WHEN IS AN EMPLOYER LEGALLY REQUIRED TO PAY COMPENSATION IN LABOR DISPUTES?

A Practical Perspective from Lawyer Nguyen Thanh Trung

In labor disputes, many employers assume that once an employee files a complaint, compensation will inevitably follow.

This is not necessarily the case.

An employer is only required to pay compensation where there is a clear legal basis establishing that the termination of employment or the disciplinary action was unlawful.

The issue does not lie in pressure or allegations. It lies in documentation and procedural compliance.

Courts do not evaluate managerial sentiment. Courts evaluate legal grounds and evidence.

1. Not Every Period of Non-Working Time Requires Salary Payment

Under Article 99 of the 2019 Labor Code of Vietnam, salary payment during work suspension depends on the specific cause of suspension.

Where the suspension is not attributable to the employer’s fault, salary obligations are determined in accordance with the relevant statutory provisions.

In practice, employees may claim full salary for periods during which no work was performed. However, upon review of the underlying cause and supporting documentation, it may be established that the obligation to compensate does not arise on the employer’s side.

The determining factor is not the demand itself, but the applicable legal grounds.

2. Unilateral Termination: Procedural Errors Result in Legal Disadvantage

Pursuant to Articles 36 and 41 of the 2019 Labor Code, if an employer unlawfully unilaterally terminates an employment contract, the employer may be required to: • Reinstate the employee; • Pay salary and social insurance contributions for the period during which the employee was not permitted to work; • Compensate the employee with at least two months’ contractual salary.

However, in many practical cases, the managerial reasons for termination may appear reasonable. The legal risk arises when: • There is no documented performance evaluation; • No formal record of violation exists; • Disciplinary procedures are not conducted in compliance with statutory requirements; • Statutory notice periods are not properly observed.

Where procedure is flawed, the employer loses legal advantage.

In labor disputes, employers often lose not because they lack substantive reasons, but because they cannot demonstrate compliance with proper procedure.

3. Three Critical Control Points Before Making a Decision

First, verify the legal basis. Any decision concerning termination or disciplinary action must be grounded in the Labor Code and applicable regulations.

Second, review internal documentation. Labor regulations, collective labor agreements, and performance assessment systems must be legally valid and properly documented. Deficiencies create legal exposure.

Third, assess legal risk before taking action. A rapid managerial decision may resolve short-term operational issues, but without legal assessment, potential compensation costs may be significantly higher.

4. Recommendations for Employers

To minimize the risk of labor disputes, employers should: • Establish and properly register internal labor regulations in accordance with statutory requirements; • Implement documented performance evaluation systems; • Prepare formal written records when addressing employee violations; • Seek legal advice before making termination decisions in sensitive cases; • Periodically review employment contracts to ensure compliance with current legal provisions.

Proper prevention is more effective than post-dispute remediation.

Professional Position

Not every compensation claim has a legal basis. However, every managerial decision must be subject to legal control.

Guided by the principle:

Correct in Law – Practical Solutions – Steadfast Protection

Lawyer Nguyen Thanh Trung approaches labor disputes through comprehensive review of documentation, legal grounds, and appropriate strategic assessment.

Lawful rights and interests can only be protected when exercised in accordance with the law.