As prescribed by labour law, Employees under indefinite LCs may unilaterally terminate LCs in any event provided that they must notify Employers at least 45 days in advance. Therefore, regardless of whether Employers agree with the Employees’ request or not, indefinite LCs will terminate upon expiry of the prior notification period of 45 days. However, if Employees change their minds before the notification period expires, they may cancel the unilateral termination of LCs by giving a written notice to Employers regarding this cancellation which is only effective with the Employers’ consent.
If Employers accept the request to cancel the unilateral termination of LCs during the notification period, Employers should be aware that the signed indefinite LCs will continue to be effective and binding on the parties. So, based on the principle that all agreements should be favourable to Employees, Employers cannot convert the signed LCs from an indefinite-term to definite-term LC. The replacement of indefinite LCs by definite LCs may expose Employers to legal risks when Employees lodge complaints with or initiate lawsuits at local labour management agencies or competent courts. In addition, Employers are also subject to a fine of VND2,000,000 to VND40,000,000 for the violation of not signing the right LCs, depending on the number of Employees involved.
However, Employers may consider entering into new definite-term LCs if the indefinite LCs have been terminated completely in accordance with law. The signing of definite-term LCs in this case will be viewed as a legal basis to start a new employment relationship between Employers and Employees, independent from the previous employment relationship. As mentioned above, it is entirely the Employers’ decision to continue or discontinue the employment relationship with the Employees who have requested to terminate LCs. So as to minimise legal risks when entering into new definite LCs with Employees, Employers should not give any feedback about agreeing with the Employees’ request for cancellation of unilateral termination of LCs during the prior notification period. In addition, to ensure that the LCs are terminated completely, Employers must discharge all of their obligations upon termination of LCs, including payment of the amounts related to Employees’ rights and benefits, verification and return of SI books and other papers that Employers are keeping. Accordingly, definite-term LCs should be signed with the Employees a reasonable period (normally 7 days) after the date the indefinite LCs are terminated to avoid the confusion that new definite LCs are signed in replacement of the indefinite LCs. To avoid possible risks, Employers should post a recruitment ad and those Employees will apply for jobs in accordance with the recruitment procedure of the enterprise.
Article 37 Labor Code
Article 40 Labor Code
Articles 3 and 5 Decree 95/2013/NĐ-CP as amended and supplemented by Decree 88/2015/NĐ-CP
Articles 47.2 and 47.3 Labor Code