Vietnamese labor law places strong emphasis on employee protection, and disciplinary measures and dismissal in particular are governed by strict statutory procedures. Companies bear the responsibility of fully complying with the procedures set out in the Labor Code, and a clear understanding that disciplinary action and dismissal are not matters of employer discretion but rather a framework rooted in the protection of employee rights is essential.
This article provides a comprehensive explanation, based on Labor Code No. 45/2019/QH14 and Decree 145/2020/ND-CP, of the four disciplinary actions, the limited scope of dismissal grounds, the disciplinary meeting procedure that guarantees due process, the statute of limitations, periods when employees are legally protected, and the rights employees may exercise. It also highlights common misunderstandings arising from differences between Japanese and Vietnamese practice, with the aim of supporting labor compliance from both the employee protection and corporate risk management perspectives.
Four Disciplinary Actions under the Labor Code (Article 124)
Article 124 of the Vietnam Labor Code provides for the following four disciplinary actions only. Measures outside this list, such as monetary fines or salary deductions imposed as discipline, are expressly prohibited by Article 127, and this prohibition is in place to protect employees’ economic livelihood.
| Action | Overview | Compliance Points |
|---|---|---|
| 1. Reprimand | Written warning | The lightest measure; most commonly applied |
| 2. Deferral of salary increase | Up to 6 months | Applies only where regular salary increases are scheduled |
| 3. Demotion | Transfer to a lower position | Must be specifically defined as grounds in the work rules |
| 4. Dismissal | Termination of the labor contract | Applicable only to the grounds exhaustively listed in Article 125 |
Each ground for discipline must be specifically defined in the internal work rules (Noi quy lao dong). Disciplining an employee on grounds not stipulated in the work rules constitutes an administrative violation in itself, and the employee is entitled to challenge it.
Grounds for Dismissal Are Limited to Four (Article 125)
Dismissal is the most severe disciplinary action, with the greatest impact on an employee’s livelihood. For this reason, the grounds on which dismissal may be applied are exhaustively limited by Article 125 to the four cases below. Any disciplinary dismissal outside these grounds is invalid, and the employee is entitled to seek reinstatement and compensation.
- Theft, embezzlement, gambling, intentional injury, or drug use at the workplace
- Disclosure of trade or technology secrets, infringement of intellectual property rights, causing serious damage or threatening especially serious damage to the employer’s property or interests, or sexual harassment in the workplace as defined in the work rules (added in the 2019 Labor Code)
- Repeat violation during a disciplinary period (e.g., committing a further violation while a deferral of salary increase is still in effect)
- Unauthorized absence of 5 days in a 30-day period, or 20 days in a 365-day period (excluding cases with legitimate reasons)
Compliance Point
“Serious damage” and “especially serious damage” must be specifically defined in the work rules with concrete monetary thresholds or scope. Vague provisions such as “causing major damage to the company” do not satisfy the requirements for grounds of dismissal, and an employee dismissed on such grounds may exercise the right to challenge it.
Disciplinary Meeting Procedure as a Guarantee of Due Process
Article 122 of the Labor Code and Article 70 of Decree 145/2020/ND-CP set out a detailed disciplinary meeting procedure to guarantee the employee’s right to defend themselves. These procedures function as procedural safeguards for employees, and failure to observe them renders the disciplinary action procedurally invalid.
Steps of the Disciplinary Meeting
- Notice: Notify the employee, the employee representative organization, and other relevant parties at least 5 working days before the meeting
- Required attendees: Employer, employee (and a representative if the employee is under 15), employee representative organization
- Right to defend: The employee may make statements and attend with a lawyer
- Minutes: A written record must be prepared and signed by all attendees
- If the employee does not attend: After three valid notices have been given, the meeting may be held in absentia
The decision on the disciplinary action must be issued in writing within the statute of limitations and delivered to the employee and the relevant parties. Oral notice or notification by chat or email alone does not satisfy the procedural requirements.
Statute of Limitations and Periods When Employees Are Protected
Statute of Limitations on Disciplinary Action (Article 123)
- Ordinary cases: Within 6 months from the date the violation occurred
- Violations related to finance, assets, or disclosure of trade/technology secrets: Within 12 months
- Extension: If discipline cannot be carried out due to a protected period below, the limitation may be extended for up to 60 days after the period ends
Disciplinary action initiated after the statute of limitations is invalid. The statute of limitations is one of the important employee-protection mechanisms designed to prevent indefinite exposure to disciplinary risk.
Periods When Employees Are Legally Protected (Article 122(4))
During the following periods, employees are in a particularly vulnerable position, and the Labor Code prohibits the imposition of any disciplinary action.
- During sick leave or other approved leave
- While being held in temporary detention or custody
- While the matter is pending investigation by the competent authorities
- Female employees during pregnancy or maternity leave, and employees (both genders) caring for a child under 12 months of age
- Employees with mental illness or other conditions causing loss of cognitive capacity or behavioral control
Disciplinary action imposed during these periods is invalid, and the employee may seek annulment of the action and damages.
Employee Rights against Wrongful Dismissal (Article 41)
Where dismissal is found to be unlawful, Article 41 of the Labor Code guarantees the following rights to the employee. These provisions are a key part of the framework designed to protect employees from arbitrary dismissal.
Rights Guaranteed to Employees
- Right to reinstatement: Right to return to the original position and continue working
- Right to receive salary for the suspended period: Right to receive the full salary for the period during which the employee was unable to work
- Right to have social insurance, health insurance, and unemployment insurance contributions made: The employer must make the full insurance contributions for the suspended period
- Right to additional compensation: Compensation of at least 2 months’ salary in addition to the items above
- Severance allowance where reinstatement is not chosen: Where the employee does not wish to return, the right to receive a severance allowance
Disciplinary Dismissal and Unilateral Termination Are Distinct Procedures
Disciplinary dismissal under Article 125 and unilateral termination by the employer under Article 36 are governed by entirely different procedures and grounds. Unilateral termination by the employer requires the advance notice periods below, in addition to specific statutory grounds (long-term incapacity, force majeure, etc.).
| Type of Labor Contract | Notice Period |
|---|---|
| Indefinite-term labor contract | At least 45 days |
| Definite-term labor contract (12-36 months) | At least 30 days |
| Definite-term labor contract (under 12 months) | At least 3 working days |
Settlement of wages and other entitlements at termination must be completed in principle within 14 working days from the date of termination (extendable to up to 30 days in special cases). Note, however, that in the case of disciplinary dismissal under Article 125, no severance allowance under Article 46 is payable.
Administrative Penalties for Procedural Violations (Decree 12/2022 Article 19)
Decree 12/2022/ND-CP sets administrative penalties for procedural violations in disciplinary actions. The amounts below apply to organizations (penalties for individuals are half).
| Type of Violation | Fine (Organizations) |
|---|---|
| Disciplinary action on grounds not listed in the work rules | VND 40-80 million |
| Imposition of fines or salary deductions as disciplinary action | VND 40-80 million |
| Multiple disciplinary actions for a single violation | VND 40-80 million |
| Disciplinary action during a period when the employee is protected | VND 40-80 million |
In addition to administrative fines, the company must also bear civil liabilities such as compensation under Article 41 (reinstatement, payment of suspended wages, additional 2+ months’ salary). Compliance is therefore essential not only from an employee protection standpoint but also from a corporate risk management standpoint.
Common Misunderstandings Arising from Japan-Vietnam Differences
Key Compliance Points
- Discipline on grounds not in the work rules is invalid: Unlike in Japan, where work rules tend to use general clauses, Vietnam requires specific grounds. Vague language such as “violations of company order” is not sufficient.
- Skipping the disciplinary meeting is a procedural violation: Even where the grounds are valid, omitting the procedure results in invalidity. The disciplinary meeting is a procedure designed to guarantee the employee’s right to defend themselves.
- Japanese-style “retirement persuasion” carries risk: Repeated requests to resign may be regarded as forced resignation. The proper procedure is “mutual termination” by written agreement under Article 34(3).
- Fines and salary deductions as discipline are expressly prohibited: Article 127 prohibits monetary penalties as disciplinary measures. They cannot be combined with the four statutory actions.
- Disciplinary action during protected periods is invalid: Discipline imposed against an employee during pregnancy, maternity leave, or sick leave is invalid even if otherwise procedurally proper.
- Discipline beyond the statute of limitations is invalid: Even where the facts are clear, disciplinary action initiated after 6 months from the violation (12 months in finance/IP cases) is invalid.
Conclusion: Compliance Is the Foundation of Employee Protection
Disciplinary action and dismissal under Vietnamese labor law are founded on the perspective of employee protection, and companies are required to comply with the procedures laid down by law. Each rule, from the limitation of grounds to disciplinary meeting procedures, the statute of limitations, and the periods when employees are protected, has the meaning of guaranteeing employee rights.
Faithful compliance with these procedures not only protects employee rights but also reduces the company’s exposure to administrative penalties and civil liability. To prevent labor disputes and build a sound employment relationship, it is essential to prepare detailed work rules and observe statutory procedures rigorously.
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