How do you terminate an employee in Vietnam in 2026?

The Labour Code sets out the valid grounds for unilateral employer termination in Article 36:

• Repeated failure to perform work after written warning, as defined in the employment contract or internal rules
• Illness or extended sick leave exceeding the statutory duration with no prospect of recovery
• Natural disaster, fire, or force majeure where the employer has exhausted efforts to mitigate and still cannot maintain sufficient employment
• Absence without leave for five consecutive working days or more
• Retirement age reached with the applicable social insurance conditions met
• Restructuring or technology change that results in the employee's role being genuinely eliminated (Article 42 to 44, the economic/structural dismissal route)

Dismissal for disciplinary reasons, including gross misconduct, follows a separate track under Articles 124 to 126 and requires a formal disciplinary meeting with the employee present and the trade union notified.

Protected categories

Several groups are fully protected against unilateral termination regardless of the stated ground, including employees on maternity or parental leave, pregnant employees, and employees currently receiving medical treatment for work-related illness or injury. Trade union representatives have enhanced procedural protections under the Labour Code and the Trade Union Law.

Probation period dismissals

During probation, either party may end the relationship without notice: the notice requirement is 0 days for both sides. The statutory probation cap is 2 months for graduate and degree-level roles, with an extended maximum of 6 months for senior management and executive positions. Severance does not accrue for service during a probation period that ends without confirmation.

1. Confirm the valid statutory ground

   Anchor the termination to one of the grounds in Article 36 or the economic/restructuring route in Articles 42 to 44. Grounds cannot be added or changed after notice is served.

2. Determine the correct severance track

   Employee-related grounds (performance, illness, absence) use the severance allowance track. Economic or technological restructuring uses the job-loss allowance track at a higher rate and with a floor payment.

3. Notify the People's Committee for restructuring cases

   For collective reductions under Articles 42 to 44, the provincial People's Committee must receive written notification before any individual notices are issued. The advance notice window is 30 days.

4. Issue written notice by contract type

   Serve notice in writing. The period varies by contract: 45 days for indefinite-term contracts, 30 days for fixed-term contracts of 12 to 36 months, and 3 days for fixed-term contracts under 12 months.

5. Compute and pay the final settlement

   Calculate severance or job-loss allowance on the six-month average salary base, add accrued annual leave, and settle all payments within 14 days of the termination date under Article 48.

6. Return documents and complete social insurance filing

   Return the social insurance book (so stich) and any other personal documents on the day of termination or as soon as practicable. File the termination with the social insurance authority to preserve the employee's access to unemployment benefit.

The notice periods above are statutory minimums. The employment contract may specify longer notice; it may not specify shorter. Pay in lieu of notice is permissible in practice but is not codified in the Labour Code as a statutory right in the same way as in common-law jurisdictions. Employers using pay in lieu should document the arrangement explicitly in the termination agreement.

Notice does not apply in cases of summary dismissal for serious disciplinary violations under Article 125. When an employee is absent without leave for five or more consecutive days, the employer may terminate with shorter process but must still issue a written termination notice and follow the Article 38 procedure for termination documentation.

Both tracks use the average salary over the final six consecutive months of employment as the calculation base. Only years of service during which the employee was not covered by the unemployment insurance fund count toward the entitlement. Once an employee is enrolled in unemployment insurance (compulsory for most formal employees), future service accrual moves off the employer's balance sheet and onto the social insurance system.

Vietnam's Labour Code does not set a monetary ceiling on total severance or job-loss allowance. There is no statutory cap on countable years of service either. Both figures scale with actual tenure and actual average salary, without limit.

Qualifying service

Both allowances apply after 1 year of continuous service with the same employer. Periods of fixed-term contracts with the same employer are aggregated. A gap of more than 90 days between contracts breaks continuity for social insurance purposes but the Labour Code's own continuity rules may differ; verify the specific case with local counsel.

Final pay settlement

All outstanding wages, accrued annual leave, severance or job-loss allowance, and any other entitlements must be paid within 14 days of the termination date under Article 48. Late payment triggers an obligation to pay interest at the rate set by the State Bank of Vietnam, plus the base entitlement.

The collective redundancy process under Article 44 requires:

• Labour usage plan prepared and shared with the trade union (or employee representatives where no union exists) before any announcement
• Genuine consultation on redeployment options, retraining, and reduced working hours as alternatives to termination
• Written notification to the provincial People's Committee 30 days in advance of the planned dismissal dates
• Payment of job-loss allowance to all affected employees on the job-loss track (Article 47), not the lower severance-allowance rate

Skipping the People's Committee notification or using the severance allowance rate when the job-loss rate applies are the two most common procedural errors in collective reductions. Both create reinstatement exposure for affected employees and, in practice, require renegotiation of individual exit terms.

Vietnam has no collective-redundancy threshold expressed as a headcount number in the Labour Code. Article 44 applies whenever the reason for dismissal is economic restructuring or technological change, regardless of how many employees are affected. A single role eliminated for genuine economic reasons triggers the job-loss allowance track and the People's Committee notice requirement.

The Ministry of Labour, Invalids and Social Affairs (MOLISA) is the national authority that sets guidance on collective dismissal procedure. Individual disputes go to the labour conciliation system and then to the People's Court.

There is no statutory minimum payment for mutual termination. The agreed package is whatever both parties accept. In practice, most negotiated exits in Vietnam settle at or above what the job-loss allowance track would deliver, because employees understand the alternative and use it as a reference point.

Points to include in a written mutual termination agreement:

• Effective date of termination
• Total compensation to be paid, including severance or job-loss allowance (if any) and outstanding accrued leave
• Final pay settlement date (the Article 48 14 days deadline applies equally here)
• Social insurance book and personal documents return timeline
• Non-disparagement and reference terms where relevant
• Confirmation that the employee waives further claims, subject to legal validity

Even in a mutual exit, the employer must complete the social insurance book (so stich) handover and file the termination with the social insurance authority. Failure to do so delays the employee's access to unemployment benefit and creates an administrative liability for the employer.

Senior or specialist employees often negotiate a mutual exit after the employer has served notice of a valid-ground termination. The notice period functions as a negotiating window, not just a procedural formality.

Real HR and legal experts handle your Vietnam hires, from the first offer letter through every monthly social insurance filing. An actual person, not a pooled queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.

The split of responsibilities under EOR for Vietnam terminations:

Vietnam's dual-track system is one of the more operationally involved severance regimes in Southeast Asia. The distinction between the severance allowance and the job-loss allowance is fact-specific: misfiling the track creates reinstatement exposure. Teamed's Vietnam operations carry this determination as a standard step, not an exception.

EOR payroll, contractor onboarding, and entity setup all live on one platform. A Vietnam contractor who converts to payroll keeps their record, and that same employee can graduate to your own Vietnam entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Vietnam hire, until it isn't. Start from the Vietnam hiring overview; each guide here takes one layer of Vietnamese employment law.

Key sources: Labour Code 2019, Law No. 45/2019/QH14, ASL Law termination guide, and guidance from the Ministry of Labour, Invalids and Social Affairs (MOLISA).