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1. Forms of disciplinary measures may apply

 Depending on the seriousness of the violation, the employee may be subject to one of the following forms of disciplinary action if there is an act that causes damage to the company’s assets:

• The form of disciplinary action for the verbal reprimand, written reprimand prolongation, or extend the salary increase period, or demotion (apply to employees holding manager positions) will be applied to cases where the employee commits a violation directly related to property, the interests of the company but do not cause serious damage to the employer. Choosing a form of labor discipline to apply will completely depend on the internal policy of the enterprise. This policy must be also recognized in the labor regulations of the enterprise.
• The form of disciplinary action for dismissal is applied in cases where the employees’ actions can cause serious damage or threatens to cause particularly serious damage to the assets and interests of the employer. However, employers should be noted that regulations in terms of the definition of serious injury or threat of serious damage should be clearly stated in the internal documents or mutually agreed upon by a separate agreement with employees. Since clearly stipulating internal policies will help the company to have a basis for handling violations of employees in practice.
• Particularly in case the employee commits acts of disclosing business secrets and technological secrets of the employer, the employee may be subject to the highest level of labor discipline – Dismissal as prescribed in Clause 2, Article 125, Labor Code 2019.

2. Statute of limitations for handling labor discipline

Unlike other violations, particularly for violations directly related to finance, assets, disclosure of technological secrets and business secrets of the employer, the labor Code provides for a longer statute of limitations for handling labor discipline, around 12 months.

Please also note that, an employer will have the obligation to prove faults when a violation occurs or a violation is found by employees. Also, the employer should record violations in writing or collect evidence relating to the time of the act to determine the statute of limitations for applying appropriate forms of labor discipline. 

3. The process of handling labor discipline

When handling a labor discipline, employers should comply with the following basic steps in accordance with the provisions of labor law:

Step 1: Determining employee’s violations in writing or collecting evidence of the violation for the 02 following cases:

• Detect violations of labor discipline at the time of occurrence; or
• Detect violations of labor discipline after the moment the act has occurred.

Step 2: Organize a meeting to handle labor discipline in accordance with the provisions of the Labor Code 2019

Accordingly, employers should pay attention to the statute of limitations for handling labor discipline, notify the participants of the meeting, the place and time of conducting the meeting and the recording of the meeting contents in writing signed by the participants.

Step 3: Issue a disciplinary decision

Regarding the competence to issue a decision on handling labor discipline, the Labor Code 2019 and Decree No. 145/2020/ND-CP, allowing the employer the right to add another person to the internal labor regulations of the enterprise, to have the authority to issue a decision on handling labor discipline in addition to the 03 cases prescribed according to the former Labor Code 2012:

• The legal representative specified in the charter of the enterprise;
• The head of the organization has legal status in accordance with the provisions of law;
• The person is authorized in writing by the legal representative to enter into a labor contract.

Therefore, for flexibility in the implementation process, enterprises can specify the regulations in the internal labor regulations related to the person who has the authority to issue decisions on disciplinary action in order to handle labor discipline more effectively when applied in practice.

Step 4: Announce the decision to discipline

For the issued decision on handling labor discipline, the employer is responsible for notifying the participants who must attend in accordance with the provisions of the Labor Code 2019. In this case, such participants can include (i) the employee representative organization at the establishment of which the employee taking the labor discipline is a member, (ii) the employee or (iii) the lawyer, the employee’s representative organization defense, or (iv) the employee’s legal representative if the employee (if any).

4. Important labor notes for enterprises

Enterprises need to carefully examine and review their internal documents focusing on the following points:

– Labor contract and other agreement documents: these documents can help the enterprise to find out the legal basis for handling employee violations. The main reason is that regulations on labor allow the parties to reach an agreement in writing regarding the content, duration of protection of business secrets, technology secrets, accompanying sanctions, and compensation for violations.

– Internal Labor regulations: Similarly, the enterprise should review the Internal Labor Regulations to determine what form of labor discipline will be applied in this case. As one of the basic principles when handling labor discipline is that enterprises must not discipline employees if their violations were not specified in the internal labor regulations or did not be agreed upon in the labor contract.

– Enterprises also should clearly define the following terms such as finance, technology secrets, business secrets, and a list of the company’s assets in their internal labor regulations. Since, currently, these definitions of such terms have not yet been regulated clearly in the current Labor Code and its guiding documents. Therefore, these specific definitions mentioned in such internal documents can help enterprises to determine a clear legal basis or previous agreement grounds, and the scope of labor disciplines imposed on the violations of employees once it occurs.

In short, it can be seen that if the employee commits a violation directly related to the employer’s finances, property, technology secrets, business secrets, the employee may be applied the highest form of disciplinary action being dismissal or other forms of disciplinary action corresponding to each specific violation. However, in order to ensure compliance with labor legislation, in the process of application, the employer should also pay attention to the agreements with employees, labor contracts, provisions in internal documents, labor regulations, the statute of limitations and processing process rationale in accordance with labor regulations.