Minimize the Risk of Legal Disputes When Laying Off
Inflation, losses, and cost cutting are the explanations that businesses give when asked about the reasons for their decision to lay off a large number of employees. However, the decision to lay off employees must be carefully calculated and considered, because behind each decision are the potential legal risks that businesses face, the high possibility of being sued and the obligation to compensate employees for dismissals that are contrary to labor laws.
1. Limits and Regulations on Mass Layoffs in Human Resources Management
The situation of mass layoffs from "tech giants" has recently become a hot topic on forums around the world. In the US, many large technology companies have carried out mass layoffs in recent months. Most recently, Meta, the parent company of Facebook, announced a cut of more than 13% of its staff, or more than 11,000 employees. Next is Twitter, which, shortly after the takeover by billionaire Elon Musk, laid off nearly half of its 7,500 employees. Most recently, Amazon is planning the largest staff reduction in history with an expected number of nearly 10,000 people.
It can be seen that the departure of even senior staff of businesses in the United States can happen in just a few "notes". However, this is almost impossible in Vietnam when labor laws are much stricter in the matter of dismissal or unilateral termination of labor contracts with employees.
7 issues to consider when conducting layoffs
2. Dismissal of employees under Vietnamese law – be cautious because of unpredictable legal risks
The term “mass dismissal” does not exist in the Vietnamese labor law system. Instead, it is possible to classify two cases in which employers have the right to terminate labor contracts with employees, one is when employers exercise the right to unilaterally terminate labor contracts, and the other is when employers handle labor discipline against employees in the form of dismissal.
The term “dismissal” is only used in cases of handling violations of labor discipline of employees, applicable to individuals, while unilateral termination of labor contracts with many employees can be seen in cases where businesses change their structure, technology, or are affected by the epidemic.
3. In cases where employers want to unilaterally terminate labor contracts with employees
Employers must first consider whether the termination is within the legal framework. The reason for termination may be due to the employee's fault, such as frequently failing to complete work, voluntarily quitting without a valid reason, or due to the employer's fault, such as the business changing its structure or technology. The employer must also comply with the obligation to notify the employee in advance, at least 03 working days to 45 calendar days depending on the type of labor contract (except for some exceptions). Notifying the employee in advance is considered reasonable so that the employee can prepare mentally and proactively arrange work or find a new job.
In general, the termination of the labor relationship from the employer is only considered legal when the employer ensures both necessary and sufficient conditions: the reason for terminating the labor contract must comply with the provisions of labor law and the termination must comply with the prescribed procedures and processes.
How to Navigate a Layoff Successfully
If one of these two conditions is missing, the unilateral termination of the labor contract or dismissal by the employer is likely to be considered illegal by the dispute resolution agency. At this time, the employer must accept the employee back to work under the signed labor contract (if the labor contract is still valid), pay wages, pay compulsory insurance for the employee during the days the employee is not allowed to work; pay wages corresponding to the days without notice and must pay the employee an additional amount of at least 02 months of salary according to the labor contract.
Therefore, for senior personnel, enterprises in Vietnam often prioritize implementing the negotiation solution first to persuade the employee to sign an agreement to terminate the labor contract and compensate a certain amount of money so that the employee "leaves peacefully" as well as not creating a precedent of the employer unilaterally terminating the labor contract with the employee. Meanwhile, in the United States, employers can ask employees to leave their offices at any time, regardless of the risk of going to court or paying damages later.
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resources solutions for many enterprises in Vietnam. If you need more assistance regarding Minimize the Risk of Legal Disputes When Laying Off, please contact us:
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