NPLaw has observed that, in order to ensure a smooth employment separation process while maximizing the protection of financial interests and professional reputation, the involvement of a professional legal advisor is often the most effective solution. The following article provides an in-depth analysis of the role of lawyers in negotiating employment separation agreements, enabling all parties to gain a comprehensive and accurate understanding of such important legal matters.

I. The level of professionalism in employment separation negotiations within enterprises 

Vietnam’s labor market is currently experiencing a significant change in human resource management practices. Rather than relying on unilateral termination measures that may easily result in legal disputes, large corporations and multinational enterprises increasingly prioritize negotiated separation arrangements. Nevertheless, the level of professionalism in internal negotiation processes remains inconsistent, often leading to situations involving coercion or a lack of transparency regarding severance benefits and compensation packages.

Due to the misunderstanding of legal knowledge of employers and employees, the involvement of a lawyer specializing in employment separation negotiations has become an inevitable trend. Legal professionals not only serve as intermediaries to ease disputes but also establish a secure legal framework, accurately assess financial entitlements based on labor law regulations, and assist both parties in reaching a mutually acceptable resolution in a civilized and lawful manner.

II. Concept of lawyers in negotiating employment separation agreements

1. What is a lawyer in negotiating an employment separation agreement?

At present, labor legislation does not provide a specific definition of “a lawyer in negotiating an employment separation agreement”. However, according to Clause 4, Article 5 of the Law on Lawyers 2006 (as amended and supplemented in 2012), lawyers are entitled to provide legal consultancy services, act as representatives outside litigation, and protect the lawful rights and interests of their clients.

Accordingly, a lawyer for employment separation negotiations may be understood as a licensed legal professional engaged or authorized by either party (the employee or the employer) to directly participate in negotiations regarding the terms and conditions of employment termination. Their role is to utilize legal expertise to assess risks, determine severance and compensation entitlements, and draft an Employment Termination Agreement that comply with laws.

2. Which party may a lawyer represent during employment separation negotiations?

Pursuant to Articles 137 and 138 of the Civil Code 2015 concerning representation by authorization for legal entities and authorization arrangements, a lawyer may represent either party in an employment relationship, provided that no conflict of interest exists. A lawyer may be authorized by an employer to develop a legally secure severance package as part of workforce reduction measures, or by an employee to negotiate for rights relating to severance benefits, unpaid wages, or compensation for loss of employment opportunities.

In conclusion, a lawyer’s representative capacity is entirely flexible and depends on the legal service agreement executed with the client, provided that the principles of independence, honesty, and avoidance of conflicts of interest are strictly observed. 

III. Legal regulations relating to lawyers in employment separation negotiations

1. How is an employment separation agreement regulated under the Labor Code 2019?

Clause 3 Article 34 of the Labor Code 2019 recognizes “an employment separation agreement between the parties” as one of the lawful grounds for ending an employment relationship. The law respects the parties’ freedom to negotiate based on the principles of voluntariness, goodwill, and equality as stipulated in Clause 1 Article 15 of the Labor Code 2019.

Such agreements should ideally be documented in writing and clearly specify the termination date, financial payments, and handover obligations to serve as evidence in future disputes.

In summary, employment separation agreements constitute a flexible and lawful legal mechanism protected under labor law, provided that the parties reach a voluntary, transparent agreement that does not contravene legal provisions.

2. Rights and obligations of the parties during negotiating employment separation agreements

Pursuant to Article 48 of the Labor Code 2019, upon employment separation, all payments and related obligations must be completed within 14 working days from the termination date. In exceptional circumstances, such a period may be extended but must not exceed 30 days.

- For the parties’s rights: 

  • Regarding employees’ rights, they are entitled to request full payment of salaries, bonuses, unused annual leave entitlements, severance allowances (if eligible under Article 46 of the Labor Code 2019), and other benefits provided under agreements or company regulations. Employees are also entitled to require employers to complete social insurance procedures, certify unemployment insurance contribution periods, and return original personal documents retained by the employer. During negotiations, employees may refuse to execute an agreement if its contents adversely affect their lawful interests and may engage legal counsel to support the negotiation process.
  • Regarding employers’ rights, enterprises may require their employees to fully complete the handover of work, records, assets, data, and confidential information before departure. Enterprises may also negotiate the separation date, payment arrangements, confidentiality obligations, non-competition clauses, and compensation responsibilities for actual losses incurred in accordance with applicable law.

- For the parties’s obligations: 

  • As for obligations, employers must complete procedures for certifying social insurance and unemployment insurance contribution periods and return relevant documents to employees under Clause 3 Article 48 of the Labor Code 2019. In the case of delayed payment of employment-related entitlements, employers may be subject to administrative fines under Clause 2 Article 12 of Decree No. 12/2022/ND-CP, ranging from 1,000,000 VND to 20,000,000 VND for individual violators, while organizations may be fined up to twice such amounts depending on the number of affected employees.
  • Employees are obligated to hand over work, assets, records, and documents in a timely manner and comply with confidentiality commitments stipulated in employment contracts or other agreements. If employees voluntarily leave employment in a manner causing damage or unlawfully violate notice obligations, they may take compensation liabilities under Article 40 of the Labor Code 2019.

3. In which circumstances should a lawyer participate in employment separation negotiations?

Lawyers should be engaged in complex situations such as:

  • Workforce reductions involving senior executives (C-level personnel), where substantial compensation packages, Non-Disclosure Agreements (NDAs), and Non-Compete Agreements (NCAs) are involved;
  • Situations where there are indications that the employer is abusing its authority, exerting undue pressure, or coercing employees into submitting resignation letters. The involvement of a lawyer in employment separation negotiations can restore the balance of bargaining power, prevent unlawful practices, and ensure that negotiations proceed within the proper legal framework;
  • Corporate restructuring projects involving large-scale workforce reductions.

Furthermore, where substantial severance payments are involved or where cross-border and foreign elements exist, retaining legal counsel can significantly reduce the risk of prolonged and costly disputes.

4. What legal requirements must an authorized lawyer comply with when representing a party in employment separation negotiations?

Pursuant to Article 138 and Clause 1 Article 141 of the Civil Code 2015, an authorized representative (including a lawyer) may only establish and perform civil or labor-related transactions within the scope of authority specified in the Power of Attorney or Authorization Agreement.

A lawyer negotiating an employment separation agreement must strictly adhere to the client’s instructions and may not independently determine financial arrangements without the client’s prior approval. Any agreement executed by a lawyer on behalf of a client shall only be legally binding upon the client if such actions fall within the scope of authority expressly granted under a duly notarized or lawfully authenticated written authorization.

IV. Questions regarding lawyers for employment separation negotiations

1. Are the parties required to engage a lawyer when negotiating an employment separation agreement?

At present, there is no legal provision mandating the participation of a lawyer in the process of negotiating and executing an agreement for the termination of an employment contract. According to the principles of freedom of contract and voluntary agreement set out in Clause 2 Article 3 of the Civil Code 2015 and Article 15 of the Labor Code 2019, employees and employers are fully entitled to conduct negotiations and execute agreements on their own.

Engaging a lawyer is merely an option available to the parties for the purpose of enhancing legal certainty and maximizing their interests; it is not a mandatory condition for the validity of an employment separation agreement. Accordingly, the parties should independently assess the complexity of the matter when deciding whether legal counsel is necessary.

2. How are legal fees for employment separation negotiations typically calculated?

With respect to legal fees, there are currently no statutory provisions prescribing a fixed fee schedule for legal consultation and out-of-court negotiation services. According to Article 55 of the Law on Lawyers 2006 (as amended and supplemented in 2012), legal fees are determined based on mutual agreement between the client and the legal practice organization, taking into account the complexity of the matter, the time required, and the results achieved. 

In practice, fees for lawyers handling employment separation negotiations are generally calculated under one of the following methods:

  • Fixed fees (charged on an hourly basis or as a package fee covering drafting services and participation in negotiation meetings); or
  • Success fees (where the lawyer receives an agreed percentage of the additional compensation, severance benefits, or financial entitlements obtained through the negotiation process).

3. What risks may employees face if they sign an employment separation agreement without legal representation?

The greatest risk is the loss of lawful financial entitlements due to insufficient knowledge of labor laws. According to Article 46 of the Labor Code 2019, employees who have worked continuously for at least 12 months are entitled to severance allowance, calculated at one-half month's salary for each year of service.

However, many employers incorporate unfavorable provisions into separation agreements, causing employees to inadvertently waive their entitlement to severance allowance, payment for unused annual leave, or other legitimate benefits, or to accept unreasonable penalty clauses. Once an employee has voluntarily executed an agreement while possessing full legal capacity, it may be extremely difficult to subsequently challenge the agreement or recover forfeited rights through legal proceedings.

The involvement of a lawyer can help identify and eliminate such legal disputes before the employee signs the agreement.

4. What specific services can a lawyer provide during employment separation negotiations?

A lawyer negotiating employment separation agreements typically proceed with a comprehensive legal service package, including:

  • Assessing the legality of the employment separation process and accurately calculating salary payments, severance allowance, and job-loss allowance in accordance with Articles 46 and 47 of the Labor Code 2019;
  • Representing the client during direct negotiation and meetings with the Board of Directors or Human Resources Department;
  • Drafting an employment separation agreement containing robust confidentiality and non-competition provisions;
  • Monitoring the employer’s payment schedule to ensure full compliance with all agreed commitments.

5. Is it possible to change lawyers during the employment separation negotiation process?

Pursuant to Article 140 of the Civil Code 2015 concerning the duration of representation, clients are fully entitled to unilaterally terminate an authorization agreement, legal service contract, or power of attorney granted to a lawyer at any time if they are dissatisfied with the proposed negotiation strategy.

Any change of lawyer in connection with employment separation negotiations should be documented in writing and promptly notified to the other party (whether the employer or the employee) in order to terminate the representative status of the former lawyer and recognize the authority of the newly appointed lawyer.

V. Why should you seek legal advice from NPLaw regarding employment separation negotiations?

NPLaw takes pride in its team of highly experienced legal professionals and lawyers specializing in employment separation negotiations, with extensive practical expertise in labor law matters.

We are committed to delivering sharp risk assessments, strategic and flexible negotiation advice, and direct representation of clients at the negotiation table to safeguard their lawful rights and interests to the fullest extent possible.

Guided by the principles of dedication, confidentiality, and strict compliance with the law, NPLaw strives to ensure that employment termination processes are conducted efficiently, securely, and in a manner that maximizes our clients’ financial benefits.

The information provided above is for reference purposes only. Should you require detailed advice regarding a specific matter, please contact NPLaw for immediate legal assistance.