26 March 2024

Terminating Labor Contracts With Union Officials

When the labor contract expires and the enterprise has no need to sign another contract, the labor relationship between
Vietnam Employment and HR
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When the labor contract expires and the enterprise has no need to sign another contract, the labor relationship between the parties also ends. However, in case the employee is a union official, the termination of the labor contract will be subject to special regulations that the enterprise needs to pay attention to avoid violations leading to liability for compensation for damages to the employees.

  1. Is it possible to terminate labor contracts with union officials?

An officer of the grassroots trade union or chairman of the union is a person in charge of one role or simultaneously an employee following labor law and a union officer following the provisions of the union's charter and law. An individual who is in charge of an enterprise's officer of a trade union, firstly based on the establishing of a labor contract. Thus, when this basis no longer exists, precisely the labor contract expires, will employees' role as union officials end?

To answer this question, let's review the legal regulations as well as Precedents when resolving labor disputes. Accordingly, the labor law has stipulated that it is mandatory for enterprises to extend the signed labor contract until the end of the term for employees who are members of the leadership board of the employee's representative organization at the facility that are in the term and the labor contract expires.

Thus, when the labor contract expires and the employee is also a union official, the labor contract will continue to be valid until the end of the term that the employee is holding in the grassroots trade union at the enterprise. However, enterprises should note that, in case the enterprise does not intend to extend the labor contract when it expires with a new labor contract or appendix to the labor contract, enterprises need to give specific notice to employees before the contract expires. Accordingly, the notice will clearly state that the labor contract will terminate on its expiration and the parties will not sign a new labor contract, and simultaneously notify the employee that the parties will sign an appendix to the contract only for the purpose of extending the labor contract until the end of the union official's term. Based on this notice, the parties establish an appendix to the labor contract to bind each party's responsibilities, as well as record the will of the parties regarding the labor relationship.

  1. Disputes related to union officials from the perspective of the Court

Precedent No. 70/2023/AL on termination of labor contracts for employees who are part-time union officials is one of the bases for enterprises as well as labor management agencies to consider applying when there is a labor dispute.

According to the Precedent, the employee and the employer signed a definite-term labor contract. During the contract term, the employee is elected Chairman of the Executive Committee of Grassroots Trade Union, but his candidacy and election as Chairman of the Executive Committee of Grassroots Trade Union is invalid. When the contract expires, the employer issues a decision to terminate the labor contract with the employee.

The employee requested the Court of First Instance to force the employer to take him/her back to work, pay salaries and compensation. The Court of First Instance found that the employer's termination of the labor contract was in accordance with regulations. Therefore, the Court did not accept the employee's lawsuit claim.

The Court of Appeals accepted the employee's appeal request, revised the entire first-instance judgment and forced the company to pay the employee's salary for the period of time they were not allowed to work. However, at the trial of cassation, the Trial Panel reviewed and concluded that the Court of First Instance's refusal to accept the employee's lawsuit claim was well-founded and simultaneously cancelled the appeal judgment.

Quoting the content of the Precedent as follows:

" [3] On February 24, 2016, when the Provisional Executive Committee of Trade Union held the Congress, Mr. A's labor contract was only valid for 1 month, but Mr. A and the union of the industrial park still offered Mr. A being the list to be elected to the Executive Committee of the Grassroots Trade Union is not appropriate... Therefore, the fact that Mr. A was elected Chairman of Company K's Executive Committee of the Grassroots Trade Union for the 2016-2021 term and was recognized by the Trade Union of Industrial Park according to Decision No. 138/QĐCN-CDKCN dated October 27, 2016, is invalid regarding standards of candidates and elected candidates.

[4] after the expiration of the labor contract extension, Company K issued Decision No. 05/2016/QD /QDNV-KD dated November 25, 2016, to terminate the labor contract with Mr. A in accordance with the provisions of Clause 1, Article 36 of the Labor Code. Therefore, Mr. A's lawsuit claiming that company K issued a decision to terminate the labor contract with him illegally has no basis for acceptance. It was well founded that the Court of First Instance did not accept Mr. A's lawsuit claim. The Court of Appeal revised the first-instance judgment and accepted Mr. A's lawsuit claim, which is not in accordance with the law."

Thus, it is important for enterprises to strictly manage the labor relationship between enterprises and employees who are also union officials. In fact, many enterprises have controlled the risks of labor disputes quite effectively, and the enterprise mentioned in the above Precedent is a typical example. Accordingly, these enterprises usually focus on creating procedures, compliance warning systems, and cross-control mechanisms. This thorough understanding helps enterprises spend less time and money handling disputes.

Time of writing: 30/10/2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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