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TERMINATION OF LABOUR CONTRACTS DUE TO STRUCTURAL OR TECHNOLOGICAL CHANGES, OR...

10/06/2024

TERMINATION OF LABOUR CONTRACTS DUE TO STRUCTURAL OR TECHNOLOGICAL CHANGES, OR ECONOMIC REASONS UNDER VIETNAMESE LABOUR LAW: A COMPARISON WITH THE UNITED STATES

Nguyen Thi Xuan Mai¹^*
¹Faculty of Law, Ho Chi Minh City University of Economics and Finance (UEF)
*Điện thoại: +84931156892; Email: maintx@uef.edu.vn

The article was published in the Proceedings of Conference on Society Transformation, Linguistics, and Global Governance – CSLG 2024 by Ho Chi Minh City University of Economics and Finance and Agency for Southern Affairs of Ministry of Science and Technology coordinates to organize on May 22, 2024

ABSTRACT

In today's ever-changing economic landscape, businesses often need to adapt quickly, which can result in the termination of employment contracts. This poses a complex challenge for labour laws, particularly when terminating contracts under such circumstances. Article 42 of Vietnamese Labour Law outlines the specific scenarios in which employers must follow legal provisions in the face of structural or technological changes or economic hardships. These regulations are meant to protect workers' rights and ensure workplace fairness. However, the lack of clarity in Article 42 can lead to confusion and potential labour disputes. Given this context, it is crucial to develop pragmatic solutions tailored to Vietnam's unique circumstances, especially considering the divergent interpretations of this issue. Therefore, this article aims to comprehensively examine the legal intricacies surrounding the termination of employment contracts in response to structural or technological changes or economic difficulties and provide recommendations for improving existing labour laws.
Keywords: Termination; Labour contract; Structural or technological changes; Economic reasons.
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Introduction

In the world of production and business operations, employers often face the tough decision of restructuring their workforce or adopting new technologies due to various reasons, such as economic pressures or subjective considerations. These adjustments often lead to the termination of labour contracts, which can have significant consequences in the labour market.
In Vietnam, the termination of labour contracts due to structural or technological changes or economic reasons has unique legal considerations compared to unilateral termination by employers. The Labour Law of 2019 provides specific definitions for such cases, which were absent in its 2012 predecessor. Structural or technological changes can refer to changes in organisational structure, personnel rearrangements, production processes, technologies, machinery, or equipment related to the employer's industry or business activities. Economic reasons may include financial crises, recessions, or compliance with state policies and laws during economic restructuring or international commitments. These legal provisions provide clear guidelines for addressing labour disputes and bring coherence to the process, building on the guidelines previously outlined in Decree No.05/2015/2ND-CP on the guidance of the 2012 Labour Code.
However, the termination of employment contracts in Vietnam can be complicated when vague terms, missing explanations, and employer responsibilities regarding changes in production processes, technologies, machinery, or equipment are involved. This can occur regardless of whether the changes are comprehensive or limited to specific components. This article explores the legal and practical aspects of employment contract termination in response to such changes or economic difficulties in Vietnam. It seeks to analyze the current labour laws in Vietnam and compare them to those of the United States, with the aim of providing recommendations for refining and improving the existing legal regulations governing labour termination processes. The following research questions will guide this inquiry:
The purpose of these research inquiries is to delve into the complexities surrounding labour termination protocols in Vietnam in comparison to those in the United States. The goal is to pinpoint any discrepancies between legal mandates and practical applications, and to provide suggestions for enhancements or modifications that may be necessary to facilitate congruence between legal frameworks and actual practices. By examining these issues, this article endeavors to add to the ongoing conversations surrounding labour law and policy in Vietnam and furnish useful guidance for policymakers and other stakeholders engaged in labour relations.