Compilation of Labor Disputes Involving Foreign Employees

I. Appellate Judgment No. 06/2023/LD-PT: Employment Contract Invalid Due to Absence of a Work Permit

1. Case Overview

Criteria	Details
Judgment	Appellate Judgment No. 06/2023/LD-PT (June 7, 2023)
Adjudicating Body	High People’s Court in Ho Chi Minh City
Subject Matter	Unilateral termination of employment contract; claim for compensation of VND 8.83 billion
Ruling	Dismissed the appellant's entire appeal; upheld the first-instance judgment

2. Summary of Dispute Developments

• Contract execution: Ms. D executed three consecutive contracts (collaborator and seasonal contracts) with Company L for the position of Business Development Director, at a monthly salary of VND 88,000,000.

• Termination: In February 2015, the Company issued a notice of contract termination pursuant to a restructuring plan and the expiration of the seasonal contract.

• Plaintiff’s claims: Alleged that the company unilaterally terminated the labor contract unlawfully; demanded reinstatement, back pay for 90 months along with statutory social insurance, amounting to a total claim of VND 8,832,266,667. Ms. D claimed she held Vietnamese nationality and therefore did not require a work permit.

• Defendant’s arguments: Ms. D entered Vietnam using a US passport and evaded submitting an application for a work permit. Consequently, the contracts were null and void.

3. Key Legal Findings of the Appellate Court

• Legal regime applicable to dual citizens: Immigration Department records indicated Ms. D entered Vietnam on a US passport with a valid visa. Pursuant to Clause 4, Article 4 of the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam, an individual who uses a specific passport to enter Vietnam must be governed by the legal status of that citizenship throughout their period of stay.

• Legal consequences of lacking a Work Permit: Pursuant to Point d, Clause 1, Article 169 and Article 172 of the 2012 Labor Code, foreign nationals working in Vietnam must possess a work permit. Executing employment contracts without a work permit and concealing identity details (in violation of Article 19 of the 2012 Labor Code) rendered all executed employment contracts entirely null and void.

• Basis of dispute resolution: A void contract does not give rise to compensation obligations resulting from unlawful termination. The Court rejected the plaintiff’s claims for reinstatement and compensation of VND 8.83 billion in their entirety.

II. Appellate Judgment No. 102/2019/LD-PT: Probationary Contract Invalid Due to Violations of Probationary Duration and Work Permit Regulations

1. Case Overview

Criteria	Details
Judgment	Appellate Judgment No. 102/2019/LD-PT (January 29, 2019)
Adjudicating Body	People’s Court of Ho Chi Minh City
Legal Relationship	Dispute regarding unilateral termination of employment contract
Value of Dispute	Claim for compensation and outstanding salary: VND 5,818,660,575
Ruling	Dismissed the appellant's entire appeal; upheld the first-instance judgment

2. Summary of Dispute Developments

• On April 23, 2015, Company R executed a probationary contract with Mr. F for the position of Building Manager. The agreed probationary period was 3 months (August 20, 2015 – November 20, 2015), with a probationary salary of USD 6,500/month, and an official post-probation salary of USD 8,000/month net (USD 11,430/month gross).

• Termination of probation: On November 26, 2015, Company R issued a notice refusing official employment because Mr. F did not meet professional requirements.

• Plaintiff’s claims: Claimed that the probationary period expired on November 20, 2015, but the company allowed him to continue working until November 26, 2015, automatically converting the employment relationship into an indefinite-term labor contract. Consequently, the dismissal was an illegal unilateral termination; claimed total compensation of VND 5,818,660,575.

• Defendant’s arguments: Neither party had executed an official labor contract. Ceasing the engagement was strictly grounded on the actual probationary performance failing to meet requirements.

3. Key Legal Findings of the Court

• Pursuant to Article 27 of the 2012 Labor Code (corresponding to Article 25 of the 2019 Labor Code), jobs requiring professional qualifications of associate degree level or higher permit a maximum probationary period not exceeding 60 days. Agreeing to a 3-month probation period directly breached statutory prohibitions.

• Breach of Work Permit requirements: Under foreign labor management regulations, foreign employees must hold a valid work permit starting from the moment they commence work in Vietnam. Mr. F had no work permit throughout the entire probationary period.

• Due to violations of statutory prohibitions regarding both duration and employment prerequisites for foreign nationals, the probationary contract was entirely invalid under Article 50 of the 2012 Labor Code (Article 49 of the 2019 Labor Code).

• Consequences of compensation: Both parties were at fault for the contract's invalidity. An invalid probationary contract cannot transform into an official employment contract. Because no lawful employment contract existed, Company R's action did not constitute "unlawful unilateral termination of an employment contract." The Court dismissed the plaintiff’s claim for VND 5.8 billion in its entirety.

III. Appellate Judgment No. 14/2020/LD-PT (December 24, 2020): Disputes Over Wages, Social Insurance, and Termination of Foreign Employees

1. Case Overview

Criteria	Details
Judgment	Appellate Judgment No. 14/2020/LD-PT (December 24, 2020)
Adjudicating Body	People’s Court of Binh Duong Province
Legal Relationship	Disputes over wages, social insurance, and unilateral termination of employment contract
Value of Dispute	Claim for compensation and payment: VND 1,052,232,000
Appellate Ruling	Amended the first-instance judgment: Dismissed claims for illegal termination compensation and social insurance; ordered the Company to pay outstanding wages within the statute of limitations amounting to VND 110,000,000

2. Dispute Developments and Factual Summary

• On August 1, 2015, Company H signed a 2-year employment contract with Mr. G.J.P for a Sales Manager position at a salary of VND 15,000,000/month, backed by a work permit. Upon expiry on August 1, 2017, the parties did not execute a new contract, but the work permit was extended until September 30, 2019, and Mr. G.J.P continued working.

• On March 3, 2018, the working relationship ended. Mr. G.J.P claimed he was verbally dismissed, barred from entering company premises, owed 35 months of accumulated unpaid wages, and was denied statutory social insurance. Company H maintained it did not dismiss him; rather, Mr. G.J.P voluntarily abandoned work to return abroad, while the company had provided monthly advances for living costs.

• Plaintiff’s claims: Demanded 35 months of unpaid wages (VND 525 million), cash compensation equivalent to 35 months of social insurance (VND 90 million), compensation for unlawful termination, and other costs, totaling over VND 1.05 billion.

3. Key Legal Findings of the Appellate Panel

• No ground for "verbal dismissal": The plaintiff failed to produce any written termination decision, written notice, or evidence of employer obstruction. Border exit records established that on March 3, 2018, Mr. G.J.P had exited Vietnam to China. The Court determined this constituted voluntary abandonment of employment rather than unlawful unilateral termination by the company.

• Statute of limitations: Pursuant to Article 202 of the 2012 Labor Code and Article 184 of the 2015 Civil Procedure Code, the statute of limitations for individual labor dispute resolution is 1 year from the date the violation of rights was discovered. The defendant requested the application of the statute of limitations prior to the first-instance hearing. Accordingly, all wage claims from August 1, 2015, to March 2, 2017, were time-barred. The Court only accepted claims for the most recent 12-month period (March 3, 2017 – March 3, 2018) totaling VND 180,000,000; after deducting VND 70,000,000 in advances, the defendant was ordered to pay only VND 110,000,000.

• No mandatory social insurance obligations prior to December 1, 2018: Article 2 of the 2014 Law on Social Insurance provided that foreign employees participate in mandatory social insurance pursuant to separate government regulations. Decree No. 143/2018/ND-CP governing this took effect on December 1, 2018, whereas the employment relationship ended in March 2018. Even though the parties had an agreement written into the contract, claims compelling social insurance contributions or cash payouts during that period lacked legal grounds.

IV. Appellate Judgment No. 20/2020/LD-PT (August 13, 2020): Probation Without a Work Permit

1. Case Overview

Criteria	Details
Judgment	Appellate Judgment No. 20/2020/LD-PT (August 13, 2020)
Adjudicating Body	People’s Court of Dong Nai Province
Plaintiff	Mr. Satsuma K (Born: 1974; Nationality: Japanese)
Defendant	M Co., Ltd. (H Industrial Zone, Bien Hoa City, Dong Nai Province)
Legal Relationship	Dispute over unilateral termination of employment contract
Value of Dispute	Initial claim: VND 298,585,000 (increased to VND 835,505,000 at the appellate hearing)
Appellate Ruling	Dismissed the appeal, upheld the first-instance judgment; rejected all compensation claims of the plaintiff

2. Summary of Dispute Developments

• In November 2016, M Co., Ltd. issued an offer letter to Mr. Satsuma K with a 3-month probationary period (commencing November 14, 2016, structured across two consecutive probationary contracts) for the role of Deputy Production Manager at USD 2,300/month.

• On January 20, 2017, the Company notified him that he would not be hired permanently due to unsatisfactory technical performance, and paid full compensation for 59 actual working days.

• Plaintiff’s arguments:

  • Statutory probation cannot exceed 60 days; extending it to 3 months violated the law.

  • The company failed to provide notice 3 days prior to the expiration of the 60 days and allowed him to work an additional 6 days (until January 20, 2017).

  • Pursuant to Clause 1, Article 29 of the 2012 Labor Code and Judicial Precedent No. 20/2018/AL, the employment relationship had automatically converted into a 12-month fixed-term employment contract. Terminating his employment constituted unlawful unilateral termination, entitling him to compensation initially claimed at VND 298,585,000 (raised to VND 835,505,000 on appeal).

• Defendant’s arguments: The parties only established a probationary arrangement; failing to meet standards meant no formal contract was executed. Crucially, throughout this tenure, Mr. Satsuma K held only a Temporary Residence Card (TRC) and completely lacked a work permit under Vietnamese law.

3. Key Legal Findings of the Court

• Probationary agreement void ab initio due to breach of statutory prohibitions:

  • Duration: Under Clause 1, Article 27 of the 2012 Labor Code (Article 25 of the 2019 Labor Code), professional work cannot be subjected to a probation period exceeding 60 days. Structuring a 3-month probation across two consecutive contracts constituted an unlawful circumvention.

  • Subject capacity: Under Articles 23 and 169 of the 2012 Labor Code and Decree No. 102/2013/ND-CP, foreign citizens must possess a valid work permit to enter into an employment relationship in Vietnam. A Temporary Residence Card confers only residence status and cannot substitute for a work permit.

  • Consequences: The probationary agreement was void in its entirety from inception due to mutual fault pursuant to Article 50 of the 2012 Labor Code. A void contract gives rise to no lawful rights or obligations between the parties.

• Inapplicability of Precedent No. 20/2018/AL:

  • Precedent No. 20/2018/AL establishes that when an employee continues working after the probation period ends without objection from the employer, an employment contract is deemed established.

  • However, Precedent No. 20 applies only when the worker meets all legal conditions to execute a lawful employment contract. Here, the plaintiff lacked a work permit, rendering the initial contract void ab initio. An illegal, invalid agreement cannot automatically convert into a valid employment contract.

• Dismissal of compensation claims: As no valid employment contract existed, the termination by M Co., Ltd. did not constitute unlawful unilateral termination. All claims for back wages, insurance, and severance/notice pay were dismissed.

V. Appellate Judgment No. 449/2021/LD-PT: Lessons on Work Permit Validity and Employment Contract Disputes Involving Foreign Nationals

1. Case Overview

Criteria	Details
Judgment	Appellate Judgment No. 449/2021/LD-PT (May 11, 2021)
Adjudicating Body	People’s Court of Ho Chi Minh City
Legal Relationship	Dispute over unilateral termination of employment contract
Initial Dispute Value	Claim for wages and compensation: VND 5,189,256,540
Appellate Ruling	Amended the first-instance judgment; recognized mutual settlement: The enterprise agreed to pay VND 4,000,000,000 to fully settle the entire dispute

2. Dispute Developments and Factual Summary

• Recruitment and licensing: In April 2016, Company H.VN recruited Mr. A.S as Project Director with a monthly income of USD 11,436. The company sponsored his initial work permit valid through June 15, 2018, and later extended it for another 2 years (valid through June 15, 2020).

• Fragmented contract terms: Rather than executing an employment contract aligned with the full validity of the work permit, Company H.VN split the term into three consecutive short-term contracts with Mr. A.S (Contract 1: 10 months; Contract 2: 6 months; Contract 3: 12 months, expiring December 31, 2018).

• Termination: On December 27, 2018, the Company issued a notice of termination for Contract No. 3 on grounds of expiration under Clause 1, Article 36 of the 2012 Labor Code.

• Plaintiff’s arguments: Argued that under labor laws and foreign labor regulations, the employment contract was required to match the validity period of the work permit (until June 15, 2020). Terminating his employment on January 1, 2019, while the work permit remained valid for another 17 months and 15 days, constituted unlawful unilateral termination; claimed over VND 5.18 billion in compensation.

• Defendant’s arguments: Securing a 2-year work permit extension was an administrative oversight. The company provided over 3 months' prior notice of non-renewal and settled all statutory severance allowances. The employment relationship ended lawfully upon the expiration of the agreed contractual term.

• First-instance judgment: The People’s Court of District H (now Thu Duc City) sustained all claims of Mr. A.S, ordering Company H.VN to pay compensation of VND 5,189,256,540. Company H.VN appealed the judgment in full.

3. Key Legal Findings and Appellate Resolution

• Risks of executing multiple short-term contracts misaligned with Work Permit duration:

  Under the 2012 Labor Code (the applicable law at the time), the term of an employment contract for a foreign worker could not exceed the term of the work permit. However, signing three consecutive fixed-term contracts while holding a 2-year permit placed the enterprise at a disadvantage at first instance, where trial courts tended to safeguard the worker's right to employment throughout the licensed term.

  (Comparative note under current law: Under Clause 2, Article 151 of the 2019 Labor Code, employers and foreign employees may enter into multiple fixed-term employment contracts, provided the term of each contract does not exceed the validity of the work permit).

• Successful mediation at the appellate stage:

  Recognizing the significant legal risk of having the adverse VND 5.18 billion first-instance judgment upheld, Company H.VN and Mr. A.S negotiated and executed a settlement agreement during the appellate preparation phase.

  The company agreed to settle the matter for VND 4,000,000,000 (reducing the exposure by nearly VND 1.2 billion compared to the first-instance verdict) in exchange for the definitive termination of the employment relationship, eliminating prolonged litigation risks and expediting judgment enforcement.

  Pursuant to Article 300 of the 2015 Civil Procedure Code, the People’s Court of Ho Chi Minh City recognized this voluntary settlement, amended the first-instance judgment, and confirmed the financial obligations as fully resolved.

See more at:​

1. Summary of 10 labor judgments on disputes concerning damages and allowances by Appellate Courts