Legal provisions on unlawful termination of labor contracts

The current situation regarding lawsuits over unlawful termination of labor contracts and the legal provisions governing such lawsuits are of significant concern. Clients may contact NPLaw for further detailed legal consultation on such complicated matters.

I. Current situation regarding lawsuits over unlawful termination of labor contracts

Termination of a labor contract is one of the common issues arising in labor relations when one of the parties no longer wishes to continue the employment relationship.

However, unlawful termination of labor contracts is significantly increasing, affecting the rights and interests of both parties. So, how does labor law regulate such issues? Let us explore the matter with NPLaw through the following content.

II. Legal provisions on lawsuits over unlawful termination of labor contracts

1. What is a lawsuit over unlawful termination of a labor contract?

Current labor law does not specifically define lawsuits over unlawful termination of labor contracts. However, Article 39 of the Labor Code 2019 stipulates that unilateral termination of a labor contract in violation of the law constitutes unlawful termination if it fails to comply with Articles 35, 36, and 37 of the Code. Specifically, it includes cases where:

• The employee unilaterally terminates the labor contract without giving prior notice within the statutory period to the employer, except for cases where no prior notice is required;
• The employer unilaterally terminates the labor contract outside the legally permissible grounds, or fails to provide statutory advance notice;
• The employer exercises unilateral termination in cases where the law prohibits them. 

Additionally, Article 186 of the Civil Procedure Code 2015 provides that individuals, organizations, and agencies have the right to initiate lawsuits before a competent court, either by themselves or through a lawful representative, or to request protection of their lawful rights and interests.

Accordingly, lawsuits over unlawful termination of labor contracts refer to individuals, organizations, or their lawful representatives requesting a competent authority to resolve the dispute in accordance with procedural law, in order to protect their lawful rights and interests arising from the unlawful termination of the labor contract.

2. Who has the right to initiate lawsuits over unlawful termination of labor contracts?

Pursuant to Article 186 of the Civil Procedure Code 2015 , agencies, organizations, and individuals are entitled to bring lawsuits before competent courts, either directly or through lawful representatives, to protect their lawful rights and interests.

Thus, in the above case, both employees and employers have the right to initiate lawsuits over unlawful termination if the other unilaterally terminates the contract unlawfully.

3. Which authorities are competent to resolve lawsuits over unlawful termination of labor contracts?

According to Articles 187 and 188 of the Labor Code 2019 , competent authorities to resolve disputes over unlawful termination of labor contracts include:

• Labor conciliators;
• Labor arbitration councils;
• People’s Courts.

Accordingly, disputes or lawsuits over unlawful termination must first be resolved through labor conciliators before being referred to arbitration councils or the courts, except for labor disputes exempted from mandatory conciliation procedures.

III. Questions regarding lawsuits over unlawful termination of labor contracts

1. What causes lawsuits over unlawful termination of labor contracts?

Pursuant to Article 34 of the Labor Code 2019, lawsuits typically arise when the employer unilaterally terminates a labor contract against laws, or when the employee is dismissed without due process, or outside the lawful grounds for dismissal under Article 125 of the Code, or in violation of statutory provisions.

For example, under Articles 35, 36, and 37 of the Code, lawsuits may arise where:

• The employee unilaterally terminates the contract without statutory advance notice to the employer and not in the legally exempted cases;
• The employer unilaterally terminates the contract outside permissible cases, or fails to provide statutory advance notice;
• The employer terminates in cases expressly prohibited by law.

2. What is the statute of limitations for lawsuits over unlawful termination?

Under Clause 3, Article 190 of the Labor Code 2019, the statute of limitations for requesting the Court to resolve individual labor disputes is 01 year from the date on which the disputing party discovers the act that they believe has infringed upon their lawful rights and interests.

Thus, the limitation period for initiating lawsuits over unlawful termination is one year from the date of discovery of the alleged violation.

3. What should be noted when initiating lawsuits over unlawful termination?

When initiating such lawsuits, the following points must be noted:

• Careful review of the labor contract and statutory provisions: Ensuring clarity termination clauses, notice periods, and grounds for unilateral termination by either party.
• Collection of sufficient evidence: Including termination notices, related documents, meeting minutes, proof of improper job arrangements, unpaid wages, etc.
• Selection of the competent authority: Filing lawsuits with the appropriate labor dispute resolution agencies. 
• Preparation of complete dossiers: Including petitions, copies of labor contracts, supporting evidence, and other documents required by the competent authority.
• Legal assistance: Consultation with lawyers is advisable to ensure proper legal procedures and enhance litigation effectiveness.

4. What compensation is the employee entitled to in cases of unlawful termination?

Under Article 41 of the Labor Code 2019, if the employer unlawfully unilaterally terminates a labor contract, the employee is entitled to:

• Case 1: Employer accepts reinstatement
  + Payment of wages, social insurance, health insurance, and unemployment insurance for the period the employee was not allowed to work;
  + An additional compensation of at least two months’ wages under the labor contract;
  + Compensation equivalent to wages for the days of insufficient advance notice.
• Case 2: Employee does not wish to return to work
  + Entitlements as in Case 1;
  + Payment of severance allowance according to law.
• Case 3: Employer does not wish to reinstate and employee consents
  + Entitlements as in Case 1;
  + An additional compensation mutually agreed upon by both parties, but at least equivalent to two months’ wages under the contract.

Note: In Cases 2 and 3, the employee is also entitled to all outstanding benefits due (e.g., unpaid wages, bonuses, or other allowances) under Clause 1, Article 48 of the Labor Code 2019.

5. May the employer file a counterclaim in lawsuits over unlawful termination?

According to Article 200 of the Civil Procedure Code 2015, along with submitting written opinions to the court regarding the plaintiff’s claims, the defendant has the right to file a counterclaim against the plaintiff or an independent claimant. The defendant may submit such counterclaims prior to the hearing on submission, access, disclosure of evidence, and conciliation.

Thus, the employer, as the defendant in a lawsuit over unlawful termination, has the right to lodge a counterclaim.

IV. Legal advisory services on lawsuits over unlawful termination of labor contracts

The foregoing provides clarification on issues relating to lawsuits over unlawful termination of labor contracts, as prepared by NPLaw. Should readers have further inquiries requiring legal guidance, please contact NPLaw for assistance.