Terminate the labor contract for the position of Senior Director

Terminate the labor contract for the position of Senior Director

In the complex context of corporate management, there may come a time when the decision to fire a senior director becomes necessary. However, this process is not as simple as one might think, especially when operating within the framework of Vietnamese labor law. Understanding the complexities of firing a senior executive is important to ensure both company interests and legal requirements are met. In this article, Apolo Lawyers - Solicitors & Litigators (Tel:(+84) 903. 419. 479) will inform  about the issues about the labor contract.

1. Vietnam Labor Law and the relevance

Under Vietnamese labor law, employees, including senior executives, enjoy various rights and protections. Although the employer has the prerogative to terminate employment, this must be done within the limits set by law. Failure to do so could result in legal consequences, including disputes and costly compensation.

2. Role of Senior Director

• Corporate Governance: Senior directors play a key role in the governance of the enterprise. They may serve on the board of directors or the management board, helping to set the strategic direction of the company and making important decisions on behalf of shareholders.

• Strategic Planning: Senior directors are typically involved in developing and implementing the company strategic plans and long-term goals. They provide leadership and guidance to ensure that the company is moving in the right direction.
• Management Oversight: Senior directors oversee the companys management team, including top executives and department heads. They may have the authority to hire and fire executives and ensure that the management team is effectively carrying out the company strategies and policies.
• Financial Management: Senior directors often have a role in financial management, including approving budgets, financial reports, and major financial decisions. They may also be responsible for ensuring the companys financial health and compliance with financial regulations.
• Risk Management: Senior directors help identify and mitigate risks that the company may face. They are responsible for ensuring that the company has effective risk management strategies in place.
• Stakeholder Relations: Senior directors often represent the company to external stakeholders, including shareholders, government authorities, and business partners. They may be involved in building and maintaining positive relationships with these stakeholders.
• Conflict Resolution: Senior directors may be called upon to mediate and resolve conflicts within the company, whether they are related to employees, management, or other stakeholders.

3. Termination Procedures

• Identify a Valid Reason: Employers must have a valid and legal reason for terminating an employees contract. Common valid reasons include poor job performance, violation of company policies, economic difficulties, or structural changes within the organization.

• Notice to Employee: Once a valid reason is established, the employer must provide written notice to the employee. The notice should specify the reason for termination, the effective date, and the employees right to respond to the termination notice within seven days.
• Consultation: In some cases, consultation with the employee or labor union representatives may be required, especially when the reason for termination is economic difficulties or changes in the organization.
• Severance Pay and Benefits: The employer must calculate and provide the employee with the appropriate severance pay and benefits as required by law. Severance pay is typically based on the length of service and the reason for termination.
• Final Settlement: All outstanding payments, such as wages, bonuses, and unused leave, should be settled with the employee.
• Return of Company Property: Ensure that the employee returns all company property, including keys, access cards, and equipment, upon termination.

4. Legal Requirements

Termination of labor contracts in Vietnam must adhere to specific legal requirements to prevent disputes and legal consequences:

• Anti-Discrimination: Termination must not be based on discriminatory factors such as gender, age, religion, or ethnicity. All employees must be treated equally.
• Notice Period: The notice period for termination varies based on the length of service. Employees with more extended service typically require longer notice periods.
• Severance Pay: The amount of severance pay depends on the reason for termination and the length of service. Ensure accurate calculations and timely payments.
• Collective Bargaining Agreement: In companies with a collective bargaining agreement, follow the provisions of the agreement when terminating employees.
• Documentation: Maintain thorough documentation of the entire termination process, including written notices, correspondence, and records of consultations.
• Labor Union Involvement: Involving labor union representatives, if applicable, can help facilitate the termination process and ensure compliance with labor laws.

5. Legal Consequences of Unlawful Termination

• Reinstatement: If an employee believes that the contract was unlawfully terminated, they have the right to challenge the termination in court. In case the court rules in favor of the employee, the employer may be ordered to reinstate the employee to the previous position.

• Back Pay: Employers found guilty of unlawful termination may be required to compensate the employee for lost wages during the period of unemployment caused by the wrongful termination.
• Severance Pay: If the employee is eligible for severance pay according to the law, the employer may be obligated to pay additional severance as a penalty for unlawful termination.
• Compensation for Moral and Material Damage: In cases of severe wrongdoing by the employer, such as discrimination, harassment, or causing emotional distress, the court may order compensation for both moral and material damage suffered by the employee.
• Administrative Fines: Employers who violate labor laws may be subject to administrative fines imposed by labor authorities.
• Damaged Reputation: Unlawful termination can tarnish the reputation of the employer, making it difficult to attract and retain quality employees in the future.
• Legal Fees: Employers may incur legal fees associated with defending against claims of unlawful termination.

Contact Apolo Lawyers via email: contact@apolo.com.vn and hotline: (+84) 903.419.479 for more information.

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