The Case of Banking Industry in Vietnam

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Insider Arguments

During June 2015, the case of Mr. Mai Phuoc Tien have risen a controversial discussion among the community about labor rights and the legality of layoffs in M&A activities. Later on, many newspapers and experts have attempted to examine this case. Below is the summary of insider opinions (figure 1).

Mr. Tien

Company’s Representatives

- Disagreed with the transfer from Marketing Department to HR Department without consulting his opinion.

- The transfer reason “changing structure, technology” is not true because he was moved 6 months after the transformation without early notice.

- If they think he is not capable for new technology, he should be trained in advance.

- After the contract was terminated, Mr. Tien has difficulty finding new job because employers keep questioning him about his previous job.

- The layoff is not due to company recession because the bank started to recruit new employee for his position right after he was fired.

- Mr. Nguyen Hoai Nam – Vice President (Union President) stated that although Mr. Tien has not violated any policies, but he only has “ok” performance – not excellence. Thus, he did not receive any training priority and got fired.

- Mr. Nam also added that the bank has built employment plan for Mr. Tien until the end of 2014.

- Ms. Hoang Cam Van – Marketing Manager said that she gave Mr. Tien many chances to prove his ability but he was not able to do it well.

- She clarified new position requirements are English skills, PR knowledge, ability to multitask and expertise in both traditional and digital marketing. However, Mr. Tien is only specialized in traditional marketing, which is not suitable anymore.

Figure 1 Source TuoiTreNews (2015)

Problem Statement

Retrenchment as a result from M&A activities are raising concerns about labor rights and labor protection in Banking Business. This paper aims to discuss the impacts of retrenchment on HRM practice in Vietnam and conduct a feasible solution. The research

HRM Problem

Research Questions

Employee layoffs after M&A – the case of banking industry in Vietnam.

In this case, is layoff considered as illegal practice in Vietnam?

What are the impacts of retrenchment on employee and company?

How to solve this problem regarding management practices?

Figure 2 Research Questions

Case Analysis

Vietnamese Legislations

It is stated in Article 44 section 3 of the Labor Act, in the event of changes in systems and technology which affects many employees, the employer must be responsible for formulating plans for employees. In the event of new jobs, the priority retraining recent workers to use, even if they cannot resolve the new jobs, but to give employees severance, the employees must receive unemployment benefits in accordance with the provisions of law. Under the provisions of article 13 of decree 05/2015 of the Government, with effect from 12/01/2015, the case is considered as changes in systems and technology in Article 44 of the Labor Code includes: Changing the restructuring and reorganization of labor, product changes, product mix, changing in process technology, machinery and business ... Thus, Viet Capital Bank changing Marketing Synthetic Department into Marketing Synthetic & Public Relations Department is considered changes in systems and technology case.

Viet Capital Bank moved Mr. Tien to Marketing Synthetic & Public Relations Department as an Event staff, then transferred to HR department to await assignment of personnel, which was considered appropriate action accordance to the law. However, on 18/11/2014, Viet Capital Bank terminated Mr. Tien’s labor contracts with the reason: restructuring, unable to arrange jobs for workers. Viet Capital Bank termination of his labor contract because structural changes, technology is inappropriate and lacks of legal basis:

- According to Section 3, Clause 2 of Article 31 of the Labor law, before transferring workers to other departments, the employers must give notice and ask employees to negotiate at least 03 working days before to clarify working time, wages and relevant terms with decent working records. During the time, employees’ agreement and disagreement are clearly on the record, which will be used to consider the transfer. Viet Capital Bank has moved Mr. Tien from the Marketing Synthetic and PR department to HR without giving any reason.

- The transformation was made in January 12/2013, while Mr. Tien’s employment contract has not been terminated until 11/2014. Time intervals between two events was too long, almost 1 year, therefore time could not been claimed as a reason. Mr. Tien does not violate any labor discipline of the company lead to being sacked (Article 123 of the Labor Code). The company decided to lay off him without any indication of worker’s mistake. And in an email to employee on 13/05/2014 Nguyen Hoai Nam - Deputy General Director and Chairman of the union confirmed: Mr. Tien has not done anything seriously wrong during his work in the bank.

- Mr. Tien was not in the case of termination of the labor contract (Article 36 of the Labor Code). His employment contract was signed on 24/12/2012 with the duration of 3 years. Therefore, it should have not come to its end until 24/12/2015. It is stated in Article 44 section 3 of the Labor Act, in the event of changes in systems and technology which affects many employees, the employer must be responsible for formulating plans for employees. In the event of new jobs, the priority retraining recent workers to use, even if they cannot resolve the new jobs, but to give employees severance, the employees must receive unemployment benefits in accordance with the provisions of law. When moved to HR department, Mr. Tien did not receive any work tools, assignments, but often many times the manager require resignation. Also he was not taken to priority training program, equip any new skills