- Can an Employer impose a disciplinary action on an Employee who has bad working attitude, performance, or effectiveness?
Under Article 117 of the Labour Code, labour discipline is regulation on work time, technology and management of business and production set out in the ILR of an enterprise and the labour laws. The ILR constituted by the employer has an important role in forcing the Employees to comply with corporate policies regarding time, order, discipline, and rules at the workplaces. Therefore, contents related to labour benefits and standards for performance assessment are in general not compulsory contents of the ILR. Thus, only when the Employee violates regulations on work time and/or production – a business procedure that is specified in the ILR/LC/Labour laws will be subject to disciplinary action under any of the following forms: reprimand; deferral of salary increase (for 6 months maximum); demotion; or dismissal.
The form of dismissal stated in Article 125 of the Labour Code is only applicable to any of the following cases:
- Thief, embezzlement, gambling, intentional assault, drug use in the workplace, disclosure of trade and technology secrets, infringement of intellectual property, acts of damaging or threatening to damage corporate property and interest, or sexual harassment at the workplace which are prescribed in the ILR;
- Against any Employee who has been disciplined under the form of deferral of salary increase but then recommit the same offence. “Recommit” is an act where the Employee recommits the same offence for which he or she has been disciplined within the past 06 months (for deferral of salary increase) or 03 years (for demotion; or
- The Employee arbitrarily leaves his or her job for an accumulated five (5) days within thirty (30) days or an accumulated twenty (20) days within three hundred and sixty-five (365) days calculated from the first day of leaving work, except for justifiable reasons listed in Article 125.4 of the Labour Code:
- Disaster, fire;
- Self, biological parents, foster parents, fathers-in-law, mothers-in-law, spouse, biological children, legally adopted children falling ill, which is certified by a competent medical diagnostics and treatment establishment; or
- Other cases are specified in the ILR.
The Employee’ bad working attitude, performance or effectiveness will therefore not be considered as a violation of the ILR in order to allow the application of the disciplinary actions prescribed in Article 117 of the Labour Code in general, or the removal from office prescribed in Article 125 of the Labour Code in particular. It is because the Employee’s working attitude, performance or effectiveness do not fall into the governing scope of the ILR, as analysed above.
In practice, some enterprise put in their ILR the following clause: “deferral of wage increase or demotion is imposed on Employees have lacked responsibility or failing to complete assigned tasks, resulting harm to product quality or corporate business and interest”. And the Employers cite such clause as the basis for disciplinary action in the form of deferral of wage increase or demotion. However, following the analysis above and the practice of labour law in corporate environments, the clause can be considered as deviating from the purpose and coverage of IRLs as stated in Article 118.2 of the Labour Code. For that reason, the Employer cannot decide on a disciplinary action although they have evidence for the Employee’ poor performance and behaviour. Imposition of disciplinary action, in this case, may result in the following legal risks:
- If the Employer does not comply with the process of applying labour disciplines, the Employer may be subject to an administrative fine from VND 10,000,000 to VND 20,000,000 pursuant to Article 18 of Decree 28/2020/ND-CP. The process of applying labour disciplinary actions will be as follows:
- Step 1: the Employer to give notice about agenda, time, location for holding the disciplinary meeting, name of the disciplined Employee, and act of violation to the Employee and the organisation representing Employees at the grassroots level which the Employee is a member at least 05 working days before holding the meeting.
- Step 2: The Employer to hold the disciplinary meeting at the notified time and location. In case any of the mandatory attendants cannot attend the meeting, the Employer and the Employee shall reach an agreement on a change of time and/or location of the meeting. If such an agreement cannot be reached, the Employer shall make the final decision. Additionally, in case of the Employer send the letters to the Employee’ residence for requesting the Employee to return to work shall not be considered to be the notice for holding the disciplinary meeting of dismissal for arbitrarily leave the job;
- Step 3: The Employer constitutes minutes of meeting and get the approval of participants before the meeting ends. The meeting minutes must have all the attendants’ signatures and the recorder. If one of the attendants does not agree to sign the minutes though they have attended the meeting, the reason for this must be stated;
- Step 4: The Employer to issue decision on imposing disciplinary actions on the violated Employee within the statute of limitations or the extension thereof. The Employer’s legal representative or a person authorised by the legal representative for signing LC or the person prescribed in the ILR of having the power to take disciplinary actions; and
- Step 5: The Employer to send the disciplinary decision to the meeting attendants.
Furthermore, if the Employee lodges his or her complaint to a labour dispute settlement agency or initiate a lawsuit at a competent court, and the labour dispute settlement agency or the competent court concludes that the Employer’s decision on imposing the disciplinary action is against the law (groundless and not in accordance with the procedure because there was not the participation of the organisation representing Employees at the grassroots level to protect the Employees’ rights). The Employer also shall be forced to cancel the decisions and restore the Employee’ rights and interests (if any).
2. Can the Employer also terminate the LC with the Employee for this reason?
2.1 Case 1: The Employer unilaterally terminating the LC
In this case, if the Employer wishes to terminate the LC with the Employee due to his or her bad performance, the Employer may consider terminating the LC unilaterally. Accordingly, Article 36.1(a) of the Labour Code prescribes that an Employer may unilaterally terminate a valid LC if an Employee has frequently failed to fulfil the job as agreed in the LC. However, in this case, to unilaterally terminate the LC in accordance with the law, the Employer needs to fulfil the following conditions:
- There must be a specific regulation on the criteria to evaluate the degree of task completion, which is issued following the collection of opinions from the organisation representing Employees at the grassroots level (Article36.1(a) of the Labour Code), and the Employee actually failed to fulfil the tasks in accordance with the criteria;
- Notify the Employee of the decisions on unilateral termination of the LC at least 45 days in advance for an indefinite-term LC; and 30 days for a definite-term LC with the term of 12 months up to 36 months. The notice of termination of the LC should indicate the reasons, the grounds to conclude that the Employee has not fulfilled the tasks in accordance with the criteria in order to avoid future disputes; and
- Fully pay all the amounts that the Employee is entitled to, such as salary, insurance, severance allowance etc. within 14 working days from the date of termination of the LC. To avoid the Employee’ complaints about these payments, the Employer should make a table of payment breakdown and payment schedule enclosed with the notice of termination of the LC to get the Employee’ opinion and confirmation.
However, the Employee may make a lawsuit against the Employer at a competent court or lodge his or her complaint to the Inspectorate of the DOLISA. Accordingly, if the evidence given by the Employer is not convincing, the decision on LC termination of may be declared to be unlawful, and the Employer must reinstate the Employees and pay him or her at least 2 months of contractual salary as compensation.
2.2 Case 2: the Employer negotiating the termination of LC with the Employee
Due to the legal risks with the application of labour discipline and the unilateral termination of the LC by the Employer, the Employer may consider negotiating the termination of a valid LC with the Employee. In this case, the Employer may have to pay the Employee an additional amount to help the Employee seek a new job elsewhere along with other payments that must be made in accordance with the requirements of the labour law.