Termination of an employment contract due to organizational restructuring carries significant legal risks for employers. In the context of restructuring, streamlining the organizational system, or applying new technologies, employers must strictly comply with the procedures prescribed by law to avoid potential disputes.This article summarizes 5 key considerations to help businesses carry out employment termination in a lawful, transparent, and safe manner, including: demonstrating the basis for organizational restructuring, developing a labor utilization plan, prioritizing retraining, consulting with the employee representative organization, and providing timely notice. These are mandatory requirements that businesses must pay close attention to during the personnel restructuring process.

1. Enterprises must retain documentation evidencing organizational restructuring 

Current laws do not provide specific guidelines or definitions as to what constitutes a change in organizational structure. As a result, the application of restructuring as a legal basis for terminating labor contracts largely depends on each enterprise. 

To minimize legal risks in the event of disputes arising from such terminations, enterprises should issue and retain documentation that clearly demonstrates the implementation of organizational restructuring. Specifically, companies should issue internal documents such as restructuring decisions, workforce reallocation plans, and official notices regarding changes to the organizational structure. 

2. Issuing a labor utilization plan 

In cases where changes in organizational structure affect the employment of many employees, the employer is required to develop and implement a labor utilization plan.⁶ 

Prior to issuing this plan, the enterprise must consult with the grassroots-level employees’ representative organization. In practice, in many localities, if the enterprise does not have the grassroots-level employees’ representative organization (typically the grassroots trade union), it may need to seek written opinions from the directly superior trade union instead. The process of requesting support or opinion from the superior trade union may take considerable time to complete.⁷ For compliance purposes, the enterprise should retain written opinions provided by either the grassroots or superior trade union regarding the proposed labor utilization plan. 

Within 15 days from the date the plan is approved, the enterprise is required to publicly notify the affected employees. This may be done by posting the plan at the workplace or by sending it directly to employees via email. In addition, the enterprise should retain evidence of the disclosure, such as photographs of the public notice or email delivery confirmations, as proof of having fulfilled its legal obligations. 

3. Prioritizing employee retraining for continued employment 

Retraining employees to assign them to new positions is not a mandatory obligation for employers in cases of termination due to organizational restructuring.⁸ However, during the preparation phase for contract termination, if the enterprise has recruitment needs or plans to reassign staff to newly created or vacant positions, it must be able to demonstrate that the affected employees are not suitable for those roles. 

Specifically, the employer must provide clear and objective grounds for the inability to place the affected employees in available positions, particularly when such positions require specific qualifications, such as academic degrees, professional certificates, specialized experience, or foreign language proficiency. For instance, if a vacant accounting position requires a professional accounting certificate or prior experience in finance and accounting, and the affected employee does not meet these criteria, the company should retain documentation evidencing the objective and reasonable basis for exclusion. 

4. Consulting with the grassroots trade union on termination decisions 

The termination of employees in this context may only be carried out after consultation with the employee representative organization at the workplace (typically the grassroots trade union).⁹ In cases where the enterprise has not established a grassroots trade union, the enterprise may need to consult with the directly superior trade union, subject to local laws and prevailing administrative practices. The enterprise should also ensure that all relevant documents and written records evidencing the consultation process with the trade union concerning the proposed termination are properly retained. 

5. Notice of Termination 

The enterprise shall notify such dismissal 30 days in advance to the provincial-level People’s Committee where it is headquartered and the employees.¹⁰ Although current laws do not prescribe a specific form for such notice, to ensure transparency and demonstrate compliance with legal requirements, the company should issue the notice in writing and retain evidence that it was properly delivered within the required timeframe.

(6) Clause 3, Article 42 of the Labor Code 2019.

(7) https://apolatlegal.com/are-enterprises-required-to-establish-grassroots-trade-unions/, Accessed on June 20, 2025.

(8) Clause 3, Article 42 of the Labor Code 2019. 

(9) Clause 6, Article 42 of the Labor Code 2019. 

(10) Clause 6, Article 42 of the Labor Code 2019.

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

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Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Employment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.