Unilaterally Terminate Of The Labour Contract Due To The Employee’s Repeatedly Failure To Perform His/Her Work – Better Be Careful

The termination of an employment contract by one party due to consistent work-related failures is an option that many enterprises are considering in order to end the employment relationship with underperforming employees who exhibit behaviours such as tardiness, failure to meet targets, or neglecting their duties. However, enterprises need to be cautious to avoid finding themselves in a precarious situation referred to as being “honest but impeachable” if they are unaware of the labour law regulations that dictate the criteria for determining that an employee has consistently failed to meet their work obligations.

Currently, employees no longer hesitate to sue the enterprise when they believe that the decision of the enterprise directly infringes upon their legitimate rights and interests. According to the annual work review report of the Supreme People’s Court, in the period from 2019 to 2021, the Court has accepted 2,428 cases involving disputes over disciplinary measures, dismissal, and unilateral termination of labour contract (accounting for more than a quarter of labour disputes to be resolved). [1]

Despite this, there are still many enterprises who hold the belief that they can unilaterally terminate an employment contract by simply citing the fact that they have repeatedly reminded the employee “not to perform their work.” Similarly, some enterprises think that creating on-the-spot records each time an employee fails to fulfill their assigned duties, damages company property, or is consistently late, provides sufficient legal grounds for unilateral contract termination. However, it is important to note that the lack of experience and hasty decision-making when dismissing employees in such cases can expose the enterprise to numerous legal risks.

Basis for determining that the employee “repeatedly fails to perform his/her work”

Between 2003 and 2021 [2], the regulations governing the determination of an employee’s repeated failure to perform their work under the labour contract have undergone multiple changes in standards and evaluation procedures. Previously, in order to identify an employee who consistently failed to perform their duties, the enterprise was required to specify the level of non-performance, provide a reason for the lack of performance, and maintain a written record or reminder at least twice a month. If the employee’s performance did not improve despite these measures, appropriate action could be taken. Starting in 2015, the enterprise only needed to establish regulations that included criteria for assessing the extent of non-performance (after consulting the representative organisation of the collective employee at the grassroots level). This would provide a sufficient legal basis for determining whether the group of employees’ behavior constituted “repeated failure to perform their work”. As of 2021, when issuing regulations for evaluating work completion levels, the enterprise is no longer required to get opinions from the representative organisations of the labour collective at the grassroots level. Instead, they need to consult the representative organisations of employees at the grassroots level (if available) and engage in a dialogue within the workplace.

Therefore, the evidence gathered by the enterprise to substantiate the claim that an employee has “repeatedly failed to perform their work” must be solid and involve a comparison between the actual fulfilment of duties by the employee and the criteria outlined in the regulation governing the assessment of work completion levels. If the enterprise has not established such a regulation, it will not have the legal grounds to unilaterally terminate the labour contract based on the employee’s consistent failure to perform its duties, even if it is evident that the employee has indeed repeatedly failed to fulfil their assigned tasks.

For instance, in the case of the dispute over the unilateral termination of the labour contract involving Company A1 and employee Mr. A, as stated in Judgment No. 03/2021/LD-PT issued by the Hanoi High People’s Court on 23 June 2021 [3], the Court of Appeal has ruled that Company A1’s termination of Mr. A’s labour contract was unlawful. This decision was reached because Company A1 could only provide monthly internal meeting minutes documenting Mr. A’s work failures, without separate minutes specifically detailing Mr. A’s repeated failures as stipulated in the labour contract. Additionally, Company A1 failed to present evidence outlining the criteria used to assess the levels of work completion, which would have served as a basis for comparing Mr. A’s violations.

Furthermore, according to Article 21.1.c of the Labour Code 2019 and Article 3.3.a of Circular No. 10/2020/TT-BLDTBXH issued by the Ministry of Labour, War Invalids and Social Affairs, the labour contract must specify the tasks that the employee is obligated to perform during the course of their employment. If the labour contract does not include a comprehensive job description, it should clearly state that the employee will carry out tasks assigned by their immediate superior or refer to a work assignment table. This ensures a basis for determining the specific work responsibilities of the employee before assessing whether they have failed to fulfil their duties.

For example: Employee (Ms. X) is recruited by B Company to work as a cleaner under a labour contract. However, if the director assigns Ms. X the job of security guard instead, it would be unreasonable to use the reason that Ms. X did not perform the assigned work well, based on the regulations on the assessment of the levels of working completion.

In summary, in order to have a basis for assessing of the levels of working completion, the enterprise must ensure a series of documents as follows: (i) the regulation on the assessment of the levels of working completion is promulgated in accordance with the law, (ii) labour contract, (iii) a description of the levels of working completion, (iv) criteria to evaluate whether the employee performs his/her work or not. The content of these documents must be consistent with each other and must be consistent with the work of the employee.

Although there are documents mentioned above, if employees are not informed and do not understand the criteria for assessing employees’ fulfillment of duties, the unilateral termination of the employment contract of the enterprise still faces many difficulties.

In many cases, the enterprise has prescribed regulations on the assessment of the levels of working completion under a labour contract and at the time of signing the contract, employee already knows about this regulation. But when the employee was assessed by the enterprise for not performing the work, they strongly objected to the criteria set out on the grounds that they were not disseminated and did not fully understand these regulations.

In relation to this matter, the current labour laws state that when introducing regulations regarding the assessment of work completion levels, enterprises are required to engage in workplace dialogues to consult employees’ opinons. Following these dialogues, enterprises must make the content of the regulation on work completion assessment publicly available. It is essential for enterprises to ensure that the content of the regulation is properly communicated within the workplace. As an additional measure of security, it is advisable for enterprises to individually provide each employee with a copy of the regulation, requesting confirmation of having read, understood, and committed to comply with its provisions.

The good sense of the criteria for assessment of the levels of working completion

The regulation and application of the criteria for assessment of the levels of working completion shall also be done in a reasonable manner. Enterprise cannot force employee’s behaviour into a general, unspecific, or inappropriate criterion.

For instance, let’s consider the case of Company Z, a retail company that has implemented a regulation stating that if a business location fails to achieve more than 50% of the sales KPI on a monthly basis, all employees at that location are deemed to have failed to fulfil their work obligations. However, Company Z is applying this regulation to security guards who are responsible for store security and customer assistance, without any direct involvement in the sales process. This application of the regulation clearly lacks rationality. Company Z should establish separate criteria for assessing the levels of work completion for different employee groups. For example, the criteria for sales staff should be distinct from those applied to security staff.

Furthermore, if an employee files a complaint with labour authorities or initiates legal proceedings in a competent court, these authorities may determine that the regulations implemented by the enterprise are invalid. This could occur if the regulations contain content that contradicts the provisions of the law, is inconsistent with the actual circumstances of the enterprise, or exhibits signs of unfair treatment towards the employee. In such cases, the enterprise is obligated to amend the regulation in accordance with the legal provisions, ensuring it serves as a valid basis for assessing work completion levels in subsequent evaluations. Moreover, the enterprise cannot utilise this regulation as grounds for unilaterally terminating a labour contract.

Evidence that the employee repeatedly fails to perform his/her work

According to the guidelines provided in Instruction No. 33/HD-VKSTC issued by the Supreme People’s Procuracy on 8th November 2022, enterprises can gather various documents as evidence to demonstrate that an employee has repeatedly failed to perform their work. These documents may include the labour contract, regulations outlining the criteria for assessing work completion levels, job assignment sheets, job assignment notices (containing job descriptions and requirements regarding progress and quality of work), scoring tables, evaluations, and classifications of task fulfilment, records of emulation and commendation titles, minutes detailing specific instances of unfulfilled duties over a continuous period, and statements from the employee and other relevant individuals involved (especially those directly responsible for task management and work assessment).

Conclusion

Based on the aforementioned evaluations, although the law permits enterprises to terminate the employment relationship on the grounds of an employee’s failure to meet the enterprise’s expectations regarding their capabilities, in practice, exercising this right poses significant challenges for enterprises. Consequently, enterprises need to exercise utmost caution when considering and implementing this reason for termination. In cases where the enterprise lacks sufficient legal grounds, alternative options for terminating the labour contract can be explored. This may involve restructuring the workforce or mutually agreeing to early termination of the contract in accordance with the provisions outlined in Vietnamese law.

[1] Report summarizing the work in 2021 and the orientation and key tasks of the People’s Court in 2022; Report summarizing the work in 2020 and the orientation and key tasks of the People’s Court in 2022; Report summarizing the work in 2019 and the orientation and key tasks of the People’s Court in 2022;

[2] Article 12.1 of Decree 44/2003/ND-CP, Article 12.1 of Decree 05/2015/ND-CP, Article 36.1 (a) Labour Code 2019;

[3] https://thuvienphapluat.vn/banan/ban-an/ban-an-ve-tranh-chap-don-phuong-cham-dut-hop-dong-lao-dong-thuong-xuyen-khong-hoan-thanh-cong-viec-261794.