Unilateral termination of the labor contract and labor discipline can be considered as one of the “courses of action” to adjust labor relations. Unilateral termination of the labor contract will result in the case of terminating the existing labor relationship between the employee and the employer. As for the labor discipline, when the employee is subjected to dismissal that the labor relationship is required to be terminated. For other forms of labor discipline such as reprimand, extending the probationary period for a maximum of six months, demotion, the employee still has the right to continue working, receive wages, and enjoy other benefits as stipulated in the labor contract and internal labor regulations. However, the choice of the appropriate disciplinary measure will depend on each specific case. It is necessary and essential to understand the regulations, requirements and conditions for the selection of measure options.
| Criterion | Unilateral termination of the contract | Labor discipline | |
| Legal basis
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Both the employee and the employer have the right to unilaterally terminate the labor contract. Accordingly:
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The employer applies one of the labor discipline stipulated by law to handle the violation of the employee. In order to handle labor discipline, the employer needs to fulfill the following conditions: As for the statute of limitations for labor discipline (Article 123 of the Labor Code 2019). The employer must prove the employee’s fault (Article 122.1.a of the Labor Code 2019). Disciplinary action must be specified in the internal labor regulations or agreed upon in the signed labor contract or labor laws (Article 127.3 of the Labor Code 2019).
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| Obligations to be performed
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Employee | Employer | The procedures for conducting the meeting for labor discipline
Step 1: Preparing a record of the violation
The employer collects evidence to prove the violation, prepares a record of the violation, and notifies the representative organization of the employee at the workplace where the employee is a member.
Step 2: Notice of conducting the disciplinary hearing for labor discipline The invitation notice for the disciplinary meeting for labor discipline must be sent at least 05 working days prior to the scheduled date of the meeting. The content of the invitation notice must include the following information:
Step 3: Conduct the meeting with the required participants as prescribed
Step 4: Issue the decision on labor disciplinary The authorized person responsible for labor disciplinary measures action shall issue the decision on labor disciplinary action and send it to the required participants of the meeting. The decision on labor disciplinary action must be issued within the statute of limitations of the labor disciplinary process or the extended time limit of the labor disciplinary process.
Other issues to consider during the process of labor discipline are: 1. The individuals who are not subject to disciplinary action for a certain period of time are:
2. Not applying prohibited behaviors as specified in Article 127 of the Labor Code 2019:
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a. Performing the obligation of prior notification to the employer. Specifically: i. At least 45 days if working under an indefinite-term labor contract; ii. At least 30 days if working under a fixed-term labor contract with a duration ranging from 12 months to 36 months; iii. At least 3 working days if working under a fixed-term labor contract with a duration of less than 12 months; iv. For certain industries, occupations, and specialized jobs, the advance notice period is implemented according to the regulations of the Government. b. In cases where the obligation of prior notification is not required: when one of the 07 cases specified in Article 35.2 of the Labor Code 2019 occurs. |
a. Performing the obligation of prior notification to the employee. Specifically: i. Unilateral termination of the labor contract in cases specified in points a, b, c, d, and g clause 1, Article 36 of the Labor Code: + At least 45 days for indefinite-term labor contract; + At lease 30 days for a fixed-term labor contract with a duration ranging from 12 months to 36 months; + At least 03 working days for a fixed-term labor contract with a duration of less than 12 months and for cases specified in point b, Article 36.1 of the Labor Code 2019. + For certain industries, occupations, and specialized jobs, the advance notice period is implemented according to the regulations of the Government. ii. In cases where the obligation of prior notification is not required: + When unilaterally terminating the labor contract as stipulated in points d and e of Article 36.1 of the Labor Code 2019. b. In cases where the right to unilaterally terminate the labor contract is not allowed: when one of the 3 cases specified in Article 37 of the Labor Code 2019 occurs. |
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Legal consequences of non-compliance |
1. Disqualification from receiving severance benefits. 2. Compensation must be provided to the employer. a. Half a month’s salary according to the labor contract; and b. An amount equivalent to the salary according to the labor contract for the days without prior notice. 3. Reimburse the training fees to the employer as stipulated in Article 62 of the Labor Code 2019. |
Case 1: If the employer accepts the employee’s return to work under the previously signed labor contract, the employer must pay the employee the following amounts:
Case 2: If the employee does not wish to continue working, the employer must pay the employee the following amounts: 1. The amounts mentioned in Case 2. Severance allowance. Case 3: If the employer does not wish to rehire the employee and the employee agrees, the employer must pay the employee the following amounts: 1. The amounts mentioned in Case 2. Severance allowance. 3. A sum of money equal to at least 2 months’ wages as stipulated in the labor contract. |
The same the case of unilaterally terminating the contract illegally. |
From the analysis above, although the legal consequences of unilaterally terminating the contract illegally and labor disciplinary legally may be similar, they fundamentally differ in nature.
- The unilateral termination of the labor contract is the right of the parties within the labor contract, and both the employee and the employer must comply with (i) the notice period and (ii) the cases in which the right to unilateral termination of the labor contract is applicable (applicable to the employer).
- Employers have the right to discipline employees to exercise their management, administration and supervision rights for employees. Therefore, when carrying out disciplinary measures, the employer needs to (i) provide grounds to substantiate the employee’s violation and (ii) follow the prescribed procedures as stipulated by law.
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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