During the term of employment and even after the labor relation has been terminated, a dispute between the Company as the employer and its employees is unavoidable. Among incidents resulting in labor dispute stands the reason of employees’ belief that their rights and benefits are not assured.

On 14 July 2020, the People’s Court of Thu Duc District issued the decision to resolve the labor dispute lasting for nearly one year between the reputable beverage corporation – Coca-Cola and the plaintiff being former official of the manufacture department the Company.

The employee states that, on 08 July 2019, she was requested to sign the agreement on termination of the indefinite term labor contract signed in May 2011 (the “Labor Contract”), to hand over her laptop, employee ID card, and not to come to the Company after such termination date. Realizing the act of forcible termination executed by the Company does not comply with the laws, the employee initiated a lawsuit to the People’s Court of Thu Duc District to request for Coca-Cola’s (1) cancellation of the illegal termination decision dated 08 July 2019; (2) re-employment under the indefinite term Labor Contract signed in May 2011; and (3) payment of damage for mental loss, seniority allowances, job loss allowances according to the labor laws.

Before the Court, Coca-Cola justified the legality of its termination decision against the employee by stating that (1) the termination of the Labor Contract was under the re-structuring plan of the Company; (2) the attached employment utilization plan was submitted and then approved by the Department of Labors, War Invalids and Social Affairs of Ho Chi Minh City (the “DOLISA”); and (3) the failure of 45-day announcement in advance was to follow the instructions of DOLISA to prove the its legality actions.

However, Coca-Cola’s arguments and bases have failed to convince the Jury. Based on the current regulation of the labor laws, the Jury decided that the termination of the Labor Contract to be illegal due to formality breach; and forced the Company to pay the salary for the period during which the employee was prohibited from working, salary for period during which advance notice was not provided, job loss allowance, social insurance, which is totally about over 300 million Vietnam Dong to the employee.

This lawsuit once again affirms that, even if receiving the guidance or approval of the DOLISA – a competent labor authority of the State, the termination of labor contracts with employees is still likely to be deemed as illegal, because in addition to the compliance of content, the employer must also adhere to regulations of formality, procedures which set forth clearly in the labor laws to terminate the labor relations with employees. Accordingly, in order to minimize any potential risks, besides obtaining the approval of the competent labor authority of the State in some necessary circumstances, it is advised that the Company should also further consult professional legal agencies to avoid unnecessary damages.