On November 27, 2015, the National Assembly of Vietnam has adopted Penal Code No.100/2015/QH13 (the “2015 Penal Code”).  The 2015 Penal Code is being suspended for revision by the National Assembly of Vietnam but it is expected to come into force in the near future.  One of the most remarkable regulations in the 2015 Penal Code is Article 162 which provides the penal sanctions up to 03 years of imprisonment for the illegal termination of the labor contract _¹.  So, how will this new regulation affect the employers in Vietnam and what should the employers do in responding to this new regulation?

Applying penal sanctions to the illegal termination, is it new?

Most employers currently misunderstand that applying penal sanctions to the illegal termination is a new issue which only arises from the 2015 Penal Code.  However, in fact, similar regulations have already existed in both the 1985 Penal Code _² and the 1999 Penal Code_³ ,_,which means that the Vietnam law has considered the illegal termination as a crime from the beginning.  Below are the relevant regulations in the 1985 Penal Code, the 1999 Penal Code and the 2015 Penal Code.

The 1985 Penal Code

Article 123. Illegally forcing employees to leave their jobs

Those who, for their own benefits or other personal motivation, illegally force employees to leave their jobs, shall be subject to warning, non-custodial reform for up to 01 year or  a prison term of between 03 months and 01 year.

The 1999 Penal Code

Article 128. Illegally forcing employees, cadres, civil servants to leave their jobs

Those who, for their own benefits or other personal motivation, illegally force employees, cadres, civil servants to leave their jobs, causing serious consequences shall be subject to warning, non-custodial reform for up to 01 year or a prison term of between 03 months and 01 year.

The 2015 Penal Code

Article 162. Illegally forcing civil servants, public employees to leave their jobs or dismissing employees

Those who, for their own benefits or other personal motivation, commit any of the following acts which makes the person forced to leave his/her job, the dismissed person or his/her family be under hardship or lead to a strike shall be subject to a fine of between VND10,000,000 and VND100,000,000, non-custodial reform for up to 01 year or a prison term of between 03 months and 01 year:

• Illegally issuing decision on forcing a civil servant, public employee to leave his/her job;
• Illegally dismissing an employee;
• Forcing or threatening an employee, civil servant, public employee to make that person leave his/her job.

Those who commit the offence in one of the following circumstances shall be subject a fine of between VND100,000,000 and VND200,000,000 or a prison term of between 01 year and 03 years:

• The offence is committed against 02 or more people;
• The offence is committed against a woman whose pregnancy is known by the offender;
• The offence is committed against a woman raising a child under 12 months of age;
• The offence results in the suicide of the person forced to leave his/her job, the dismissed person.

The offender might be forbidden from holding certain positions for 01 year to 05 years.

So, why has almost no one ever noticed this issue if it has already been regulated under the law since 1985? The reason is because there is hardly any criminal case made against the employer for the illegal termination; it is due to the facts that the regulations are vague (i.e. there is almost no guidance) and the sanctions are also very light (i.e. before the 2015 Penal Code, the maximum sanction is only 01 year of imprisonment). Furthermore, under normal circumstances, many people do not consider the illegal termination serious enough to be charged as a crime and as a result, the prosecutors may face strong reaction from the public when prosecuting such crime. The recent case regarding the “Xin Chào Café” is an example on how the public reaction could affect the decision of the prosecutors on pursuing a case. In this case, the owner of “Xin Chào Café” was charged with the crime of illegally doing business because he had operated the coffee shop without the business registration. Although such criminal charge was possible under the law, the prosecutors were soon forced to drop the case due to the strong public criticism _⁴ .

In fact, not every regulation of the 1985 Penal Code and the 1999 Penal Code was frequently applied in practice. Some regulations, such as the ones regarding the illegal termination, were quite impractical. Therefore, the 2015 Penal Code has made some amendments mostly to improve the practicality of these regulations by clarifying the acts and consequences constituting the crimes.

What are the impacts of Article 162, the 2015 Penal Code?

By comparing Article 162, the 2015 Penal Code with Article 128, the 1999 Penal Code, it is clear that Article 162, the 2015 Penal Code applies heavier sanctions by (i) increasing the minimum sanction from warning to a monetary fine of VND10,000,000 to VND100,000,000 and (ii) increasing the maximum sanction from 01 year of imprisonment to 03 years of imprisonment.

However, Article 162, the 2015 Penal Code also defines the “serious consequences” provided in Article 128, the 1999 Penal Code as “making the person forced to leave his/her job, the dismissed person or his/her family be under hardship or leading to a strike”. This will prevent the prosecutors from freely interpreting the “serious consequences” and as a result, limit the scope of applying the criminal sanctions.

The heavier sanctions and clearer definition are expected to make the criminal charge of illegal termination become more practical. However, in our opinion, this may not work as intended because the main reason for the impracticality of this criminal charge in the past is the fact that this criminal charge is usually considered unnecessary by the public rather than the lack of guidance (i.e. if there was significant amount of concern regarding the vagueness of the regulation, the supreme court could have issued a guiding resolution instead of waiting for the amendment of the law). Therefore, unless there are some very serious consequences which raise the attention from the public such as a serious strike leading to heavy damage to the economy or the suicide of the employee, it is unlikely that the employers will be charged with the crime of illegal termination.

What should the employers do in responding to Article 162, the 2015 Penal Code?

In order to minimize the possibility of being charged with the crime of illegal termination under Article 162, the 2015 Penal Code, we recommend the employers to:

Avoid conducting the illegal termination of the labor contract

The Vietnam law protects the employees and especially protects their jobs. Thus, illegal termination has been considered serious by the Vietnam law from the beginning. This is proven not only by the penal sanctions but also by the regulations of the labor laws which force the employer to pay various compensation to the employee in case of illegal termination.

Therefore, it is always recommended that every employer should avoid conducting the illegal termination. In order to do this, firstly, the employer should make and maintain the effective and adequate internal labor regulations as they are the grounds for the termination of the labor contract. Secondly, the employer should make sure that the HR staffs, or any person conducting the termination, duly understand the complicated procedures required by the law for terminating the labor contract.

In case the termination of the labor contract cannot be legally conducted due to the inadequate internal labor regulations or other reasons, it is recommended that the employer should negotiate with the concerned employee for a mutual termination of the labor contract. If the employer offers a reasonable amount of compensation and shows respect for the employee, the employee will likely cooperate with the employer to leave his/her job voluntarily and amicably.

Carefully consider the personal situation of the concerned employee and the reaction of other employees

As Article 162, the 2015 Penal Code determines whether or not an illegal termination constitutes a crime based on its consequences, the employer should put the personal situation of the concerned employee into careful consideration before proceeding with the termination. In particular, the employer should avoid terminating the labor contracts with the vulnerable employees such as the one who is currently under hardship, is pregnant, is raising an under 12-month-old baby, etc. In this case, offering a compensation package to mutually terminate the labor contract may be a safer option for the employer.

Furthermore, it is important to pay attention to the reaction of other employees towards the termination. While it is unnecessary to disclose all information, the employer should make sure that other employees will not misunderstand the termination as an “unethical” or “unacceptable” act. This matter is especially important to the employers hiring a high number of employees because a miscommunication could lead to the strong reaction from the employees and eventually lead to a serious strike.

If you want to discuss with us about unlawful termination of labor contract and other labor issues under the Vietnam labor law, our Labor Lawyers and Litigation Lawyers are always available at info@letranlaw.com.

1. Article 162, the 2015 Penal Code uses the term “dismissal” and there is no definition for this “dismissal” under the 2015 Penal Code yet.  However, based on the context, Article 162, the 2015 Penal Code should be applied to all kinds of unilateral termination of the labor contract made by the employer, which means the “dismissal” should be understood in the broadest sense.
2. Penal Code No.17-LCT/HDNN7 dated June 27, 1985 as amended, supplemented in 1989, 1991, 1992 and 1997.
3. Penal Code No.15/1999/QH10 dated December 21, 1999 as amended, supplemented in 2008 and 2009.
4. http://english.thesaigontimes.vn/46985/Heavy-handed.html