[Q&A] Applying Labor discipline: Some key issues
During the enterprise’s operation, there is often a part of employees that do not comply with the enterprise’s labor internal regulations rules. For the purpose of creating favorable conditions for employers in managing the labor source and maintaining stability in enterprise business activities, current labor legislation allows employers to issue labor internal regulations and apply sanctions to their employees for violations of regulations. This is one of the fundamental rights of the employer in the labor relation. However, the application of these rights must be within legal framework and in case it contravenes the legal framework, the application of discipline on employees will be considered illegal.
Q: What labor disciplinary measures can enterprises apply as per the current law?
A: According to the current law, labor discipline is the regulations on compliance in respect of time, technology, production, and business management promulgated by the employers in the labor internal regulations and prescribed by law[1]. When an employee violates the labor discipline, the employer may apply one of the following four forms of labor discipline:
- Reprimand: This is the lightest discipline measure. The specific acts will be prescribed in the internal labor regulations.
- Deferment of increment for 6 months: Depending on the violation, the employee may be subject to the deferment of the regular salary increase period compared to the time limit as agreed upon by the parties in the labor contract. However, the extension will not exceed six months.
- Demotion: Normally, only employees in the specific position are applied to this discipline. The specific acts that will be applied to this measure shall be prescribed in the internal labor regulations; and
- Dismissal: This is the severest disciplines for employees, so Article 125 of the Labor Code 2019 provides specific acts that will be applied to this measure.
Q: When applying the labor discipline to the employee who commits violations, do enterprises have to follow any principles as prescribed by law or they can freely apply the labor discipline?
A: The Labor Code 2019 promulgated fundamental principles when applying the labor discipline, specifically: (i) The employers are able to prove the employee’s fault; (ii) The process is participated in by the representative organization of employees to which the employee is a member; (iii) The employee is physically present and has the right to defend him/herself, request a lawyer or the representative organization of employees to defend him/her; if the employee is under 15 years of age, his/her parent or individual legal representative must present; (iv) disciplinary process is recorded in writing. In addition, when applying discipline to employees, employers are not allowed to impose more than one disciplinary measure for one violation of internal labor regulations. Where an employee commits multiple violations of internal labor regulations, he/she shall be subjected to the heaviest disciplinary measure for the most serious violation[2].
In fact, not all employees who commit labor violations are subject to labor discipline[3]. An employer does not have the right to take disciplinary action against an employee in the following circumstances: (i) The employee is taking leave on account of illness or convalescence, or any type of leave with the employer’s consent; (ii) The employee is being held temporarily in custody or detention; (iii) The employee is awaiting the results of the competent authorities to investigate, verify and conclude on the violations of theft, embezzlement, disclosure of business secrets, infringement of intellectual property rights…; (iv) The employee is pregnant, on maternal leave or raising a child under 12 months of age; (v) The employee violates the labor discipline when suffering from mental illness or another disease that results in the worker losing self-awareness or the ability to control their actions.
Q: What legal issues do you think the employer should note in order for the labor discipline to be legal?
A: When applying labor discipline to the employee, the employers need to be extremely careful to avoid this being considered illegal. There are some legal issues that the employer should note in order to the labor discipline to be legal, avoiding the possibility of being determined by the court as illegal when there is a dispute arising between the employee and the employer.
Firstly, there shall be a labor contract between the employer and the employee in accordance with the Labor Code 2019. Because labor discipline is governed by the Labor Code 2019, it only applies to labor relations under the labor contract. Some other cases, such as the relationship under a working contract between an employer who is a public non-business unit and a public employee, will be governed by the Law on Public Employees, so disciplinary action is also determined under this law.
Secondly, the employee commits violations of labor discipline, and such behaviors must be specified in the internal labor regulations along with the form of labor discipline corresponding to the violation. During the working process, employees may have many violations, but not all of them are violations of labor discipline. According to Clause 3, Article 127 of the Labor Code, the employer will only have the right to apply the labor discipline for the acts specified in the internal labor regulations or for offenses that are determined by the labor law as violations of labor discipline. The current labor law forbids the application of labor discipline to employees whose infractions are not covered by the Internal Labor Regulations, are not prescribed in the signed labor contract, or are not regulated by the law at all.
Thirdly, the disciplinary action must be complied with the labor discipline measures prescribed under Article 122 of the Labor Code 2019 and must be grounded on the law and registered labor internal regulations as well as provided evidence when applying forms of labor discipline.
Fourthly, violations of labor discipline shall still have a statute of time limit for taking disciplinary and the employer must issue a decision on applying the labor discipline during this time. The time limit for taking disciplinary measures against a violation is 06 months from the date of the occurrence of the violation or 12 months in case the violations directly relate to finance, assets, and disclosure of technological or business secrets or 60 days in some particular case according to the Labor Code 2019.
Fifthly, the decision for applying the labor discipline must be issued and signed in accordance with the competence. According to Clause 3, Article 18 of the 2019 Labor Code, the person who has the competence to take disciplinary measures is competent to enter into a labor contract on behalf of the employer or another person specified in the internal labor regulations.
Sixth, the application of the labor discipline shall be carried out in accordance with the order prescribed by law, specifically[4]:
- Step 1: Prepare a violation record when discovering that the employee has committed violations of labor discipline and inform the representative organization or the individual legal representative of the employee under the age of 15. In case the employer detects a violation of labor discipline after the violation has occurred, it shall collect evidence to prove the fault of the employee.
- Step 2: The employer establishes the Labor Disciplinary Committee and sends the Notice of/Invitation to the disciplinary hearing to the participants at least five (05) working days in advance before the date of the meeting and makes sure that the participants receive the Notice/Invitation to the meeting before the hearing takes place.
- Step 3: Confirm the time and place of the disciplinary hearing. After receiving the notify, the representative organization of the employee and the employee shall confirm the time and place of the disciplinary hearing with the employer. In case it is not possible to attend the hearing according to the notice, the employee and the employer shall agree to change the time and place of the disciplinary hearing. In case no agreement is reached, the employer shall decide the time and place of the disciplinary hearing.
- Step 4: Conducting the disciplinary hearing according to the notification. If the employee or the internal trade union representative does not confirm attendance at the meeting or absent at the meeting, the employer still conducts the disciplinary hearing. At this hearing, the employer must clearly determine the violation of labor discipline and prove the fault of the employee.
- Step 5: Drafting minutes of the disciplinary hearing, ratify the minutes and collecting signatures of hearing participants, especially the signatures of employees and internal trade union representatives. In case a person refuses to sign the minutes, the minutes taker shall specify his/her full name and reasons for refusal in the minutes.
- Step 6: Issuing a disciplinary decision and sending it to the mandatory participants. When issuing a disciplinary decision, the employer must pay attention to the competence of the person who signed the decision.
Q: So, in case of the enterprise applies illegal labor discipline, what legal consequences may occur?
A: Legal consequences of illegal labor discipline are: (i) The employer must accept the employee back to work under the signed labor contract and must pay salary, social insurance and health insurance for the days the employee is not allowed to work with at least two (02) month salary under the labor contract (“Compensation”); (ii) If employee does not want to continue working, in addition to the Compensation, the employer must also pay a severance allowance; (iii) If the employer does not want to continue to work with the employee and the employee agrees, in addition to the Compensation, the employer must pay an additional amount of money to the employee according to the agreement between the two parties but must be equal to at least two-month salary under the signed labor contract; (iv) If the employee no longer has the position or job specified in the labor contract; however, the employee still wants to work for the employer, apart from the Compensation amount, the two parties shall negotiate to amend and supplement the labor contract[5].
With the above remedies, when conducting labor disciplinary, the employer must be very careful to avoid suffering economic losses in the event of taking labor discipline illegally. Especially in case the labor contract of the employee who was disciplined is indefinite-term, or the employee holds a senior position in the enterprise, the economic loss to the company can be huge.
[1] Article 117 of the Labor Code 2019
[2] Article 122 of Labor Code 2019
[3] Article 122 of Labor Code 2019
[4] Article 70 of Decree 145/2020/ND-CP
[5] Article 41 of Labor Code 2019 and Clause 2, Article 73 of Decree 145/2020/ND-CP
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