How should a dismissal process be developed in compliance with the law to help enterprises reduce the risk of labor disputes?

Developing a dismissal process is an important aspect of human resource management and compliance with labor laws. A clear and legally compliant process not only enables enterprises to handle employee violations transparently but also minimizes the risk of labor disputes, complaints, and compensation liabilities. The following article clarifies the concept, legal regulations, and practical considerations when developing a dismissal process within an enterprise.

I. Current situation relating to the development of dismissal processes

In practice, many enterprises have not established a clear dismissal process or only provide general provisions in their internal labor regulations, resulting in inconsistent disciplinary handling and potential legal risks. In many cases, dismissal decisions have been declared unlawful due to violations of legal principles, procedural errors, failure to ensure employees’ right to provide explanations, or insufficient evidence proving the misconduct.

In addition, some enterprises apply merely formalistic processes by copying generic templates without adapting them to their organizational characteristics, business scale, or nature of work. It makes the process difficult to implement in practice and increases the likelihood of labor disputes, complaints, or compensation obligations.

Thus, enterprises should pay increasing attention to developing structured dismissal processes connected to legal risk management and labor law compliance in order to ensure transparency, fairness, and protection in the cases of disputes.

II. Concept of developing a dismissal process

1. What is developing a dismissal process?

Developing a dismissal process means establishing a system of steps, processes, and principles for imposing dismissal as a disciplinary measure against employees, ranging from identifying violations, collecting evidence, organizing disciplinary meetings, and issuing dismissal decisions in accordance with labor laws.

The purpose of such a process is to ensure that dismissal is conducted transparently, based on legitimate grounds, in compliance with legal processes, and to reduce the risk of labor disputes.

2. Why do employers need to develop a dismissal process?

Establishing a comprehensive and legally compliant dismissal process not only ensures the legality of disciplinary actions but also serves as a mechanism for preventing disputes, protecting reputation, and maintaining stable human resource management.

Developing a dismissal process is necessary for the following reasons:

• Ensuring compliance with labor laws: Dismissal is the most severe disciplinary measure. If implemented incorrectly or in breach of procedural requirements, it may be declared unlawful and result in compensation obligations.
• Reducing dispute risks: A clear process helps enterprises demonstrate the legality of disciplinary actions in the event of complaints or lawsuits.
• Ensuring transparency and fairness: Employees are properly informed, given the opportunity to explain, and have their rights protected in accordance with legal requirements.
• Improving human resource management efficiency: A unified process ensures consistent handling of violations and avoids arbitrary or subjective decisions.
• Protecting corporate reputation and image: Disciplinary measures implemented in compliance with regulations reflect professionalism and respect for the law.

3. Does the development of a dismissal process depend on the size of the enterprise?

The development of a dismissal process does not depend on the size of the enterprise but rather on compliance with labor law requirements. Whether an enterprise is small, medium-sized, or large, employers must comply with legal principles, grounds, and disciplinary processes when applying dismissal.

However, business scale may affect the level of detail in the process. Large enterprises often develop separate written dismissal processes involving multiple departments (human resources, legal, and direct management), whereas smaller enterprises may regulate dismissal within internal labor regulations or personnel policies using a simpler structure.

Therefore, enterprises are obligated to implement the dismissal process, but the design and level of procedural detail may vary depending on business scale, organizational structure, and internal management needs.

III. Legal regulations relating to the development of dismissal processes

1. What forms of disciplinary measures may a company impose on employees who violate regulations?

Pursuant to Article 124 of the 2019 Labor Code, employers may apply four disciplinary measures to employees who commit violations:

• Reprimand: It applied to minor violations as a warning and corrective measure.
• Deferral of salary increase for up to six (06) months: It applied where violations affect discipline or work performance but are not serious.
• Demotion: It applied to employees holding managerial positions whose misconduct relates to their responsibilities or position.
• Dismissal: The most severe disciplinary measure, applicable in cases of serious violations as prescribed by law.

2. What legal principles must be followed when developing a dismissal process?

When establishing a dismissal process, enterprises must comply with the following legal principles under the Labor Code 2019:

• Dismissal may only be imposed where legally permitted: Pursuant to Clauses 1–4, Article 125, dismissal applies only in cases of serious misconduct (e.g., theft, embezzlement, disclosure of confidential information), repeated violations before disciplinary records are cleared, or unauthorized absence for the legally prescribed number of days.
• Violations must already be stipulated in internal labor regulations: Under Clause 3, Article 127, disciplinary action cannot be imposed for conduct not previously prescribed in labor regulations, employment contracts, or applicable laws.
• Respect for employees’ dignity and honor: Clause 1, Article 127 prohibits employers from infringing employees’ health, dignity, reputation, or personal honor during disciplinary proceedings.
• No fines or salary deductions as disciplinary substitutes: Clause 2, Article 127 prohibits imposing monetary penalties or salary deductions in place of disciplinary measures.

3. What is the current process for imposing dismissal as a disciplinary measure?

The disciplinary dismissal process is governed by Article 70 of Decree No. 145/2020/ND-CP, implementing the Labor Code 2019, and includes the following main steps:

• Step 1: Identifying violations and collecting evidence: Upon detecting misconduct, the employer must prepare a written record. If the violation is discovered later, evidence and documents proving employee fault must be collected (Clause 1, Article 70).
• Step 2: Notifying participants of the disciplinary meeting: At least five (05) working days before the meeting, the employer must notify relevant participants of the content, time, location, violation, and the employee subject to disciplinary action in accordance with Points b and c, Clause 1, Article 122 of the Labor Code. Participants must confirm attendance or agree on changes if necessary (Point a, Clause 1, Article 70).
• Step 3: Conducting the disciplinary meeting: The meeting must follow the notified agenda. If participants fail to attend or confirm participation, the employer may still proceed. Minutes must be prepared and signed by attendees; any refusal to sign must be recorded together with reasons (Point b, Clause 1, Article 70).
• Step 4: Issuing and delivering the dismissal decision: Within the statutory disciplinary limitation period under Clauses 1 and 2, Article 123 of the Labor Code, the competent person must issue the disciplinary decision and send it to relevant parties (Clause 2, Article 70).

4. What consequences may arise if a dismissal process is developed unlawfully?

Developing and implementing a dismissal process in violation of legal requirements may result in the dismissal decision being deemed unlawful, effectively constituting unlawful unilateral termination of the employment contract under the Labor Code 2019.

Pursuant to Article 41 of the Labor Code 2019, the enterprise may take the following legal consequences:

• Reinstatement of the employee to the original position under the signed employment contract;
• Payment of salary and full contributions to social insurance, health insurance, and unemployment insurance for the period during which the employee was unable to work;
• Payment of additional compensation equal to at least two (02) months’ salary under the employment contract.

If the employee does not wish to return to work, in addition to the above compensation, the enterprise must also pay severance allowance in accordance with the law.

IV. Questions regarding the development of a lawful dismissal process

1. Can a company apply a single dismissal process to all types of employee violations?

Under the Labor Code 2019, dismissal may only be imposed in legally prescribed circumstances and must comply with the proper disciplinary process (Articles 122 and 125). Accordingly, different violations may require different methods of investigation, evidence collection, participant composition, and implementation steps.

Therefore, enterprises should establish a general dismissal framework while incorporating separate procedural tracks for different categories of violations to ensure legality, reduce the risk of labor disputes, and avoid dismissal decisions being declared invalid.

2. Is consultation with the employee representative organization required when developing a dismissal process?

The development and implementation of a dismissal process requires the participation of the employee representative organization at the enterprise level during certain stages in accordance with labor laws.

Specifically:

- Pursuant to Point b, Clause 1, Article 122 of the Labor Code 2019, during disciplinary proceedings (including dismissal), the disciplinary meeting must include the participation of the employee representative organization of which the employee is a member.

- In addition, under Article 70 of Decree No. 145/2020/ND-CP, the employer must:

• Provide prior notice to the employee representative organization regarding the content, time, and location of the disciplinary meeting;
• Facilitate the organization’s attendance and allow it to express opinions during the disciplinary meeting.

3. Under what circumstances may a company amend or supplement an existing dismissal process?

Pursuant to Articles 117 and 118 of the Labor Code 2019, labor discipline and disciplinary measures (including dismissal) must be stated in internal labor regulations issued by the employer. Accordingly, enterprises may amend or supplement the dismissal process in the following situations:

• When changes in labor law render existing provisions no longer compliant (Clause 2, Article 118 requires internal labor regulations not to contradict the law);
• When the company restructures its organizational framework, disciplinary authority, or introduces additional categories of violations (Points g and i, Clause 2, Article 118);
• When practical implementation reveals shortcomings requiring improvement to ensure clarity, transparency, and enforceability.

However, such amendments must strictly comply with legal processes:

• Consulting the employee representative organization at the enterprise level before issuing or revising the regulations (Clause 3, Article 118);
• Notifying employees and publicly post the internal labor regulations for implementation (Clause 4, Article 118);
• Enterprises employing ten (10) or more employees must issue internal labor regulations in written form (Clause 1, Article 118).

4. What legal risks should enterprises pay attention to when developing and applying a dismissal process?

When developing and applying dismissal processes, enterprises should pay particular attention to the following legal risks:

- First, dismissal without statutory grounds: Under Article 125 of the Labor Code 2019, dismissal is permitted only in specific circumstances prescribed by law. If the employee’s conduct does not fall within those grounds or is not clearly regulated in the internal labor regulations, the dismissal decision may be declared unlawful.

- Second, violation of disciplinary principles and processes: If the company fails to ensure proper meeting participants, provide timely notice, prepare minutes, or process disciplinary action within the statutory limitation period under Articles 122 and 123 of the Labor Code 2019 and Article 70 of Decree No. 145/2020/ND-CP, the dismissal decision may be rendered invalid.

- Third, invalid internal labor regulations: Under Article 118 of the Labor Code 2019, internal labor regulations must not violate legal provisions, must involve consultation with employee representatives, and must be properly promulgated. Defective regulations may eliminate the legal basis for disciplinary action.

- Fourth, compensation liability for unlawful dismissal: Under Article 41 of the Labor Code 2019, if dismissal is determined to be unlawful, the employer may be required to:

• Reinstate the employee to their former position;
• Pay full salary and make social insurance contributions for the period during which the employee could not work;
• Pay additional compensation equal to at least two (02) months’ salary under the employment contract.

5. Is dismissal lawful if the company does not have a written dismissal process?

Employee dismissal must be implemented on the basis of valid internal labor regulations and in compliance with disciplinary processes. Under Point g, Clause 2, Article 118 of the Labor Code 2019, internal labor regulations must specify prohibited conduct and corresponding disciplinary measures, including dismissal. In addition, Clause 1, Article 118 requires enterprises employing ten (10) or more employees to issue written internal labor regulations.

Moreover, disciplinary proceedings must comply with the principles and processes prescribed under Article 122 of the Labor Code.

V. Why should you seek legal advice from NPLaw regarding the development of the dismissal process?

When developing or implementing a dismissal process, enterprises may face legal risks such as procedural defects, insufficient evidence, unlawful internal regulations, or dismissal decisions being declared invalid.

With extensive experience in labor law, NPLaw supports enterprises in reviewing internal labor regulations, designing dismissal processes tailored to specific operational needs, advising on practical situations, and representing clients in dispute resolution. Legal support helps enterprises ensure compliance, minimize legal exposure, and improve human resource governance efficiency.

The above information is for reference purposes only. Should you require advice tailored to your specific circumstances, please contact NPLaw for direct consultation.