Layoff Violations Under Vietnam’s Updated Criminal Code

Posted by Reading Time: 5 minutes

A crowd of votersBy: Dezan Shira & Associates

Recently implemented, an updated version of Vietnamese criminal code raises penalties for illegal termination of employees. Effective from July 01 2016, Code No. 100/2015/QH13 lays out punishments, including serious fines and even jail time, for those found to be terminating or coercing the termination of employees illegally.

In order to reduce exposure to non-compliance, companies should be aware of how updates differ from previous legislation, in what instances non-compliance can be triggered, and the penalties and liability that are established and maintained under updated guidance.

Professional Service_CB icons_2015RELATED: Payroll & Human Resource Services from Dezan Shira & Associates
Avoiding Violations

Legal action under Code No. 100/2015/QH13 is triggered under more specific circumstances than the legislation it superseded. Instead of referring to “forcing workers to leave their positions” in an “unlawful” manner, violations under the new code are tied to three specific situations:

  • Forcing workers to quit their jobs through coercion
  • Issuing decisions to terminate workers based on grounds currently prohibited
  • Carrying out the dismissal process in a manner found to be incompliant with current laws

If it is found that violations mentioned above have been carried out against people meeting certain qualifications, or result in the outcome listed below, those carrying out the dismissal will be liable for more severe penalties:

  • Violations related to pregnant employees
  • Violations related to a mother that has given birth in the last 12 months.
  • Violations relating to two of more employees
  • Violations that can be connected to the suicide of the employee in questions

Note: while the previous criminal code eluded to hardship as a means of determining the severity of violations, the use of a two tier system is new to the the updates introduced in 2016.

Understanding Penalties

Under the old criminal code from 1999, dismissal violations often resulted in a warning and had a maximum penalty of one year in jail. In addition to lacking clarity on when certain punishments were to be utilized, fines were also excluded from available recourse.

Under 2016’s update, violators of the labor code that have been mentioned previously will be faced with one of the following punishments:

  • Fines: between VND 10 million (US $500) and VND 100 million (US $5,000)
  • Community service: up to one year
  • Imprisonment: for a duration between three months and one year

For dismissals that have met the criteria for more serious punishment, any of the following punishments may be implemented:

  • Fines: between VND 100 million (US $5,000) and 200 million (US $10,000)
  • Jail time: from one to three years

Note: As part of the punishment for either of the tiers of violation listed above, the person in question may be barred from holding their professional position in Vietnam for a period of up to five years.

Related-Reading-Icon-Asean Link RELATED: Oscar Mussons speaks with CNBC on the implications of Obama’s Trip to Vietnam
Preparing for Liability

As with the previous criminal code, liability is tied to the legal representative of a company. This is the person with the power of attorney to sign contracts and is generally a person of great importance for the company. With jail time and revocation of the ability to represent the company on the line, it is of utmost importance to ensure that operational exposure to HR non-compliance is brought to as close to zero as possible.

Ensuring compliance

Despite the risks, laying off employees is an unfortunate but necessary component of corporate HR strategy. Whether it be to cut costs, close operations, or simply to remove workers unable to fulfill daily tasks, letting employees go can be a powerful tool to ensure the continuity of operations.

Under Vietnamese law, the proper procedures for terminating employees can be clarified by referring to Vietnam’s 2012 labor code and should be reviewed closely in conjunction with newly established penalties set forth within the updated criminal code. Given the personal exposure of the legal representative to criminal liability, it is also of utmost importance that companies clarify any questions concerning the cohesion of their current HR practices with Vietnamese Law.


Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email or visit

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading Icon-VB

Annual Audit and Compliance in Vietnam 2016
In this issue of Vietnam Briefing, we address pressing changes to audit procedures in 2016, and provide guidance on how to ensure that compliance tasks are completed in an efficient and effective manner. We highlight the continued convergence of VAS with IFRS, discuss the emergence of e-filing, and provide step-by-step instructions on audit and compliance procedures for Foreign Owned Enterprises (FOEs) as well as Representative Offices (ROs).

VB_2015_Navigating_the_Vietnam_Supply_Chain_ImageNavigating the Vietnam Supply Chain
In this edition of Vietnam Briefing, we discuss the advantages of the Vietnamese market over its regional competition and highlight where and how to implement successful investment projects. We examine tariff reduction schedules within the ACFTA and TPP, highlight considerations with regard to rules of origin, and outline the benefits of investing in Vietnam’s growing economic zones. Finally, we provide expert insight into the issues surrounding the creation of 100 percent Foreign Owned Enterprise in Vietnam.

Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)
This edition of Tax, Accounting, and Audit in Vietnam, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate Vietnam’s complex tax and accounting landscape in order to effectively manage and strategically plan their Vietnam operations.