Terminating an employment contract is one of the highest-risk decisions an employer can make. In Vietnam, a large number of labor disputes arise not because employers want to act unlawfully, but because termination procedures are misunderstood, rushed, or improperly handled.
Many businesses only realize the risk after receiving a complaint, a labor authority notice, or a lawsuit. At that point, the cost—both financial and reputational—is often far greater than expected.
This article explains how businesses can terminate employment contracts lawfully without being sued, common mistakes that lead to disputes, and why ongoing legal consultancy is essential for managing termination risks effectively.
Unlike some jurisdictions where termination is relatively flexible, Vietnamese labor law places strong protections on employees. Employers may only terminate employment in specific circumstances and must follow strict procedures.
Even when there is a legitimate reason, procedural mistakes alone can make a termination unlawful, exposing the employer to compensation claims or reinstatement orders.
Understanding both substantive grounds and procedural requirements is critical.
One of the most common mistakes businesses make is assuming that dissatisfaction with performance or internal restructuring automatically justifies termination.
In practice, termination must be based on legally recognized grounds, such as:
Expiry of a fixed-term contract
Mutual agreement between employer and employee
Employee misconduct meeting disciplinary thresholds
Organizational restructuring or redundancy
Long-term incapacity under specific legal conditions
If the legal basis is unclear or weak, termination is highly vulnerable to challenge.
Even when a lawful ground exists, failure to follow proper procedures can still result in an unlawful termination.
Common procedural mistakes include:
Not providing proper notice
Failing to consult employee representatives where required
Skipping internal disciplinary procedures
Issuing termination decisions without supporting documentation
In labor disputes, courts and authorities often focus on procedure first, regardless of the employer’s intent.
Notice periods are strictly regulated and depend on:
Contract type
Duration of employment
Reason for termination
Providing insufficient notice—or failing to pay salary in lieu of notice—can automatically trigger compensation obligations, even if the termination reason is valid.
Termination for misconduct is particularly risky.
Employers often make mistakes such as:
Relying on verbal complaints
Skipping internal disciplinary meetings
Failing to involve employee representatives
Applying inconsistent disciplinary standards
Without proper evidence and procedure, disciplinary termination is one of the most litigated employment issues in Vietnam.
Business restructuring does not give employers unlimited termination rights.
Redundancy-related termination requires:
A clear restructuring plan
Consultation with employees or representatives
Compliance with notice and compensation obligations
Proper reporting to labor authorities
Skipping these steps often leads to collective labor disputes or inspections.
Some businesses attempt to reduce risk by asking employees to sign mutual termination agreements. However, if an employee later claims coercion or lack of understanding, the agreement may be challenged.
To reduce risk, mutual termination should:
Be clearly documented
Provide reasonable compensation
Allow time for consideration
Be supported by proper explanation
Legal guidance is critical to ensure enforceability.
Many termination disputes escalate because of how the termination is communicated, not just the decision itself.
Poor communication can:
Trigger emotional reactions
Encourage employees to file complaints
Damage company reputation internally
Legal advisors help employers structure communication carefully, preserving dignity while protecting legal position.
Termination-related lawsuits often arise because:
Employers act too quickly
HR relies on outdated templates or assumptions
Legal advice is sought too late
Termination decisions are inconsistent across employees
In many cases, employers believe they acted reasonably—but legal standards require more than reasonableness.
If termination is found unlawful, businesses may face:
Reinstatement of the employee
Back pay for lost wages
Additional compensation
Administrative fines
Legal and management costs
These consequences often exceed the cost of handling termination correctly from the start.
Many employers consult lawyers only when:
Termination is already decided
Complaints have been filed
Authorities are involved
At that stage, options are limited. Legal advice becomes defensive rather than preventive.
Employment termination risk must be managed before decisions are finalized, not after.
With ongoing legal consultancy, employers receive legal support throughout the employment lifecycle—not just at termination.
Ongoing legal support helps businesses:
Design compliant employment contracts and policies
Document performance and disciplinary issues properly
Assess termination options early
Choose the lowest-risk termination strategy
Execute termination with proper procedure and communication
This reduces the likelihood of disputes and strengthens the employer’s legal position if challenges arise.
FDI companies face additional termination risks due to:
Language and cultural differences
Use of global HR policies incompatible with Vietnamese law
Higher scrutiny from labor authorities
Pressure from headquarters to act quickly
Local ongoing legal support helps foreign employers avoid costly mistakes in termination decisions.
DEDICA provides ongoing legal consultancy services to help businesses manage employment termination lawfully and strategically.
As an outsourced legal department, DEDICA supports clients by:
Assessing lawful termination grounds
Advising on notice, compensation, and procedures
Supporting disciplinary and restructuring processes
Drafting termination documents and agreements
Assisting in dispute prevention and resolution
DEDICA’s approach is practical, risk-focused, and business-oriented, helping employers protect their interests while respecting employee rights.
Terminating an employment contract without being sued is not about being harsh or lenient—it is about being legally precise.
Most termination disputes are avoidable if employers understand legal requirements, follow proper procedures, and seek legal guidance early.
For businesses operating in Vietnam, ongoing legal consultancy is the most reliable way to manage termination risks, avoid lawsuits, and maintain stable labor relations.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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