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This article briefly summarizes the recent trends in labor disputes in Vietnam and their main causes. It also explains the estimated compensation that companies may be required to pay in cases of unlawful contract termination, as well as practical measures to prevent violations of labor laws.
In Vietnam, labor disputes between employees and employers have been increasing year by year.
An analysis of 33 representative court cases published by the Supreme People’s Court shows that the amounts claimed in lawsuits often reach several million yen in scale.
Among these cases, the most frequently observed types of disputes are as follows:
a. Disputes concerning termination of labor contracts (20 out of 33 cases)
b. Disputes concerning reasons for dismissal or disciplinary action (4 out of 33 cases)
c. Disputes concerning social insurance, pensions, salaries, and severance allowances (9 out of 33 cases)
The primary causes of labor disputes can be summarized as follows:
Under Vietnamese labor law, the advance notice period required for termination of a labor contract is stipulated as follows:
| Type of Labor Contract | Advance Notice Period |
|---|---|
| Contract of 12 months or less | 3 days |
| Fixed-term contract (12–36 months) | 30 days |
| Indefinite-term contract | 45 days |
| Contract for specific work | Subject to individual regulations |
In practice, there are cases where employers provide advance notice verbally but fail to keep written records, resulting in lawsuits being filed by employees at a later stage.
In addition, when labor–management relations deteriorate, there are also cases in which employees are dismissed immediately on the spot without any advance notice.
Under Vietnamese labor law, dismissal is permitted if an employee is absent without legitimate reason for five consecutive days.
However, in practice, there are many cases where employees argue that the grounds for dismissal are unjustified, leading to labor disputes.
For example, there was a case involving a nurse working at a medical institution who took leave due to her child’s illness and notified the employer in advance via SMS. Despite this, the employer refused to recognize the reason as legitimate and dismissed her.
In such cases, employees often file lawsuits claiming “illegal unilateral termination of the labor contract,” and courts frequently render decisions unfavorable to the employer.
Many companies tend to fear substantial compensation claims once a lawsuit is filed. However, Vietnamese courts carefully examine evidence as well as the arguments and opinions of both parties before rendering a judgment.
As a result, even if the claimed amount is high, the actual amount recognized by the court may be relatively limited.
When a termination is deemed an “illegal termination of a labor contract,” the following compensation obligations generally arise:
| Item | Estimated Amount |
|---|---|
| Compensation | At least 2 months’ salary |
| Salary for violation of advance notice obligation | Approximately 1 month’s salary |
| Severance allowance | Approximately 2 months’ salary (excluding periods covered by unemployment insurance) |
| Others | Additional compensation depending on the case |
| Total | Five months’ salary or more |
In other words, when a dispute proceeds to litigation, the employer may be required to bear costs equivalent to several months of the employee’s salary.
In practice, it is not uncommon for claimed amounts to exceed ten months’ salary.
Japanese translations of the Vietnamese Labor Code 2019 are available.
In particular, provisions concerning contract termination, dismissal, and disciplinary measures should be reviewed carefully.
The following documents should be properly prepared and maintained:
Internal labor regulations (working hours, annual leave, management of confidential information and confidentiality obligations, evaluation systems, etc.)
Minutes of labor-related meetings
Labor contracts, warning letters (written reprimands), and records of disciplinary actions
Advance notice letters for termination of labor contracts
As a general principle, it is desirable to document daily internal activities.
However, in reality, many business owners feel that documentation is “time-consuming” or “burdensome.”
Nevertheless, the existence or absence of documentation can have a significant impact in the event of future labor disputes or tax audits.
Therefore, from a risk management perspective, it is important to establish documentation as part of the company’s internal culture.
In particular, the following documents should be reliably prepared and retained:
Minutes of meetings
Warning letters issued to employees
Advance notice letters for termination of labor contracts
Other related documents
Although many companies perceive documentation as a burden, it is extremely important from the perspective of preventing labor disputes and protecting the company.
Accordingly, it is strongly recommended to retain documents, even in simplified formats, as a precautionary measure.
Some business owners may feel that installing surveillance cameras in the office indicates a lack of trust in employees. However, from a precautionary standpoint, installation is advisable.
This is because:
In Vietnam, internal misconduct (such as misappropriation of company property or embezzlement of funds) occurs more frequently than expected.
Without sufficient evidence, companies may be unable to file lawsuits or dismiss employees.
Installing cameras provides benefits not only for external security but also for internal risk prevention.
Conversely, if employees file labor-related lawsuits against the company, camera footage can serve as objective evidence to protect the employer in court when written documentation is insufficient.
Since courts require objective evidence to substantiate claims, installing surveillance cameras in offices is an effective component of risk management.
Expected benefits of camera installation include:
Deterrence of internal misconduct
Use as strong evidence when the company is sued
Principle of Evidence: Written documents and records are given greater weight than oral explanations.
Duration of Court Proceedings: Generally more than one year (in some cases, three to four years).
Emphasis on Settlement: As a general rule, parties are required to go through settlement procedures, which emphasize mutual compromise and adjustment.
Comprehensive Judgment: Courts examine all evidence before rendering judgments. Although the process takes time, decisions are generally regarded as highly fair.
Statute of Limitations for Labor Disputes:
Under the Vietnamese Civil Procedure Code, lawsuits must be filed within one year from the date the labor violation is recognized.
After this period, upon request by the defendant, the court may refuse to accept the case.
Therefore, documents related to labor dispute prevention should be retained for at least one year.
However, for tax and accounting purposes, it is advisable to retain such documents for approximately ten years.
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