Extended termination notice for senior employees in Viet Nam

In the landscape of human resources and corporate governance, the departure of senior personnel often poses significant operational risks. For high-level executives, the standard statutory notice periods, generally typically 30 to 45 days, are often insufficient to ensure a smooth handover of duties, safeguard sensitive data, and find a suitable replacement.  

Recognizing this, Vietnamese law provides a mechanism to extend the termination notice period up to 120 days for specific “Enterprise Manager” positions. However, applying this regulation requires a nuanced understanding of both the Labor Code and the Law on Enterprises. This article analyzes the legal basis for these extended notice periods and provides practical guidance for enterprises wishing to implement them effectively. 

1. Statutory Prior Notice Periods: The General Rule vs. Special Exceptions 

Under the Labor Code 2019 (Articles 35 and 36), the standard notice period for unilateral termination of a labor contract generally depends on the term of the contract: 

1. At least 45 days for indefinite-term labor contracts; 
2. At least 30 days for fixed-term labor contracts (12–36 months); and 
3. At least 03 working days for fixed-term contracts under 12 months. 

However, recognizing the complexity of certain roles, the Government issued Decree No. 145/2020/ND-CP, which stipulates longer notice periods for specific industries and jobs. These “special” categories include: 

1. Aircrew members and aviation maintenance technicians; 
2. Seafarers working on Vietnamese vessels abroad or foreign vessels; and 
3. Enterprise Managers as defined by the Law on Enterprises. 

For these specific positions, when either the employee or the employer unilaterally terminates the contract, the required notice period is significantly longer: 

1. At least 120 days for indefinite-term contracts or fixed-term contracts of 12 months or more; and 
2. At least one-quarter (1/4) of the contract term for contracts under 12 months. 

2. Defining “Enterprise Manager” in the Company Charter 

To apply the 120-day notice period to a senior employee, they must legally qualify as an “Enterprise Manager”. 

Vietnamese enterprise law defines enterprise managers broadly to cover core governance roles and any other managerial titles stated in the company charter. Specifically, under Article 4.24 of the Law on Enterprises 2020, enterprise managers include positions such as the company president/chairperson, members of the Members’ Council/Board of Directors, the director/general director (CEO), and other managerial positions expressly provided in the charter. 

This means an enterprise has the discretion to designate other key roles—such as an Executive Director, Production Director, or Administration Director, as “Enterprise Managers” within its Charter. Once designated, these roles fall under the scope of the 120-day notice period regulation. 

3. Limitations: The Chief Accountant Exception 

While companies have broad discretion to define managers, there are statutory limitations. A notable exclusion is the position of Chief Accountant. 

Under the Law on Accounting 2015 and Decree No. 174/2016/ND-CP, individuals holding managerial positions are generally prohibited from concurrently serving as accountants to prevent conflicts of interest. Therefore, a standard enterprise cannot designate the Chief Accountant as an “Enterprise Manager” in its Charter. 

Note: An exception exists for micro-enterprises (fewer than 10 employees with low revenue) and certain private enterprises, but for most limited liability companies (LLCs) and joint-stock companies (JSCs), this restriction applies strictly. 

4. Rights and Obligations of the “Enterprise Manager” 

Elevating a role to an “Enterprise Manager” status impacts the legal relationship between the individual and the company beyond just the notice period: 

• Fiduciary Duties: Managers are subject to statutory duties of honesty, prudence, and loyalty. They must act in the best interest of the company and are prohibited from misusing their authority or information. 

• Remuneration: The Company is obligated to pay remuneration, salary, and bonuses based on business results (Article 83, Law on Enterprises 2020). While the law does not mandate a specific formula, the structure of these benefits is typically governed by the Company’s internal financial regulations and the specific Labor Contract. 

• Charter Obligations: If the Charter grants specific powers to a manager (e.g., the right to approve budgets or access specific reports), the Company is legally bound to honor those rights. Furthermore, to ensure compliance, the Company should disclose relevant excerpts of the Charter to these managers so they are fully aware of their scope of authority. 

5. Practical Implementation and Compliance Notes 

Since the legal framework regarding the 120-day notice period under Decree 145/2020/ND-CP is relatively new, there is limited official guidance on enforcement. To mitigate risks and ensure the extended notice period is legally binding, enterprises should follow a two-step implementation process: 

Step 1: Amend the Company Charter  

The enterprise must formally amend its Charter to: 

1. Explicitly list the specific titles (e.g., “Production Director”) under the definition of “Enterprise Manager”; and 
2. Detail the scope of power and responsibilities associated with that position. 

Step 2: Obtain Consent from Existing Employees: 

For current employees, simply amending the Charter is insufficient. A Charter is a corporate document, whereas the employment relationship is governed by the Labor Contract. An enterprise cannot unilaterally impose a longer notice period (a change in working conditions) without the employee’s agreement. 

Therefore, the Company must sign a written Addendum to the Labor Contract with the relevant employee. This Addendum should confirm that the employee: 

• Acknowledges their status as an “Enterprise Manager”; 

• Understands the associated fiduciary duties; and 

• Explicitly agrees to the new 120-day notice period requirement. 

Conclusion: Extending the termination notice period to 120 days is a powerful strategic tool for enterprises to secure operational stability regarding senior personnel. However, it is not a “blanket” right that can be applied arbitrarily. It requires a precise combination of corporate governance actions (amending the Charter) and labor law compliance (amending Labor Contracts). By strictly adhering to these procedures, companies can protect their interests while maintaining a transparent and lawful relationship with their senior management team. 

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.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

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.

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