138 of the 2019 Labor Code.
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The employee reaches the retirement age as defined in Article 169 of the 2019 Labor Code, unless otherwise agreed upon.
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The employer provides false information per Clause 1, Article 16 of the 2019 Labor Code, affecting contract execution.
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Probation contracts (as regulated in Clause 2, Article 27 of the 2019 Labor Code).
2. Legal Consequences of Unlawful Termination
If an employee does not comply with the required notice period or does not qualify for an exemption, the termination may be considered unlawful. In such cases, the employee may face legal consequences, including:
Compensation:
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The employee must compensate the employer with half a month’s salary as stipulated in the contract and an additional amount equal to the salary for the unfulfilled notice period.
Reimbursement of Training Costs:
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If the employer has provided training, the employee must reimburse the full training costs.
Loss of Severance Pay:
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The employee may lose the right to severance pay and other benefits due to non-compliance with labor laws.
3. Employee Rights Upon Lawful Termination
When an employee legally terminates an employment contract, they are entitled to the following rights:
Final Payments:
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The employer must settle all outstanding payments related to the employee’s rights. According to Article 48 of the 2019 Labor Code, these payments must be made within 14 working days, or within 30 working days in exceptional cases.
Compensation for Unused Annual Leave:
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As per Clause 3, Article 113 of the 2019 Labor Code, employees who have not used all their annual leave days will receive compensation equivalent to the unused days.
Severance Pay Entitlement:
Employees who meet the conditions outlined in Article 46 of the 2019 Labor Code are eligible for severance pay, provided that:
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The contract termination is lawful (either unilateral termination by the employee or contract expiration).
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The employee has worked for the employer for at least 12 months.
Calculation of Severance Pay:
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Amount: Half a month’s salary per year of service.
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Eligible Work Period: Total actual working time minus the period covered by unemployment insurance and any severance or redundancy pay previously received.
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Salary Basis: The average salary of the last six months before termination.
If an employee has contributed to unemployment insurance, the responsibility for paying severance shifts from the employer to the social insurance agency.
Unemployment Benefits:
Unemployment benefits are provided by the Social Insurance Fund rather than the employer. Employees must meet the conditions in Article 49 of the 2013 Employment Law, including:
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Having paid unemployment insurance for at least 12 months within the last 24 months before termination.
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Submitting an application for unemployment benefits within three months after termination.
Unemployment Benefit Amount:
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Equivalent to 60% of the average salary for the last six months of unemployment insurance contributions.
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Maximum limit:
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State-regulated salary: Not exceeding five times the basic salary.
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Non-state salary: Not exceeding five times the regional minimum wage.
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Duration of Unemployment Benefits:
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12 to 36 months of contributions: Eligible for three months of benefits.
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Each additional 12 months of contributions: One extra month of benefits, up to a maximum of 12 months.
Return of Social Insurance Books and Documents:
Employers must return all relevant documents to employees, including:
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Social insurance book (after confirming the duration of social insurance and unemployment insurance contributions).
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Other personal records previously held by the employer.
4. Legal Advice on Employment Contract Termination
To avoid legal disputes and ensure personal rights, employees should:
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Consult labor laws or seek professional legal advice before making a decision.
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Gather necessary documents and evidence if termination is due to mistreatment, unpaid wages, or other violations.
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Follow the correct notice procedures and complete work handovers to prevent misunderstandings or conflicts.
Terminating an employment contract is a significant decision that requires careful consideration and legal knowledge. Complying with legal requirements helps employees protect their rights while avoiding unnecessary legal risks.
Contact Information:
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