Dismissing employees who engage in sexual harassment behavior

In this article, our Managing Partner Nguyen Van Phuc and Lawyer Nguyen Nhat Duong will analyze the issue of dismissing employees who engage in sexual harassment behavior. The article was published in People's Count Journal, published on March 20, 2024. Below is the English version:

Under current law, sexual harassment in the workplace is one of the grounds that an employer ("company") may use to discipline an employee. However, in order to lawfully terminate an employee in this case, the company must meet various conditions. In reality, there are many cases where companies, in their haste to handle disciplinary matters, fail to comply with the law and suffer real-world consequences as a result. The case presented in the following ruling is a typical example.

The basis for disciplinary dismissal

On November 5, 2018, the People's Court of Tu Son Town, Bac Ninh Province, issued Judgment No. 01/2018/LD-ST, resolving an individual labor dispute regarding disciplinary dismissal[1]. According to the judgment, on April 5, 2017, Mr. K, an employee of ABB Vietnam Company ("ABB Company"), behaved inappropriately toward Ms. H (also an employee of ABB Company) after attending a company party. Subsequently, Ms. H submitted a letter of complaint against Mr. K to ABB Company. On May 30, 2017, ABB Company addressed Mr. K's misconduct. On May 31, 2017, ABB Company held a disciplinary meeting for Mr. K, which resulted in his dismissal pursuant to a decision signed by Ms. G, the company's human resources director. Disagreeing with ABB Company's dismissal decision, Mr. K filed a lawsuit with the People's Court of Tu Son City, Bac Ninh Province. In the first instance, the court partially upheld Mr. K's claim. The court held that although Mr. K's misconduct towards Ms. H was stipulated in ABB Company's internal labor regulations, ABB Company's dismissal of Mr. K based on this provision was insufficient as Mr. K's conduct occurred outside ABB Company's premises and outside working hours. This reasoning of the court has several notable points, which we will discuss below.

Firstly, it should be noted that sexual harassment in the workplace as a basis for the application of disciplinary dismissal was defined only in the 2019 Labor Code. Prior to that (at the time of the dispute), sexual harassment in the workplace was not defined as a reason for a company to dismiss an employee under the 2012 Labor Code. Instead, a company could only terminate an employee for such conduct if it constituted grounds for the application of prolonged disciplinary measures, such as withholding salary increases or demotion, and the employee repeated the offense. In other words, according to the provisions of the 2012 Labor Code, it was unreasonable for a company to provide for disciplinary dismissal for sexual harassment in its internal labor regulations. In the above case, ABB Company's internal labor regulations reflected this provision. However, the court did not clarify whether ABB Company's provision was consistent with the law at the time of the dispute.

Secondly, as mentioned above, the 2019 Labor Code added sexual harassment in the workplace as a basis for companies to lawfully terminate employees for such conduct. Specifically, Article 125(2) of the 2019 Labor Code states: "Disciplinary dismissal may be applied in the following cases:

2. The employee engages in conduct that discloses trade secrets, technological secrets, violates the employer's intellectual property rights, seriously damages or threatens to seriously damage the employer's property, interests, or engages in sexual harassment at the workplace, as provided for in the internal labor regulations."

According to this provision, it can be seen that the 2019 Labor Code allows companies to specify sexual harassment in the workplace in their internal labor regulations, which is a basis for dismissal.

Thirdly, although companies may specify sexual harassment in the workplace in their internal labor regulations, it should be noted that sexual harassment only becomes a basis for disciplinary dismissal if such behavior occurs in the workplace. Although the 2019 Labor Code and related implementation guidelines had not been issued at the time the dispute was resolved, we believe that the court provided a reasonable and consistent interpretation of the current legal provisions. Specifically, according to Article 84.3 of Decree 145/2020/ND-CP, the workplace is any place where the employee actually works under the agreement or assignment of the company, including spaces or activities related to work, such as social activities, workshops, training sessions, official business trips, meals, telephone conversations, communication activities by electronic means, transportation arranged by the company from residence to workplace and vice versa, residential facilities provided by the company, and other places determined by the company. In the present case, Mr. K.'s conduct occurred in a car while he and Ms. H. were on their way home after attending a party with colleagues from ABB Company. It is noteworthy that this party was organized by the employees of ABB Company themselves. For this reason, the court held that Mr. K.'s misconduct could not be considered to have occurred in the workplace. We believe that this reasoning of the court is quite progressive considering the current legal provisions.

Disciplinary procedures

In addition to the grounds for disciplinary action, the sequence and procedures for handling discipline are also critical factors for companies to consider. In the aforementioned dispute, one of the reasons for the court to declare ABB's decision to dismiss Mr. K unlawful was the fact that ABB did not comply with the legal provisions regarding the sequence and procedures for handling disciplinary dismissals of employees. Specifically, according to Article 30.1 of Decree 05/2015/ND-CP, before conducting a disciplinary meeting for employees, the company must notify the employees at least five working days in advance. This provision is similarly reflected in Point a Article 60.2 of Decree 145/2020/ND-CP (current regulations). However, at the time of organizing the disciplinary meeting for Mr. K, ABB Company did not comply with this requirement. Specifically, after handling Mr. K's complaint on May 30, 2017, ABB Company organized a disciplinary meeting for Mr. K on May 31, 2017. This clearly interfered with Mr. K's rights by limiting his right to present and defend himself during the meeting.

Furthermore, the authority to make dismissal decisions is also a very important issue. According to Article 30.4 of Decree 05/2015/ND-CP, the person with the authority to decide on disciplinary measures against employees is the person who signed the labor contract on behalf of the company (in this case, the legal representative of ABB Company). In cases where the authority is delegated to the person who signed the employment contract, he/she has the authority only to impose disciplinary measures in the form of a reprimand. In the case of ABB Company, although Mr. Brian David Hull is the legal representative of ABB Company, the decision to dismiss Mr. K was signed by Ms. G, the human resources director of the company. This was a clear violation of the law. It is noteworthy that according to the current regulations, if the company's internal work rules specify the person who is authorized to take disciplinary measures against employees, then that person is authorized to take disciplinary measures[2]. This is a progressive point in our assessment, as this provision creates more favorable and proactive conditions for companies in handling disciplinary actions.

In summary, in order to discipline and terminate employees who engage in sexual harassment behavior in the workplace, companies must now comply with many conditions, ranging from the grounds for disciplinary action to the order and procedures for handling disciplinary actions. Therefore, when companies discover or receive complaints, reports from employees regarding such behavior, they need to handle it carefully, considering the completeness of each specific condition, in order to avoid repeating mistakes like ABB Company mentioned above. This will be the prerequisite for companies to create a healthy work environment while ensuring risk mitigation for the company.

Read more at: Sa thải người lao động có hành vi quấy rối tình dục