Employee termination is one of the highest-risk actions a foreign employer can take in Vietnam.
Unlike “at-will” jurisdictions, Vietnam’s labor law is strict, procedural, and employee-protective—and mistakes frequently lead to labor disputes, reinstatement orders, or financial penalties.
This 2026 guide explains when and how employees can be terminated in Vietnam, the legal process, common risks, and how foreign companies reduce exposure through compliant HR practices or an Employer of Record (EOR).
Why Termination Is High Risk in Vietnam
Vietnam labor authorities and courts focus on:
- Legal grounds for termination
- Procedural correctness
- Employee protection
If termination is deemed unlawful, employers may be required to:
- Reinstate the employee
- Pay back wages
- Compensate damages
- Cover legal costs and penalties
📌 Even well-intended terminations can be ruled illegal if procedures are not followed exactly.
Is “At-Will” Termination Allowed in Vietnam?
No. At-will termination does not exist.
Employers cannot terminate employees at discretion, even if the contract states otherwise.
Any clause allowing unilateral termination without cause is unenforceable under Vietnamese law.
Legal Grounds for Termination in Vietnam (2026)
Termination is permitted only under specific legal grounds, including:
1️⃣ Mutual Agreement
- Both parties agree to end employment
- Must be documented in writing
- Often the lowest-risk option
2️⃣ Expiration of Fixed-Term Contract
- Applies only if contract reaches its lawful end
- Employer must avoid implied renewals
- Severance obligations may apply
3️⃣ Employee Misconduct (Disciplinary Termination)
Allowed only if:
- Misconduct is clearly defined
- Disciplinary process is followed
- Evidence is properly documented
📌 Skipping disciplinary steps invalidates termination.
4️⃣ Poor Performance (Strictly Regulated)
Termination for performance requires:
- Pre-defined performance criteria
- Documented performance reviews
- Improvement plans and warnings
📌 “Underperformance” alone is not sufficient without documentation.
5️⃣ Redundancy / Restructuring
Permitted if:
- Organizational changes are genuine
- Redundancy plan is prepared
- Authorities and employees are consulted
This is one of the most complex termination grounds.
6️⃣ Force Majeure / Business Closure
Applies only in limited, well-documented cases.
Notice Period Requirements
Notice periods depend on contract type:
| Contract Type | Minimum Notice |
|---|---|
| Indefinite-term | 45 days |
| Fixed-term | 30 days |
| Probation | Shorter (role-based) |
Failure to observe notice requirements is a common violation.
Severance Pay Obligations
Severance may be required if:
- Employee has worked 12 months or more
- Termination is lawful but not due to misconduct
📌 Severance calculations are closely scrutinized.
Termination During Probation
Termination during probation is easier but still regulated:
- Must comply with probation rules
- Must respect notice requirements
- Must not violate anti-discrimination laws
Improper probation termination still carries risk.
Step-by-Step: Lawful Termination Process
Step 1: Confirm Legal Grounds
- Review contract type
- Identify applicable termination basis
Step 2: Prepare Documentation
- Performance records (if applicable)
- Warning notices
- Meeting minutes
- Internal approvals
Step 3: Follow Procedural Steps
- Employee notification
- Consultation (if required)
- Proper notice period
Step 4: Final Settlement
- Salary and benefits
- Unused leave
- Severance (if applicable)
- Tax and insurance finalization
Skipping any step can invalidate the termination.
Common Termination Mistakes Foreign Employers Make
❌ Assuming “company decision” is sufficient
❌ Poor documentation of performance issues
❌ Incorrect notice periods
❌ No redundancy plan
❌ Improper severance calculation
❌ Emotional or rushed termination actions
These mistakes frequently escalate into formal labor disputes.
Consequences of Unlawful Termination
If termination is ruled unlawful, employers may face:
- Employee reinstatement
- Back pay for non-working period
- Compensation (often multiple months’ salary)
- Administrative fines
📌 Vietnam labor courts often favor employees if procedures are flawed.
How Employer of Record (EOR) Reduces Termination Risk
When hiring through an Employer of Record:
- The EOR is the legal employer
- Termination is handled under local labor law
- Procedures, documentation, and settlements are managed professionally
- Risk exposure is significantly reduced
You retain operational control, while the EOR manages legal execution.
When to Seek Legal Review Before Termination
You should always seek advice if:
- Termination is performance-based
- Multiple employees are affected
- Foreign employees are involved
- There is a risk of dispute
- Redundancy or restructuring is planned
Early review often prevents expensive disputes later.
2026 Termination Risk Checklist
✔ Valid legal grounds
✔ Correct contract type assessment
✔ Proper notice period
✔ Complete documentation
✔ Accurate severance calculation
✔ Final payroll and insurance settlement
If any item is uncertain, risk increases.
How BusinessPartner.vn Helps Manage Termination Risk
BusinessPartner.vn supports foreign employers with:
- Employer of Record termination handling
- Vietnam labor law expertise
- Documentation and procedural compliance
- Payroll and severance settlement
- Risk-managed employee exits
👉 Speak with our Vietnam HR compliance specialists before taking termination action.
Employer of Record (EOR) in Vietnam: Complete Guide
Vietnam Labor Law for Foreign Employers
Employment Contracts in Vietnam Explained
