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Redundant employees due to organizational restructure in Vietnamese company

(S&B Law) In case foreign invested company in Vietnam (FIC) shall have to consider terminating employment of a number of redundant employees due to organizational restructure.
Under Vietnam Labour Law, this shall be considered as labour contract termination for the reasons of restructuring of company business.
Thus, due to the complicated nature of the work, labour matters must be carefully processed under the Vietnam Labour Laws.
We are of opinion that in general, FIC shall have to handle following matters:
  • To negotiate and terminate Employment Contracts entered by and between FIC and redundant employees in Vietnam;
  • To prepare a detailed report on resolving Employment Contracts as mentioned above to the Provincial Department of Labor, Invalid and Social Affair;
  • To account and finalize unpaid salary, untaken annual leaves, severance allowances under the laws (if any) and all outstanding Personal Income Tax, Social and Health Insurance incurred to the redundant employees.
Our experience in the field
  • Assisting a multinational company in Vietnam to terminate employment with about 100 redundant employees due to business restructure. This include negotiation with Representative of Employees; preparing necessary documents for contracts termination, liaising with competent authorities for approval and resolving labor disputes arising from these cases before the competent court;
  • Assisting a non-governmental organization to terminate employment with about 15 redundant employees due to organizational restructure. This included providing advice on legal basis for termination, negotiation with redundant employees, preparing necessary documents for termination and liaising with competent authorities as required by laws;
  • Acting for a foreign invested company in Vietnam, several Vietnamese companies to settle labor dispute with Employees regarding to the dismissal at competent courts;
  • Acting for an international school in Hanoi to settle labor dispute with its General Manager regarding to labor contract termination;
  • Acting for a number multinational companies in Hanoi to prepare Internal labor rules, Labour Collective agreements under new Vietnam Labor Law.
Proposed scope of works of S&B Law
We anticipate that our work will comprise of the following 2 main work streams. These are the key work streams required in any termination process. Depending on FIC’s specific position/situation, other works may be required.
Such additional works shall not fall under the scope of this Engagement Letter, but could be provided upon request.

Work stream 1: Due diligence
  1. Provide FIC on overview on the regulatory for labor contract termination and transfer of employees;
  2. Study and analyze legal exposure that FIC have to face in the process of labor contract termination and transfer of employees, including but not limited to legal exposure incurred from termination of employment contracts and transfer of employees;
  3. Advice most appropriate approach for outstanding matters found during the analysis process.
Work stream 2: Labor Contract Termination
  1. Assist FIC in preparing the labor redundancy plan for submission to local labour management authority.
  2. Draft termination notification/ decision/ agreements  with employees and related approval formalities internally as required by laws for management’s review and decision or review such termination agreements prepared by the company;
  3. Liaising with Competent Authorities for processing termination labour contracts of redundant employees.
Deliverables
The Deliverables will include documents prepared in English and Vietnamese as required for submission to licensing bodies.
FIC will review, approve and where necessary sign these documents. English documents should be used for reference other the purposes of discharging FIC’s responsibility for the positions taken and the underlying company information.

» Social insurance under law on social Insurance
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