EMPLOYEES SUE COCA-COLA COMPANY

Recently, the case of an employee of the Coca-Cola Beverages Vietnam Limited filing a lawsuit against the company because of sudden termination of the labor contract is a great concern to everyone.

The Court has issued first instance rulings on this case. So according to the current Labor Code 2012 and the upcoming 2019 Law, are the lawsuit of the employee and the company’s behavior reasonable? 

1. Summary of the case:

The plaintiff is Ms. Phan Thi Thanh Xuan. According to Ms. Xuan’s lawsuit, on May 6, 2011, Coca-Cola Beverages Vietnam Limited signed an indefinite labor contract with Ms. Xuan, the title is “Secretary of production department”. On April 14, 2019, the plaintiff was appointed a new title as the secretary of the supply chain department. Ms. Xuan claimed that in the process of working, she fulfilled her duties well and did not violate the discipline or the contract. However, on July 8, 2019, Ms. Xuan was called into the office by the Head of Human Resources to read and sign to terminate the labor contract drafted and sealed by the company, at the same time. asked Ms. Xuan to hand over the computer, employee card, not to join the company. On the side of Coca-Cola Beverages Vietnam Limited, the company explained that the termination of the labor contract with Ms. Xuan is part of a plan to restructure the organization in the company’s supply chain department. Before terminating labor procedures, the company has followed the entire process in accordance with the law.

Therefore, Ms. Xuan filed a lawsuit against the company’s “unilateral termination of contract” action to the People’s Court of Thu Duc district with the request of the Company to cancel the labor contract termination decision on July 8 2019 due to illegality. At the same time, the company must reinstate her to work under the previous indefinite term labor contract; compensation for mental loss, seniority allowance, redundancy allowance, etc. Thu Duc District Court decided and accepted a part of Ms. Xuan’s lawsuit, forcing Coca-Cola Vietnam Company to pay Ms. Xuan a total of 300 million VND and to pay Ms. Xuan social insurance against the employee until the date of bringing the case to trial.

2. Analyzing the case based on provisions of the Labor Code 2012:

Based on the provisions of Paragraph 1 Article 38 of the Labor Code 2012, the Company has no right to unilaterally terminate the contract with Ms. Xuan. The reason for the termination of the contract by the company is to restructure the organization in the supply chain department. However, this reason does not fall into the following cases under Paragraph 1 Article 38:

– The employee repeatedly fails to perform his/her work according to the criteria for assessment of employees’ fulfillment of duties established by the employer.

– The employee is sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive.

– In the event of a natural disaster, fire, major epidemic, hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted. The reasons for force majeure according to the law include:

– Due to enemy sabotage, epidemic diseases; Relocating or narrowing production and business locations at the request of competent state agencies. The reason of the Company Coca-cola is not under these force majeure cases. 

– The employee is not present at the workplace after the time temporary suspension of the employment contract. Employees sue company

Even if the reason for unilaterally terminating the contract of the Company falls into one of the above cases, the company has violated the form and procedures when unilaterally terminating the contract. According to Paragraph 2, Article 38 of the  Labor Code 2012, for an indefinite labor contract, the company must notify the employee at least 45 days in advance. Here, according to Ms. Xuan, the company did not give at least 45 days’ notice, it only called Ms. Xuan to sign the related documents. Thus, the Company’s behavior has violated Article 38 of the Labor Code 2012.

Regarding the obligations of the Company when unilaterally terminating the contract illegally, according to Article 42 of the Labor Code 2012, the company has the following obligations:

– Reinstate Ms. Xuan in accordance with the original employment contract, and pay the salary, social insurance, health insurance and unemployment insurance premiums for the period during which Ms. Xuan was not allowed to work, plus at least 02 months’ salary specified in the employment contract.

However, after the company restructured its organization in the supply chain department, there is no longer a vacancy for the position or work as agreed in the employment contract and Ms. Xuan still wishes to work, in addition to the above compensation, the two parties can negotiate to amend and supplement the employment contract.

– In case the company does not wish to reinstate Ms. Xuan, both parties shall negotiate an additional compensation which shall be at least 2 months’ salary under the employment contract in order to terminate the employment contract.

– In addition, because the Company violated the provisions on the advance notice period, the company had to compensate Ms. Xuan an amount equivalent to her salary during the days without notice.

Because the Company had a structural change that led to her resignation, the company also had to pay the redundancy allowance to Ms. Xuan according to the provisions of Articles 44 and 49 of the Labor Code.

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3. Analyzing the case based on provisions of the Labor Code 2019:

Basically, the provisions of the Labor Code 2019 in this regard are the same as those in the Labor Code 2012. Employees sue company Employees sue company

Accordingly, the company does not have the right to unilaterally terminate the contract with Ms. Xuan and the company has violated the notice deadline because of not notifying Ms. Xuan at least 45 days in advance. Specifically, according to Article 36 of the Labor Code 2019: The employer has the right to unilaterally terminate the labor contract in the following cases:

– The employee repeatedly fails to perform his/her work according to the criteria for assessment of employees’ fulfillment of duties established by the employer. Employees sue company

– The employee is sick or has an accident and remains unable to work after having received treatment for a period of 12 consecutive months. Employees sue company

-In the event of a natural disaster, fire, major epidemic, hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted.

– The employee is not present at the workplace after the time limit for temporary suspension of the employment contract.

– The employee reaches the retirement age.

– The employee quits his/her fails to go to work without acceptable excuses for at least 05 consecutive working days.

– The employee fails to provide truthful information during the conclusion of the employment contract in accordance with this Labor Code in a manner that affects the recruitment.

When unilaterally terminating a labor contract in some cases, the company must notify the employee at least 45 days in advance. Employees sue company Employees sue company

Regarding the obligations of the Company after unilaterally terminating the contract, basically still includes the obligations as prescribed by the Labor Code 2012. Specifically, according to Articles 41, 42 and 47 of the Labor Code 2019, the Company is obliged to pay salaries, social insurance, health insurance, and unemployment insurance during the days when Ms. Xuan is not working. and additionally pay Ms. Xuan an amount at least equal to 02 months’ salary under the labor contract; pay an amount corresponding to the wages under the employment contract for unnoticed days; additional compensation for Ms. Xuan but at least equal to 2 months’ salary under the labor contract to terminate the labor contract and pay redundancy allowance to Ms. Xuan.

Thus, based on the provisions of the two laws above, the company’s behavior is illegal, Ms. Xuan’s lawsuit request is reasonable, but because the company no longer has an equivalent working position, Ms. Xuan cannot get back to work but will be paid fully the related compensation.