Question 29: How many steps are there in the procedure for unilaterally terminating LCs with Employees who regularly fail to fulfil their tasks and how long does it take to finish these steps? Which step most often creates legal risks for Employers?

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The current labour law does not prescribe a specific procedure for unilaterally terminating LCs with Employees who regularly fail to fulfil their tasks. However, based on the general regulations of labour law and the regulation on unilateral termination of LCs with Employees who regularly fail to fulfil their tasks, Employers should fully conduct the following steps:

  • Step 1: Hold a meeting with the Employees to evaluate their task completion levels

The applicable labour law does not have any regulations that require Employers to hold a meeting to evaluate the Employee’s task completion level before deciding to unilaterally terminate LCs. However, to thoroughly understand the situation before deciding to terminate LCs unilaterally, Employers should hold a meeting to evaluate the Employee’s task completion level. The meeting should be attended by the representative of the labour collective representing organisation, the Employees’ immediate superiors and/or colleagues in order to have an objective evaluation, and if possible, the legal representative of the enterprise. The contents of the meeting need to be documented fully.

In the meeting, if Employers think that they can allow a period of time so Employees can improve their performance, Employers can temporarily suspend the following steps for unilateral termination of LCs with Employees.

  • Step 2: Give a prior notice about the unilateral termination of LCs for the reason that Employees regularly fail to fulfil their tasks.

After the meeting for evaluation of Employees’ task completion levels, if Employers still decide to unilaterally terminate LCs, they must give prior notices to the Employees regarding the unilateral termination of LCs[1]:

  • At least 30 calendar days in advance for definite LCs;
  • At least 45 calendar days in advance for indefinite LCs; and
  • At least 3 working days with respect to seasonal or specific-task LCs of less than 12 months.
  • Step 3: Issue the decision on unilateral termination of LCs

The labour law does not provide for the form of the decision on unilateral termination of LCs. However, the contents in the decision should include the date of termination, reasons of termination, and the payment obligations for the parties’ relevant rights and interests. In addition, the enterprise’s legal representative will be the person to sign the decisions in order to prevent Employees from making complaints about the authority of signing these decisions.

  • Step 4: Perform the obligations upon termination of LCs

Within 7 working days from the LC termination date, the two parties must fully pay all the amounts related to the rights and interests of each party, outstanding salaries; unused annual leave days and other amounts (if any); severance allowances; and other goodwill allowances (if any)[2].

In addition, Employers must also get the original social insurance books from Employees to conduct the procedure of verification, finalisation, and return of SI books and other papers[3].

In general, it will take about 2-3 months to finish the procedure for unilaterally terminating LCs, largely depending on the prior notification period regarding termination of LCs.

Of the steps that must be conducted to unilaterally terminate LCs as aforesaid, Step 1 (hold a meeting with the Employees to evaluate their task completion levels) may have the highest legal risk and it is the most important step which influences all the remaining ones. Although it is not a step which is required by law, this is considered as a “preparation step” which helps Employers to re-confirm the evidence proving that Employees have regularly failed to fulfil their jobs specified in LCs, thereby serving as a legal ground for the unilateral termination of LCs, and preventing Employees making complaints or initiating lawsuits to labour management agencies or competent courts. The evaluation meeting in which the Employees’ failure to fulfil their tasks is confirmed and documented may be challenged by the local labour management agency or the competent court in terms of its nature and whether the time of the meeting is appropriate, the meeting attendants are objective or not, the opinions in the meeting are supportive for the decision on termination of LCs or not, the Employers’ decisions are subjective or not, Employers have already had the intention to terminate LCs before that or not, the evaluation criteria which are discussed and considered in the meeting are consistent with law and reasonable or not, the evidence which proves Employees have regularly failed to fulfil their tasks according to the criteria are clear and fair or not, etc.

Furthermore, Step 1 also creates the opportunity for Employers to “gauge” the Employees’ reactions to the fact that their LCs might be terminated unilaterally. Therefore, Employers may need to have well-prepared steps or more careful considerations before deciding to unilaterally terminate LCs with the Employees.

[1]Article 38.2 Labor Code

[2]Article 47.2 Labor Code

[3]Article 47.3 Labor Code