In human resources management, disciplining labor—especially via dismissal—is a sensitive issue that carries significant legal risks if businesses fail to follow proper procedures and laws. A flawed dismissal decision can not only spark lengthy labor disputes but also severely damage a company’s reputation and increase operating costs.

When are businesses legally permitted to dismiss employees? Make sure you understand the law to avoid risks

Labor discipline and dismissal are governed in detail under Vietnam's 2019 Labor Code. Specifically:

Which behaviors justify lawful dismissal?

A company may only dismiss an employee for serious offenses such as theft, gambling, intentional bodily harm, drug use at work, or disclosure of trade secrets... Such offenses must be clearly defined in the company's legally registered labor regulations.

What steps must be followed in a lawful dismissal?

When issuing a dismissal, a business must follow all required steps: prepare a record of the violation, hold a disciplinary meeting attended by the employee and a representative of the trade union, and send full summons in advance. Violating any of these steps may result in the dismissal being ruled unlawful by a court.

What actions are strictly prohibited in disciplinary actions?

Employers must not use threats, defamation, forced resignation, or communicate false allegations to pressure employees into terminating their contracts.

Unlawful dismissal – The consequences go far beyond a lawsuit

In practice, many businesses underestimate the legal repercussions of improper disciplinary action, leading to prolonged disputes and significant compensation to employees. Some typical consequences include:

Dismissal decisions can be entirely overturned

If the employer cannot prove the employee's fault or failed to follow proper procedures, the dismissal can be nullified. The labor contract remains valid until it is lawfully terminated.

Employers may owe substantial compensation

Besides unpaid wages for the period the employee was unable to work, employers must compensate at least two months' salary for unlawful dismissal and another two months' salary for unlawful contract termination. If the employee refuses to return to work, the total sum can reach hundreds of millions of VND, depending on salary level and dispute duration.

Obligations to pay social insurance and interest on late payments

An improper contract termination forces employers to pay all social insurance contributions from the dismissal date until the actual contract end date, including late interest as prescribed by law.

What should businesses do to avoid labor disputes in disciplinary actions?

With extensive experience representing numerous labor disputes in court, DEDICA offers practical solutions to help businesses minimize risks in disciplinary proceedings:

Draft and register compliant labor regulations

Labor regulations must be clear, specific, reflect actual operations, and registered with the competent state authority. This forms the primary legal basis for disciplinary action.

Train HR personnel in proper disciplinary workflows

HR should be thoroughly trained on how to prepare violation records, conduct meetings, issue decisions, and handle documentation correctly to prevent procedural failures.

Consult lawyers before issuing serious disciplinary decisions

Always seek legal advice to assess the nature of the case, identify legal grounds, and choose the appropriate disciplinary measure.

Prioritize agreement‑based contract termination

In many cases, a negotiated termination agreement with reasonable compensation is far less risky, faster, and more cost-effective than a unilateral dismissal that may be ruled unlawful.

Dismissal is the employer’s right, but must be based on clear legal grounds and compliant procedures. A careless or uninformed approach to disciplinary action can cause significant losses and tarnish your brand. Safeguard your business by proactively building a strong legal-compliance HR system.

If your company is facing challenges in labor relations, don’t hesitate to contact DEDICA for prompt and comprehensive support.

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