Many problems in the dismissal of the Head of the Representative Office of foreign traders in Vietnam

The Head of the Representative Office of Foreign Traders in Vietnam ("RO"), also known as the Head of the Representative Office of Foreign Traders in Vietnam ("RO"), is a person who plays an important role in the operation of the RO in Vietnam. This is an employee working at the RO, but also a representative of the RO, operating under the authorization of the foreign trader and responsible to the foreign trader for its activities. With the above legal status and special role, the labor management of the RO also has certain peculiarities and notes, especially serious issues such as the dismissal of the RO Head. In fact, there have been many disputes arising after the head of the RO is dismissed, raising the question of whether the dismissal of the Head of the RO is simple?

1. General principles of dismissal of employees

The dismissal for employees in general is currently relatively clearly stipulated in the Labor Code 2019 and guiding documents, specifically Decree 145/2020/ND-CP. Accordingly, the dismissal of employees needs to be based on many principles, such as the employee's violation must be proved, such acts must be specified in the internal labor regulations (or labor contracts in case there are no written internal labor regulations),  absolutely comply with the process of handling labor discipline and the person competent to handle discipline,... The Head of the RO, as an employee working at the RO, is also not exempt from the above regulations.

Among the above principles, the two principles that many foreign traders often confuse or do not comply with properly when dismissing the Head of the RO are the principle of having to rely on the internal labor regulations or labor contract to dismiss the Head of the RO and the principle of the person who has the authority to handle the dismissal discipline. In fact, this is also the cause of many disputes arising after the Head of the RO is fired.

2. Which document will be used as a basis for dismissal of the Head of the RO?

According to the provisions of Point g, Clause 2, Article 118 of the Labor Code 2019, Clause 1, Article 69 of Decree 145/2020/ND-CP, the internal labor regulations will specify violations of labor discipline and the corresponding forms of discipline, including dismissal. At the same time, if the employer does not have written labor regulations, the labor contract must specify the handling of labor discipline as above.

In addition, Clause 3, Article 127 of the Labor Code 2019 also stipulates the prohibition of dismissing employees due to violations not specified in the internal labor regulations or not agreed in the signed labor contract or the labor law is not regulated.

Thus, the above regulations all show that the dismissal of employees needs to be based on internal labor regulations, labor contracts, with provisions complying with the provisions of labor law.

Returning to the case of the Head of the RO, it can be seen that the Head of the RO is an employee working at the RO. However, considering the nature of the RO's operation, the RO is not actually the employer, instead, the foreign trader is the employer in this case. This comes from the fact that the RO is a unit operating under the authorization of foreign traders, representing foreign traders to carry out a number of activities in Vietnam. The signing of contracts for recruitment of employees working at the RO is also carried out based on the RO's authority to represent foreign traders.

In fact, despite identifying the right subject as the employer, many foreign traders are still confused when identifying documents as a basis for dismissal of the Head of the RO. Specifically, in many cases, foreign traders use internal documents on their labor such as employee handbooks, staff manuals,..., which are documents commonly applied in the activities of foreign traders in many countries, as a basis for dismissing the Head of the RO. This seems to help foreign traders apply their labor regulations in a uniform way in many countries, however, it has invisibly made the handling of labor discipline have no legal basis.

Baxter Healthcare Representative Office (Malaysia). Source: Tecoarch

As mentioned, employee handbooks or employee manuals are usually drafted in the host countries of foreign traders, where there are certain differences in terms of labor laws compared to Vietnam. Therefore, these documents often do not meet the provisions of a labor regulation under Vietnamese law. Moreover, labor regulations, when issued in writing, must also be registered with the labor management agency before being officially applied. Therefore, the application of documents such as employee handbooks and employee manuals by foreign traders will not be able to meet the regulations on grounds for dismissing employees. Instead, foreign traders need to rely on the internal labor regulations of the RO (which is the representative unit of the foreign trader in Vietnam) in case the RO has issued and registered the internal labor regulations, or based on the provisions of the labor contract between the RO Head and the foreign trader. This seems quite simple, but it also makes many foreign traders encounter mistakes. Because, normally, ROs will not have too many employees (less than 10 employees), therefore, ROs often do not have their own labor regulations. Meanwhile, when signing labor contracts with the Head of the RO, foreign traders often use labor contract forms that do not comply with the provisions of Vietnamese law, leading to no basis for disciplinary action in general and dismissal of the Head of the RO in particular.

3. Who will have the authority to dismiss the Head of the RO?

In addition to the grounds for dismissing the Head of the RO, the person with the authority to dismiss is also one of the important issues, often leading to errors for many foreign traders[1].

In principle, Point i, Clause 2, Article 69 of Decree 145/2020/ND-CP stipulates that the person competent to handle labor discipline is the person who has the authority to conclude a labor contract on the employer's side (specified in Clause 3, Article 18 of the Labor Code 2019) or a person specified in the internal labor regulations. From the perspective of foreign traders, the person competent to sign the labor contract with the Head of the RO will be the legal representative of the foreign trader or the authorized representative. Thus, these people will have the authority to dismiss the Head of the RO. In addition, the law also stipulates another case that the person specified in the internal labor regulations also has the authority to dismiss the Head of the RO. This regulation does not set any specific standards/conditions for persons specified in the internal labor regulations. This leads to the case that personnel holding lower positions in the RO, such as human resource managers, administrative managers, have the authority to dismiss the Head of the RO. Although this seems unreasonable in terms of management/power decentralization in an organization, it is based on a fairly clear basis according to the law.

However, it should be noted that, in order for the above-mentioned personnel to have the authority to dismiss the Head of the RO, they need to be specified in the internal labor regulations of the RO, or they need to receive direct authorization from the foreign trader. In general, these conditions are not too complicated, but it needs to be specifically stipulated or noted by foreign traders to be strictly implemented in the process of handling the dismissal of employees.

In short, the dismissal of employees in general and the Head of the RO in particular is always a complicated legal issue and has many potential risks for foreign traders, because the consequences of the dismissal will lead to the employee losing his job, infringing on one of the important rights of employees that are prioritized by law edge. Moreover, with the special legal status of the Head of the RO, their dismissal also needs to be paid special attention by foreign traders, in the context that labor issues at the RO are always a controversial topic, stemming from the nature of the RO's operation in Vietnam.