Article 38.1, the 2012 Labor Code provides that the employer may unilaterally terminate the labor contract with the employee if “the employee regularly fails to complete the work stated in the labor contract”.

Article 12.1, Decree No.05/2015/ND-CP also does provide the guidance as follows: “The employer must specify the criteria for assessing the work completion under the regulations of company, as a basis for assessing the employee who regularly does not complete the work stated in the labor contract.  Such assessment regulations shall be issued by the employer after consulting with the representative organization of the employees’ collective at grassroots level.”

From the above provisions, it seems that the legal requirements of unilaterally terminating the labor contract due to regularly failing to complete the work are quite simple, it does only require the assessment regulations and based on that, unilaterally terminate the labor contract.  However, in fact, the application of the said regulations is not simple.  Specifically, under Article 91.1.(b), the 2015 Civil Procedure Code: “in case the employee files a lawsuit over unilaterally terminating his/her labor contract where the employer is prohibited by the laws on labor from unilaterally terminating the labor contract or from disciplining the employee, the burden of proof rests on the employer”.

Therefore, in case of unilaterally terminating the labor contract due to regularly failing to complete the work, if the employee files a lawsuit in the court, he/she does not have the burden of proving that he/she did complete the work, but the employer is the one who has the burden of proving that the employee truly “regularly failed to perform the work”.  If the company fails to prove such matter, the court shall decide that the unilateral termination of the labor contract is illegal and force the company to compensate for the employee.  Thus, if the company concludes that the employee regularly fails to complete the work based on a cursory and vague assessment regulation, it is possible that the court may not accept this conclusion and the company shall face to the risk of failing in the lawsuit.

So, how to formulate one assessment regulation which is persuasive enough for the court and the employees?  In our opinion, the company can refer to the regulations on labor norms as follows:

Formulation of salary scales, salary tables and labor norms

Based on the principles of formulation of salary scales, salary tables and labor norms stimulated by the Government, the employer shall formulate salary scales, salary tables and labor norms which are to be used as the basis for recruitment, employment of workers, and to negotiate the salary in the labor contracts, and to pay salary to the employees.

When formulating wage scales, wage tables and labor norms, the employer must consult the representative organization of the employees’ collective at grassroots level and make this information publicly available at the workplace before implementation, and concurrently send them to the State labor management authority at the district level in which the company’s production facilities is located.”

Principles for formulation of labor norm

The labor norms are implemented for each step of work, each stage and entire process of producing products and providing services on the basis of organizing scientific labor and reasonable production.

The labor norms are formulated on the basis of the job or title ranks and in compatibility with the grades and trained qualifications of the employees, technological process, and technical standards of machines, equipment and ensuring the labor standards.

The labor norms must be the advanced average norm, which ensure that the majority of employees can implement them without having to excessively prolong the regular working time of the company as prescribed by law.

The new labor norms must be experimentally applied before being officially promulgated. The company must notify the employees at least 15 days before experimentally applying.  Duration of experimentally applying shall depend on the nature of job, but not more than 3 months and the implementation of the labor norms has to be assessed. In case where during the standard working time, the actual implemented level of calculation under productivity is lower than 5% or higher than 10% of the assigned norms, or the actual implemented level of calculation under the time is higher than 5% or lower than 10% the assigned norms, the company must adjust the labor norms.

The labor norms must be periodically reviewed, assessed to amend, supplement, and adjust for conformity. When formulating or amending, supplementing, adjusting the labor norms, the company must consult the representative organization of the employees’ collective at grassroots level and publish at the working places before implementation, and concurrently send the State labor management authority at the district level in which the company’s production facilities is located.”

The labor norms inherently are the compulsory regulation that the company has to perform beside the salary scales, salary tables.  However, currently most of companies only formulate and register the salary scales, salary tables, without formulating and registering the labor norms.  Formulation of labor norms not only complies with the laws on labor but also creates a basis for assessing the employee’s level of the work completion and unilaterally terminating the labor contract where necessary (the labor norms which are formulated and registered in accordance with the law shall be more persuasive to the court).

Formulation of the labor norms may raise difficulty to some kinds of job which are complicated in nature; however, if the company truly wants to have the clear and persuasive assessment regulations which are the grounds to unilaterally terminate the labor contract where necessary, it is necessary to consider, study and formulate the suitable assessing quantity indices of each kind of job (because only having the quantitative indices such as “good”, “medium”, “poor” shall be easy to raise debate and the employee shall be easy to deny such assessment).  If the company implements as above, it is very difficult for the employee or the court to accuse that the assessment is not objective (because the assessment is based on the specific figures, data which are already publicly published and registered) or accuse that the company’s requirements are unreasonable (because the labor norms are already experimentally applied before being practically applied).

The use of “Performance Improvement Plan” for unilaterally terminating the labor contract is very risky because (i) such “Performance Improvement Plan” is not a regulation for assessing the level of work completion under Article 12.1, Decree No.05/2015/ND-CP; and (ii) the employee can totally deny that he/she did improve the working performance in accordance with “Performance Improvement Plan” or accuse that the company’s requirements are too high and unreasonable and demand the company to be responsible for proving the company was right under Article 91.1(b), the 2015 Civil Procedure Code.  Therefore, in this case, the company should only apply “Performance Improvement Plan” to negotiate with the employee for terminating the labor contract as both parties’ agreement, not to unilaterally terminate the labor contract.

If you have any questions or concerns about the labor regulations in Vietnam, our experienced labor and employment lawyers are always available at info@letranlaw.com.