Early termination of a labor contract is when the employer has to do three things correctly: choose the right ground, give the right notice, and settle payments and confirm the social insurance book on time. Doing all three closes the employment relationship cleanly, the employee receives full entitlements, and the company avoids disputes later.
Quick answer:
- An employer may unilaterally terminate only on a valid ground in Clause 1, Article 36 of the Labor Code 2019, with notice of 45 days, 30 days or 03 working days depending on the contract type.
- Dismissal is a disciplinary measure (Article 125), handled under the labor discipline procedure, not a unilateral termination ground.
- Within 14 working days (up to 30 days in some cases), wages, any severance allowance (if eligible) and other amounts must be paid. The employer also completes confirmation of social insurance and unemployment insurance contribution periods and returns the original documents it holds.
What types of labor contract termination are there?
Article 34 of the Labor Code 2019 lists 13 cases of termination. The ones employers meet most often:
| Case | Basis | Notes |
|---|---|---|
| Contract expires or the work is completed | Clauses 1, 2, Article 34 | Severance allowance if eligible |
| The two parties agree to terminate | Clause 3, Article 34 | A written agreement is recommended, stating the last working day and all payments |
| Employee unilaterally terminates | Clause 9, Article 34; Article 35 | Employee gives 45 days, 30 days or 03 working days’ notice depending on contract type, except cases under Clause 2, Article 35 |
| Employer unilaterally terminates | Clause 10, Article 34; Article 36 | Must rely on a valid ground and the correct notice period |
| Employee dismissed for disciplinary reasons | Clause 8, Article 34; Article 125 | Follows the labor discipline procedure; no severance allowance |
| Termination due to restructuring, technology change, economic reasons, or division, separation, merger | Clause 11, Article 34; Articles 42, 43 | Job-loss allowance under Article 47 |
| The enterprise ceases operations | Clause 7, Article 34 | Termination takes effect from the notice of cessation (Clause 2, Article 45) |
Choosing the right row from the start determines the procedure and the amounts payable, so this step should come before drafting any decision.
Employer unilateral termination: grounds and notice periods
Grounds under Clause 1, Article 36
The employer may unilaterally terminate only in one of these cases:
- a) The employee regularly fails to complete work, as determined by the performance assessment criteria the enterprise has issued (after consulting the workplace employee representative organization, if any);
- b) The employee has been ill or injured and treated for 12 consecutive months (indefinite-term contract), 06 consecutive months (contract of 12 to 36 months), or more than half the contract term (contract under 12 months), and remains unable to work;
- c) Natural disaster, fire, dangerous epidemic, enemy action, or relocation or downsizing of production required by a state agency, where all remedial measures have been tried but the workplace must still be reduced;
- d) The employee does not return to work after the contract suspension period (Article 31);
- đ) The employee has reached retirement age, unless otherwise agreed;
- e) The employee abandons the job without a justified reason for 05 consecutive working days or more;
- g) The employee provided untruthful information when entering the contract, affecting recruitment.
Dismissal is not on this list. Dismissal is a disciplinary measure. It applies only to conduct in Article 125 (such as theft, embezzlement, disclosure of trade secrets, or unauthorized absence of 05 working days within 30 days, or 20 working days within 365 days), and must follow the labor discipline procedure. It is a separate ground under Clause 8, Article 34.
Notice periods under Clauses 2 and 3, Article 36
| Case | Minimum notice |
|---|---|
| Indefinite-term contract (grounds a, c, đ, g) | 45 days |
| Fixed-term contract of 12 to 36 months (grounds a, c, đ, g) | 30 days |
| Contract under 12 months; and all cases under ground b (illness, injury) | 03 working days |
| Ground d (not returning after suspension) and e (abandoning the job for 05 consecutive working days) | No notice required |
| Certain special trades or jobs | As set by the Government |
Notice of termination must be given to the employee in writing (Clause 1, Article 45). A message or verbal notice does not replace a termination decision signed by the competent person.
When can the employer not unilaterally terminate?
Article 37 sets out three cases: an employee being treated for illness, injury or occupational disease as directed by a medical facility (except ground b above); an employee taking annual leave, personal leave, or other leave approved by the enterprise; and pregnant women, those on maternity leave, or those raising a child under 12 months old.
What if the termination is wrong?
Termination that does not comply with Article 35, 36 or 37 is unlawful unilateral termination (Article 39). Under Clause 1, Article 41, the employer must reinstate the employee, pay wages and contribute to social insurance, health insurance and unemployment insurance for the days the employee was not allowed to work, and pay at least 02 months’ wages in addition. If the notice period is breached, extra wages must be paid for the days without notice. All of these costs can be avoided by checking the ground and the notice period before signing the decision.
Severance allowance and job-loss allowance: how are they calculated?
Severance allowance (Article 46) applies when the contract ends under Clauses 1, 2, 3, 4, 6, 7, 9 and 10 of Article 34, for an employee who has worked regularly for at least 12 months: half a month’s wage for each year worked. It is not paid when the employee is eligible for a pension, or when ground e, Clause 1, Article 36 applies (abandoning the job for 05 consecutive working days). Dismissal (Clause 8, Article 34) is not among the cases eligible for severance.
Job-loss allowance (Article 47) applies to an employee who loses the job under Clause 11, Article 34 (restructuring, technology change, economic reasons; division, separation, merger and similar): one month’s wage for each year worked, and at least two months’ wages.
| Factor | How it is determined |
|---|---|
| Period counted | Total actual working time, minus time already covered by unemployment insurance and time already paid as a severance or job-loss allowance (Clause 2, Articles 46 and 47) |
| Rounding of partial years | Up to 06 months counts as half a year; more than 06 months counts as one full year (Article 8, Decree 145/2020/NĐ-CP) |
| Wage used | Average wage over the 06 months immediately before termination under the contract (Clause 3, Articles 46 and 47) |
An employee who has paid unemployment insurance throughout the employment usually has a severance period much shorter than total working time, because the time covered by unemployment insurance is deducted in the calculation.
Payment and documents: which deadlines apply?
Payment (Clause 1, Article 48): within 14 working days from the termination date, both parties must fully settle all amounts relating to each party’s entitlements (wages, pay for unused annual leave, and allowances if any). The deadline may be extended, but not beyond 30 days, in four cases: the enterprise ceases operations; restructuring, technology change or economic reasons; division, separation, merger, sale, lease, change of enterprise type, or transfer of assets; and natural disaster, fire, enemy action or dangerous epidemic.
Documents (Clause 3, Article 48): the employer must:
- Complete confirmation of social insurance and unemployment insurance contribution periods, and return the original documents it has held for the employee;
- Provide copies of documents on the employee’s work history if the employee requests them, with copying and sending costs borne by the enterprise.
When the enterprise ceases operations or is dissolved, wages, social insurance and severance allowance owed to employees are paid first (Clause 2, Article 48). This is covered in more detail in the article on dissolution of enterprises with many employees.
An outstanding salary advance or the employee’s assets is a separate matter, handled by an agreed repayment. Confirmation of social insurance contribution periods should run in parallel and should not wait until that debt is settled.
Who falls under compulsory social insurance on termination?
Employees working under a labor contract of 01 month or longer are subject to compulsory social insurance under the Social Insurance Law No. 41/2024/QH15 (effective 01/07/2025), guided by Decree 158/2025/NĐ-CP. This applies even where the contract carries a different name, if its content covers paid work with wages and management, direction or supervision. Calling someone a “collaborator” does not change the obligation if the relationship is in substance an employment relationship.
The company’s labor management register may be kept on paper or electronically (Article 3, Decree 145/2020/NĐ-CP). From 01/07/2026, the conclusion and performance of electronic labor contracts through the national platform are governed by Decree 337/2025/NĐ-CP, which gives them the same legal value as paper contracts. The termination, severance and social insurance book confirmation rules above apply equally to both forms.
What Thái Tín supports
Thái Tín is the coordinating point when a company handles a labor contract termination. We help confirm the correct ground, calculate the notice period, estimate the severance or job-loss allowance, and prepare the dossier to confirm social insurance contribution periods. Specialist work (drafting the decision, detailed calculations, and working with the social insurance agency) is done case by case by our labor and social insurance partners. We track progress and act as the company’s contact point.
Next step: send us the case details (contract type, start date of work, unemployment insurance contribution period, and the intended reason for termination), so we can identify the right workstream and connect a suitable partner.
Questions and answers
How much notice must an employer give when unilaterally terminating a labor contract?
Under Clause 2, Article 36 of the Labor Code 2019: at least 45 days for an indefinite-term contract; at least 30 days for a fixed-term contract of 12 to 36 months; and at least 03 working days for a contract under 12 months and for an employee who is ill or injured and has been treated beyond the allowed period (Point b, Clause 1). No notice is required if the employee does not return after the contract suspension period, or abandons the job without a justified reason for 05 consecutive working days (Clause 3). The termination must be notified in writing (Article 45).
How is severance allowance calculated?
An employee who has worked regularly for at least 12 months receives half a month's wage for each year of work (Clause 1, Article 46). The counted period is total actual working time, minus time covered by unemployment insurance and time already paid as a severance or job-loss allowance (Clause 2). The wage used is the average over the 06 months before the contract ended (Clause 3). A remainder of up to 06 months counts as half a year; more than 06 months counts as one full year (Article 8, Decree 145/2020/NĐ-CP).
How soon must the employer pay the employee after termination?
Within 14 working days from the termination date, both parties must settle in full all amounts relating to each party's entitlements (Clause 1, Article 48). The period may be extended, but not beyond 30 days, when the enterprise ceases operations; restructures, changes technology or acts for economic reasons; divides, separates, merges, sells, leases or changes its type; or is affected by natural disaster, fire, enemy action or a dangerous epidemic.
Is a worker called a 'collaborator' covered by compulsory social insurance?
It depends on the content of the agreement, not the name. A person working under a labor contract of 01 month or more is subject to compulsory social insurance under the Social Insurance Law No. 41/2024/QH15 (Luật Bảo hiểm xã hội số 41/2024/QH15), even if the contract has another name, as long as it covers paid work with wages and management, direction or supervision by one party.
Can an employer keep the employee's social insurance book because the employee still owes an advance?
It should not. Clause 3, Article 48 of the Labor Code 2019 requires the employer to complete confirmation of social insurance and unemployment insurance contribution periods and to return the original documents it has held. A salary advance owed is a separate matter, settled by agreed repayment or lawful set-off, and is not linked to confirmation of the book.
Legal basis · verification date
Verified 2 October 2026 · next review 30 December 2026. The content is general guidance and does not replace advice for a specific case.
- Labor Code No. 45/2019/QH14 (Bộ luật Lao động số 45/2019/QH14), amended by Law 71/2025/QH15, Law 113/2025/QH15 and Law 124/2025/QH15 (consolidated text 18/VBHN-VPQH dated 12/02/2026, Official Gazette No. 131 dated 28/02/2026; the articles cited below are unchanged): Article 34 (grounds for termination), Article 35 (employee's unilateral termination), Article 36 (employer's unilateral termination), Article 37 (cases where unilateral termination is not allowed), Articles 39 and 41 (unlawful termination), Article 45 (notice of termination), Article 46 (severance allowance), Article 47 (job-loss allowance), Article 48 (obligations on termination), Article 125 (disciplinary dismissal).
- Decree 145/2020/NĐ-CP: Article 3 (labor management register, paper or electronic), Article 8 (severance allowance and job-loss allowance). Checked up to 02/10/2026: only a draft amendment exists, not yet issued.
- Social Insurance Law No. 41/2024/QH15 (effective 01/07/2025), replacing Social Insurance Law No. 58/2014/QH13: scope of compulsory social insurance; Decree 158/2025/NĐ-CP guiding compulsory social insurance.
- Decree 337/2025/NĐ-CP (24/12/2025) on electronic labor contracts and the national electronic labor contract platform; conclusion and performance through the platform from 01/07/2026.
