Answer:
1. Procedures for notification to terminate a LC with a definite-term upon expiration of the term.
Except for the case that the Employee is in his or her term of office as a member of the executive board of the organisation representing employees at the grassroots level, and his or her LC expires, the signed LC must be extended until the end of the term[1]. For the remaining cases, the Employer can carry out the following steps and procedures to terminate a definite-term LC when the LC expires:
- When the LC comes to the end of its term, the Employer will notify the Employee in writing of the time of terminating the LC[2];
- Within 14 working days from the date of termination of the LC, the parties are responsible for paying all amounts related to the interests of each party; in exceptional cases, the period may be extended but not more than 30 days[3]; and
- The “exceptional cases” in which the period may be extended but not more than 30 days include[4]: (i) The Employer who is not an individual terminates its operation; (ii) Changing structure, technology or due to economic reasons; (iii) Division, separation, consolidation, merger; sale, lease, and conversion of business type; to transfer the ownership and use rights of assets of the enterprise or cooperative; and (iv) Due to natural disasters, fires, enemy destruction, or dangerous epidemics.
2. Legal risks related to the notification of termination of definite-term LC upon expiration of contract term
When the term LC has expired but the employee continues to work, within 30 days from the date the LC expires, the parties must conclude a new LC; If not, the signed LC will become an indefinite-term LC[5].
If the Employer does not pay or pay in full the severance allowance or retrenchment allowance (if any) to the Employee within the time period specified in Article 48.1 of the Labour Code; the Employer who fails to complete the procedures for confirming and returning Employee’s documents kept by the Employer upon the termination of the LC as prescribed in Article 48.3 of the Labour Code will be subject to a fine according to one of the following rates[6]:
- From VND1,000,000 to VND2,000,000 for the violations against from 01 to 10 Employees;
- From VND2,000,000 to VND5,000,000 for the violations against from 11 to 50 Employees;
- From VND5,000,000 to VND10,000,000 for the violations against from 51 to 100 Employees;
- From VND10,000,000 to VND15,000,000 for the violations against from 101 to 300 Employees; and
- From VND15,000,000 to VND20,000,000 for the violations against 301 Employees or more.
The above penalties only apply to any individual Employer. As for an Employer being an organisation, the penalties level will be doubled that applicable to an individual Employer[7].
Therefore, to avoid the legal risks mentioned above, when terminating the LC, the Employer must regularly keep track of and early notify the Employee of his or her expiring LC if the Employer does not want to re-sign the LC as well as ensure the payment for Employee severance allowance, retrenchment allowance and other assets reimbursement to the Employee (if any) in accordance with the Labour Code.
[1] Articles 34.1 and 177.4 of the Labour Code
[2] Article 45.1 of the Labour Code
[3] Article 48.1 of the Labour Code
[4] Article 48.1 of the Labour Code
[5] Article 20.2 of the Labour Code
[6] Article 11.1 of Decree No. 28/2020/ND-CP of the Government dated 01 March 2020
[7] Article 5.1 of Decree No. 28/2020/ND-CP of the Government dated 01 March 2020
