UNILATERAL TERMINATION OF THE LABOR CONTRACT: HOW MUCH ADVANCE NOTICE MUST THE EMPLOYER GIVE, AND WHAT OBLIGATIONS MUST IT FULFILL?

Even where an employer unilaterally terminates a labor contract on a legally valid ground, it must nonetheless comply with two distinct sets of obligations: the obligation to give advance notice to the employee, and the obligation to settle payments and complete administrative procedures following termination. A failure to comply with either set of obligations may still result in the termination being deemed unlawful, or in the employer being subject to administrative sanctions, notwithstanding that the underlying ground for termination was valid.

1. Advance Notice Period for Unilateral Termination

Pursuant to Clause 2, Article 36 of the 2019 Labor Code, an employer effecting a unilateral termination of a labor contract must give the employee advance notice within the following minimum periods:

• At least forty-five (45) days, in the case of an indefinite-term labor contract.
• At least thirty (30) days, in the case of a definite-term labor contract with a term of twelve (12) to thirty-six (36) months.
• At least three (3) working days, in the case of a definite-term labor contract with a term of less than twelve (12) months, and in the case of an employee suffering illness or accident as provided under Point b, Clause 1, Article 36.
• For certain specific sectors, occupations, or types of work, the applicable notice period is as separately prescribed by the Government.

2. Circumstances in Which No Advance Notice Is Required

Under Clause 3, Article 36, the employer is not required to give advance notice in two circumstances: where the employee fails to be present at the workplace within fifteen (15) days following the expiry of a period of suspension of the labor contract; and where the employee voluntarily abandons his or her work without justifiable reason for five (5) or more consecutive working days.

3. Obligations to Settle Payments and Complete Procedures Following Termination

In addition to the obligation to give advance notice, Article 48 of the 2019 Labor Code expressly sets out the obligations that the employer must discharge following the termination of a labor contract, irrespective of whether the termination is lawful or unlawful:

• Time limit for payment. Within fourteen (14) working days from the date of termination, the employer must settle in full all amounts relating to the employee’s entitlements (including wages for accrued but untaken annual leave, and severance allowance, where applicable). This period may be extended, but not beyond thirty (30) days, in certain specified circumstances, such as where the employer ceases operations, undergoes restructuring or reorganization, or where termination results from a natural disaster, fire, or dangerous epidemic.
• Completion of social insurance procedures. The employer is responsible for completing the procedures to confirm the employee’s period of social insurance and unemployment insurance contributions, and for returning to the employee, together with such confirmation, the originals of any other documents that the employer has retained.
• Provision of related records. At the employee’s request, the employer must provide copies of documents relating to the employee’s employment history; the costs of copying and delivering such documents are to be borne by the employer.

4. Consequences of Failing to Comply with the Notice Obligation or Post-Termination Obligations

Where an employer relies on a valid ground for termination but fails to comply with the applicable advance notice period, the termination may nonetheless be deemed an unlawful unilateral termination of the labor contract under Article 39, giving rise to the substantial obligations set out in Article 41: reinstatement of the employee, payment of wages and social insurance, health insurance, and unemployment insurance contributions for the period during which the employee was not permitted to work, together with additional compensation of not less than two (2) months’ wages.

With respect to the obligations under Article 48 to settle payments and complete the requisite procedures, any delay or failure to comply may result in administrative sanctions under labor law, and may further give rise to a labor dispute with the employee.

5. Practical Considerations

Employers should carefully monitor two separate and independent time limits: the advance notice period, which runs prior to the date of termination, and the period for settlement of payments and completion of procedures, which runs following the date of termination. These two obligations operate concurrently and are not interchangeable – compliance with the advance notice requirement does not relieve the employer of its obligation to complete payment within fourteen (14) days, and vice versa.