Ending an employment relationship in Vietnam isn’t complicated if you know the rules. But if you don’t, the risks are real: wrongful termination claims, financial penalties, and reputational damage in a market where local legal expertise matters. This guide covers everything foreign employers need to know about terminating employment in Vietnam compliantly in 2026.
The legal framework for termination in vietnam
Vietnam’s 2019 Labour Code governs all employment terminations in the country. It sets out the valid grounds for ending employment, the notice periods you’re required to give, and the financial obligations you’ll need to meet before closing out the relationship. Every employer hiring in Vietnam, whether directly or through a local entity, operates within this framework.
Probation periods
During probation, both parties have more flexibility. Either side can end the relationship without notice and without severance, which makes the probation period a lower-risk window for assessing fit.
Vietnam’s Labour Code sets maximum probation lengths depending on role type:
- Management and executive roles: up to 180 days
- Roles requiring a degree-level qualification: up to 60 days
- Skilled or technical roles: up to 30 days
- Basic roles: up to 6 working days
Note that these are maximums. You can set a shorter probation period, but you can’t extend it beyond what the law allows for the relevant role type.
Notice periods
Once an employee has passed probation, you’re required to give written notice before terminating. The notice period depends on the type of contract in place:
- Indefinite-term contracts: 45 calendar days
- Fixed-term contracts (12 to 36 months): 30 calendar days
- Fixed-term contracts under 12 months: 3 working days
Make sure the notice period is documented in writing. Verbal notice won’t protect you if a dispute arises later.
Valid grounds for termination
Vietnam’s Labour Code doesn’t give employers an open-ended right to terminate. You’ll need to point to a recognised legal ground, and you’ll need to document it properly. The valid grounds fall into two broad categories.
Performance and health grounds
You can terminate an employee for repeated poor performance, provided the performance issues are documented and the employee has been given a genuine opportunity to improve. A single underperformance incident won’t meet the threshold.
Health-related termination is also permitted where an employee has been receiving treatment for an illness or injury for at least 12 consecutive months under an indefinite-term contract, or at least 6 months under a fixed-term contract, with no prospect of recovery sufficient to return to work.
Business and structural grounds
Termination is lawful when it results from circumstances beyond normal operational control or from legitimate business decisions. Recognised grounds include:
- Natural disasters, fire, or epidemic that forces a necessary reduction in workforce
- Organisational restructuring or a technology change where retraining has been attempted and redeployment isn’t possible
- Dissolution, bankruptcy, or merger of the business
For restructuring-related terminations, you’ll need to show that you explored redeployment options before proceeding with termination. Skipping that step creates legal exposure.
Prohibited termination grounds
There are categories of employees you can’t terminate regardless of performance or business circumstances. Vietnam’s Labour Code prohibits termination of employees who are:
- Pregnant
- On maternity leave
- On parental leave for a child under 12 months
- Taking leave to care for a sick child
The only exception is if your business is being dissolved or declared bankrupt. Outside of those situations, terminating an employee in any of these circumstances exposes you to a wrongful termination claim.
Severance pay
Vietnam’s severance rules apply specifically to pre-2009 service. Post-2009 service is covered through the national unemployment insurance system, so employers don’t pay severance for those years directly.
Here’s how severance works:
- Employees must have at least 12 months of service to qualify
- The rate is 0.5 months’ salary per year of service
- Only years worked before 1 January 2009 count toward the severance calculation
- The salary figure used is the average over the employee’s last 6 months
For most employees hired after 2009, severance obligations are limited or non-existent under this framework. But you’ll still need to confirm the employee’s full service history to be sure.
Final pay obligations
You’re required to settle all outstanding amounts within 14 working days of the termination date. This includes:
- Any unpaid wages
- Unused annual leave entitlements
- Applicable severance pay
If the case is complex, you can extend this deadline to 30 calendar days by written agreement with the employee. But the extension has to be agreed before the 14-day window closes.
Late payment carries a financial penalty of between VND 1,000,000 and VND 100,000,000, plus interest on the outstanding amount. It’s a risk that’s easy to avoid with proper planning.
Work permit cancellation
If the employee you’re terminating holds a work permit, you’re legally required to cancel it within 15 days of their last working day. This is a step that’s easy to overlook in the administrative rush of offboarding, but it’s a compliance obligation that sits with the employer, not the employee.
Keep a record of the cancellation in case it’s needed for audit purposes later.
Managing terminations in vietnam through an EOR
If you’re hiring in Vietnam without a registered local entity, you’re almost certainly doing so through an Employer of Record (EOR). That arrangement has real advantages when it comes to terminations.
An EOR is the legal employer on record, which means it’s responsible for ensuring the termination process complies with Vietnam’s Labour Code. That includes calculating severance correctly, issuing compliant notice, settling final pay on time, and handling work permit cancellation. You get the operational outcome without having to navigate Vietnamese employment law directly.
When you’re evaluating EOR services for Vietnam, look for a provider that handles the full termination process, not just the payroll side, with in-country legal expertise and a clear process for managing offboarding compliantly.
Book a demo to see how RemotePass handles compliant terminations in Vietnam.
Frequently asked questions
Can you terminate an employee in vietnam for redundancy?
Yes. Redundancy due to organisational restructuring or a technology change is a recognised ground for termination under Vietnam’s Labour Code. You’ll need to show that you’ve attempted retraining and that redeployment wasn’t possible before proceeding.
What happens if you don’t give enough notice?
Terminating without the required notice period exposes you to a wrongful termination claim. The employee may be entitled to compensation equivalent to the notice period salary. It’s worth getting the notice period right from the start.
Does severance apply to all employees?
No. Employees need at least 12 months of service to qualify, and severance only applies to years of service before 1 January 2009. Post-2009 service is covered through Vietnam’s unemployment insurance system, which is funded through employer and employee contributions during the employment relationship.
Who is responsible for work permit cancellation when using an EOR?
When you employ through an EOR, the EOR is the legal employer and takes on responsibility for work permit cancellation as part of the termination process. It’s one of the practical advantages of using an EOR for cross-border hiring in Vietnam.
