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Labour restructuring and laying-off in Vietnam – legal risks and what to acknowledge 

July 01, 2024

Labour restructuring and laying-off in Vietnam – legal risks and what to acknowledge 

 

In the ever-evolving landscape of business, particularly in an environment as dynamic as Vietnam, the necessity of labor reorganization cannot be overstated. As we navigate through periods of economic instability, such restructuring becomes not just advisable but imperative for the survival and growth of our companies, including those in the shipping lines and beyond.  

 

Labour restructuring is not merely about downsizing or cutting costs; it’s about optimizing resources, adapting to market demands, and ensuring long-term sustainability. In today’s globalized economy, where competition is fierce and uncertainties abound, agility is the name of the game. By realigning our workforce with our strategic objectives, we position ourselves to weather storms and seize opportunities with greater resilience and efficiency.  

 

However, amidst the imperative of restructuring lies a myriad of legal considerations, especially in a jurisdiction as intricate as Vietnam. One aspect that warrants particular attention is how employees may legitimately terminate labor contracts. Vietnamese labor laws provide avenues for employees to exit contracts under specific circumstances, such as unilateral termination due to force majeure or mutual agreement between parties. Understanding these provisions is crucial to avoid disputes and legal ramifications.  

 

The spotlight today falls on the legal risks incurred when employers initiate layoffs. Terminating labor contracts, even in the face of necessity, carries inherent legal complexities and potential pitfalls. From compliance with procedural requirements to safeguarding against claims of unfair dismissal, navigating this terrain demands meticulous attention to detail and a comprehensive understanding of the legal framework.  

As our conglomerated experience, there are five key takeaways that every employer must bear in mind when contemplating layoffs:  

 

  • Firstly, ensure compliance with legal procedures. Vietnamese labor laws prescribe specific steps and timelines for terminating contracts. Failure to adhere to these protocols can expose employers to litigation and financial penalties.  
  • Secondly, prioritize fairness and transparency. Communicate openly with affected employees, provide adequate notice, and offer reasonable severance packages where applicable. Maintaining integrity throughout the process is paramount to preserving trust and goodwill.  
  • Thirdly, mitigate risks through documentation. Keep meticulous records of performance evaluations, disciplinary actions, and communications related to the decision-making process. These records serve as invaluable evidence in the event of disputes.  
  • Fourthly, anticipate potential challenges. Proactively assess the impact of layoffs on remaining staff morale, productivity, and organizational culture. Implement measures to address concerns and mitigate negative repercussions.  
  • Lastly, seek professional guidance. Given the intricacies of labor law in Vietnam, consulting with legal experts can provide invaluable insights and mitigate risks.  

 

While labor restructuring and layoffs may present daunting challenges, they also offer opportunities for renewal and growth. By navigating these challenges with prudence, diligence, and respect for legal obligations, we not only protect our businesses but also uphold the dignity and rights of our employees. Our lawyers and assistants at ANHISA have served our Clients in many cases with the same merits, even some extraordinarily complicated cases, and are always willing to be our counsel on your demand.   

 

If you seek assistance in preparing for labor restructuring and layoffs in Vietnam, please do not hesitate to contact us via:

ANHISA

Mr. Dang Viet Anh

Email: anh@anhisa.com

T: (+84) 28 5416 5873

M: (+84) 983 467070

 

 

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