- What are the relevant regulations to be referred to for the determination of serious damage or the threat to cause extremely serious damage?
Currently, the Labour Code and relevant guiding documents do not provide any specific regulations on general criteria to determine serious or extremely serious damage to properties of an enterprise. Therefore, in principle, the levels of serious or extremely serious damage must technically be prescribed in the enterprise’s ILR or in the LC with the Employee to provide a clear legal basis for applying the disciplinary action of dismissal. The levels of damage are self-prescribed by the Employer but must be reasonable, appropriate to realities, and are made on the advice of the organisation representing the Employees at the grassroots level.
Regarding the matter above, according to the informal guiding opinions of local competent labour management agencies or the competent court’s opinions in settling similar cases of labour disputes, it will be referred indirectly to Article 129.1 of the Labour Code to determine the level of serious damage, which provides for the case where the Employee must compensate for the damage that they cause to the enterprise’s tools, equipment, or properties. Accordingly, to determine the Employee’s liability of compensation, “the level of non-serious damage” is specified by the Labour Code as not over 10 months of the minimum area wage which is announced by the Government to be applicable at the Employee’s working location and at the time of the violation. Based on this regulation, it can be inferred that “the level of serious damage” must be at least a 10-month minimum area wage which is applicable at the Employee’s working location.
2. What is the basis to determine the levels of serious or extremely serious damage?
Pursuant to Article 4.1 of Decree 90/2019/NĐ-CP of Government providing for the minimum area wage rates, “if an enterprise has branches operating in many localities with different minimum area wage rates, each of the branches will apply the minimum area wage rate which is prescribed for the locality where it operates”. Therefore, if an Employer has an Employee working in many localities with different minimum area wage rates, the Employer will have to specify in the ILR the levels of serious damage according to the Employee’s working location.
Example 1: If an Employee works in Ho Chi Minh City – the enterprise’s head office is the place with the highest minimum area wage rate (excluding Can Gio District) of VND4,420,000/month. Therefore, the most appropriate level of serious damage for this case is from VND44,200,000 for the Employee working in Ho Chi Minh City.
In addition, after registering the enterprise’s ILR with the competent labour management agency under the Provincial People’s Committee of the place where the enterprise’s head office is located, the Employer must submit one valid ILR to the State authority on labour management under the Provincial People’s Committee where the enterprise’s branch, business or production unit is located[1].
Example 2: Is it in line with the labour laws to prescribe in the ILR the following regulations for the disciplinary action of dismissal?
- Deliberately destroy or cause serious damage to the enterprise’s machinery, equipment, tools, and properties of VND500,000 and above; and
- Forge or interfere with the enterprise’s tables, documents, tools, vouchers, receipts or forge the stamps, signatures, which causes damage to the enterprise’s interest with a value up to VND500,000 and above.
As mentioned above, the Employer must ensure the following when imposing the disciplinary action of dismissal on any Employee who caused serious damage or threaten to cause extremely serious damage to the enterprise’s properties and interests: (i) the Employee commits the acts which cause serious damage or threaten to cause extremely serious damage and which have been prescribed in the ILR; and (ii) the ILR expressly prescribes the level of serious damage to determine whether it is serious damage.
According to the regulations on acts that may be disciplined in the form of a dismissal, the example above satisfies the requirements in items (i) and (ii). From the legal perspective, the Employer may impose the disciplinary action of dismissal if they have sufficient evidence proving the Employee’ violations and the corresponding damage. However, in practice, the courts and Vietnamese labour management agencies often consider the level of serious damage to be at least 10 months of the minimum area wage rate which is applicable at the Employee’ working location. As such, the level of serious damage of VND 500,000 prescribed by the Employer is not reasonable and not appropriate to realities. Therefore, it poses a legal risk for the Employer to impose disciplinary action based upon the regulations in the ILR as quoted in this example.
When determining the level of damage to the enterprise’s properties to provide the basis for imposing the disciplinary action of dismissal, the Employer must refer to the minimum area wage rates and the regulation about 10 months of the minimum area wage as aforesaid. Specifically, depending on the nature of business operations, the Employer will make considerations and, by the advice of the organisation representing the Employee at the grassroots level, prescribe in the ILR the levels of serious damage and extremely serious damage which are appropriate to realities.
[1] Article 119.4 of the Labour Code
