A “cure” for illegal unilateral termination of labor contract

In labor relations, during the implementation of a labor contract with an employee (the “Employee”), the employer (the “Employer”), due to various reasons, may decide to unilaterally terminate the labor contract contrary to the prevailing Labor Code (the “Labor Code”).

Subject to a case-by-case basis, the Employer’s illegal unilateral termination of the labor contracts may result in the Court compelling it to perform certain obligations towards the Employee in accordance with Article 42 of the Labor Code, including (i) paying compensation being two (02) months’ wages; (ii) re-employing the Employees and paying the wages, social insurance, health insurance during the days the Employee does not work; (iii) paying compensation for the employees being at least two (2) months’ wages in the case of not re-employing the Employee with the Employee’ agreement; (iv) paying severance allowance if the Employee does not wish to continue working; and (v) performing other obligations.

However, the Employer can limit some of the obligations as mentioned above after having decided to unilaterally terminate the labor contract illegally. The following is a lawsuit which actually occurred between the plaintiff being Ms. Le Ngoc Anh (“Ms. Anh”) and the defendant being AMC Communications Ltd. (“AMC”)[1] in a Court in Ho Chi Minh City.

On 01 August 2015, Mr. Lam, AMC's manager, sent an email to notify the termination of the labor contract with Ms. Anh because she failed to complete her assignment. After a period of negotiation without reaching any agreement, on 15 April 2015, AMC officially issued Notice 01 on unilateral termination of her labor contract (“Notice 01”) taking effect immediately on the date of issuance. However, on 21 April 2015, AMC issued another notice canceling Notice 01 and requested Ms. Anh to return to work on 27 May 2015.

Disagreeing with AMC's request, after a mediation process of unsuccessful bargain, Ms. Anh has filed a lawsuit to the competent Court requesting AMC for compensation of (i) two (02) months’ wages under Article 42.1 of the Labor Code and one (01) month’s wage due to AMC’s breach of its obligation of notification; and (ii) the wage for the days on which Ms. Anh was not allowed to work from 01 April 2015 to the date of the first-instance hearing.

At the first-instance trial, Ms. Anh opined that under Article 40 of the Labor Code, the cancellation of the illegal unilateral termination of the labor contract must be agreed upon by the Employee. However, the First-instance Court and the Appellate Court (in the appellate stage) held the view that although AMC had unilaterally terminated the labor contract illegally, AMC did give a notice to re-employ Ms. Anh in accordance with the signed labor contract, complying with the obligations of the Employer as stipulated in Article 42.1 of the Labor Code.

The above Courts also held that in this case, Ms. Anh might be able to return to work and request AMC to compensate the damages caused to her and if Ms. Anh returned to work, the legal consequences of AMC's illegal unilateral termination would have been reduced.

Bearing the above in mind, the First Instance Court and the Appellate Court only accepted part of Ms. Anh's requests and forced AMC to pay to Ms. Anh (i) an amount of two (02) months’ wages; and (ii) the wage for Ms. Anh’s non-working days from 01 April 2015 to 27 May 2015, i.e. the date on which AMC requested Ms. Anh to return to work after its cancellation of Notice 01.

Thus, the Court's adjudication practice indicates that after the illegal unilateral termination of a labor contract, the Employer may still cancel such termination within a reasonable period and request the Employee to return to work in order to limit its liabilities of compensation arising under the provisions of the current labor law.

[1] The business or personal name given here is for reference only and does not refer to any enterprise or person in reality.