Precedent No. 20/2018/AL

Precedent No. 20/2018/AL on establishing a labor contract relationship after the end of the probationary period was adopted by the Council of Judges of the Supreme People's Court on October 17, 2018 and promulgated under Decision No. 269/QD-CA dated November 6, 2018 of the Chief Justice of the Supreme People's Court.

Source of case law:

Final judgment No. 01/2017/LD-GDT dated August 9, 2017 of the Council of Judges of the Supreme People's Court on the labor case "Dispute over unilateral termination of labor contract" in Binh Thuan province between the plaintiff Mr. Tran Cong T and the defendant L Limited Liability Company (legal representative is Mr. H).

Location of case law:

Paragraph 2, 3 of the section “Court's Opinion”.

Overview of the case law:

– Case law:

The employer has a job offer letter specifying the type of employment contract and the probationary period. The employee has completed the probationary period in accordance with the probationary period stated in the job offer letter.

After the probationary period, the employee continues to work without any other agreement between the employer and the employee.

– Legal solutions:

In this case, it must be determined that the employee and employer have established a labor contract relationship.

Legal provisions relating to precedents:

Article 26, Article 27, Article 28, Article 29 of the 2012 Labor Code.

CASE CONTENT

Mr. Tran Cong T worked at L Limited Liability Company - L Supermarket - Branch B from September 9, 2013 according to the Job Invitation Letter dated August 20, 2013 of L Limited Liability Company. According to the content of the job invitation letter, Mr. T worked as Head of Non-Food Department, labor contract type: Fixed term (12 months or more), probationary period: 02 months, total gross salary during probationary period: 15,300,000 VND, monthly basic salary: 12,600,000 VND, monthly allowance is 5,400,000 VND.

Mr. T started working on September 9, 2013. After the 2-month probationary period (from September 9, 2013 to November 9, 2013), Mr. T continued to work. On December 19, 2013, Mr. T quit his job. On December 28, 2013, the Human Resources Department of L Limited Liability Company invited Mr. T to a meeting with the Company and made a "Minutes of Agreement Regarding: Early termination of the labor contract". Mr. T wrote his opinion in the minutes as follows: Disagreeing with the settlement of the termination of the labor contract. On December 29, 2013, L Limited Liability Company issued Decision No. 15/QDKL-2013 with the content of unilaterally terminating the labor contract with Mr. Tran Cong T, for the following reasons: Frequently failing to complete the work according to the contract; The term of termination of the labor contract is from December 28, 2013. On January 6, 2014, Mr. T received the Decision to terminate the above labor contract.

On February 24, 2014, Mr. Tran Cong T filed a lawsuit regarding the unilateral termination of his labor contract, with the following requests:

1. Cancel Decision No. 15/QDKL-2013 dated December 29, 2013 of L Limited Liability Company on unilateral termination of the labor contract with Mr.
2. Require Limited Liability Company L to pay the following amounts:

- Fine for violating the 45-day notice period, amount of VND 27,000,000.

- Compensation for 02 months salary due to illegal termination of labor contract is 36,000,000 VND, the Company has paid 19,466,000 VND, now the Company still has to pay 16,534,000 VND.

- Pay overtime for 45 days, amount 48,150,000 VND.

- Pay wages for days worked without annual leave of 11 days, the amount is 6,600,000 VND.

- Payment of wages for days worked but not yet compensated for days off is 11 days, the amount is 6,600,000 VND.

- Pay the outstanding salary of November and December, at the salary level of 18,000,000 VND/month, the amount is 5,400,000 VND.

- Social insurance, health insurance, unemployment insurance payment totaled 24,696,000 VND.

- Compensation for unilateral termination of labor contract in violation of the law according to Article 42 of the Labor Code, calculated from January 2014 to the trial date, 18,000,000 VND per month. Provisionally calculated as 07 months, the amount is 126,000,000 VND.

- Compensation for mental damage due to illegal unilateral termination of labor contract.

The authorized representative of L Limited Liability Company stated that:

The reason why L Limited Liability Company terminated the labor contract with Mr. T was because Mr. T often failed to complete the work according to the contract; specifically: After a 2-month probationary period, according to the Plan and Performance Evaluation dated November 10, 2013, it was found that Mr. T did not meet the job requirements as the Head of the non-food department, so the Director of Supermarket L - Branch B decided to give Mr. T an additional 1-month probationary period to create conditions for Mr. T to complete the task and to have more time to evaluate Mr. T's capacity. The reason for extending the probationary period was: On December 5, 2013, Supermarket L - Branch B officially opened. However, after a 1-month probationary period, on December 12, 2013, the Head of the Sales Supervision Department of Supermarket L - Branch B assessed that Mr. T did not meet the requirements and proposed a plan to replace Mr. T.

On December 24, 2013, in the Minutes of Meeting No. 10 on the meeting to evaluate the performance of the non-food industry under the management of Mr. T, the Director of Supermarket L - Branch B:  "Proposed that the Board of Directors replace Mr. T with someone experienced in managing the non-food industry  ".

On December 28, 2013, the Company sent a letter inviting Mr. T to attend a meeting to discuss the termination of the labor contract. In the Minutes of the meeting on the early termination of the labor contract, the Company assessed Mr. T as follows:  “Considering Mr. T’s work history from September 9, 2013  to  December 19, 2013 (including the 2-month probationary period), the Company assessed that Mr. T was not suitable for the current job position (attached with the assessment form of the Director of Supermarket L – Branch B), the Company now agrees to terminate the contract and make payment for working days, days off if any and compensate 1 month’s salary for the notice period”,  Mr. T did not agree with the Company’s assessment.

On the same day, December 28, 2013, L Limited Liability Company made a record of agreement on early termination of the labor contract with Mr. T. The Company announced that Mr. T would stop working at the Company starting from December 28, 2013; the Company would pay all salaries, leave allowances and pay 01 month's salary in lieu of notice period. Mr. T did not agree to terminate the labor contract early.

The company believes that the decision to terminate the labor contract with Mr. T is in accordance with the provisions of the Labor Code. The company has paid Mr. T 01 month's salary for the notice period before terminating the labor contract. Regarding Mr. T's request for compensation for damages, the company agrees to pay Mr. T the social insurance, health insurance, unemployment insurance that the company must pay for 02 months (after the end of the probationary period), with the amount of 5,292,000 VND and 11 days that Mr. T worked without compensation, which is 6,600,000 VND. The company does not agree with Mr. T's other compensation requests.

In the First Instance Labor Judgment No. 01/2014/LD-ST dated August 12, 2014, the People's Court of Binh Thuan province decided:

Reject the plaintiff's request to initiate a lawsuit  -  Mr. Tran Cong T against the request to cancel Decision No. 15/QDKL-2013 dated December 29, 2013 of the General Director of L Limited Liability Company, regarding the unilateral termination of the labor contract with Mr. T.

Reject the plaintiff's request to initiate a lawsuit - Mr. Tran Cong T against the request that L Limited Liability Company must compensate and pay salaries; social insurance, health insurance during the time Mr. T was not allowed to work at Supermarket L - Branch B.

Acknowledging the voluntary commitment of L Limited Liability Company regarding: L Limited Liability Company pays and supports Mr. T with Social Insurance, Health Insurance, Unemployment Insurance for 02 months (November and December), with the amount of 5,292,000 VND; the amount of 11 days that Mr. T worked without compensation is 6,600,000 VND. In total, L Limited Liability Company must pay Mr. T with the amount of: 11,892,000 VND.

In addition, the Court of First Instance also ruled on court fees and the parties' right to appeal.

On August 26, 2014, Mr. Tran Cong T appealed the entire first instance judgment.

In the Labor Appeal Judgment No. 01/2015/LD-PT dated April 13, 2015, the Supreme People's Court of Appeal in Ho Chi Minh City decided:

Not accepting the appeal, upholding the decision of the first instance judgment.

In addition, the Court of Appeal also decides on court costs.

On April 7, 2016, Mr. Tran Cong T submitted a request to review the above-mentioned appellate judgment according to the cassation procedure.

In Decision No. 04/2016/KN-LD dated December 26, 2016, the Chief Justice of the Supreme People's Court appealed the Labor Appeal Judgment No. 01/2015/LD-PT dated April 13, 2015 of the Supreme People's Court of Appeal in Ho Chi Minh City; requested the Supreme People's Court's Judicial Council to review the final judgment and annul the Labor Appeal Judgment No. 01/2015/LDPT dated April 13, 2015 of the Supreme People's Court of Appeal in Ho Chi Minh City and the First Instance Labor Judgment No. 01/2014/LD-ST dated August 12, 2014 of the People's Court of Binh Thuan Province.

At the appeal hearing, the representative of the Supreme People's Procuracy requested the Supreme People's Court's Judicial Council to accept the appeal of the Chief Justice of the Supreme People's Court.

JUDGMENT OF THE COURT

On the jurisdiction to resolve the case:

[1] According to the provisions of Article 34, Article 35, Article 36 of the Civil Procedure Code, the dispute case regarding the unilateral termination of the labor contract between the plaintiff, Mr. Tran Cong T, and the defendant, L Limited Liability Company, is under the jurisdiction of the People's Court of Phan Thiet City, Binh Thuan Province, to resolve the case under the first instance procedure. The People's Court of Binh Thuan Province accepting the case under the first instance procedure is not in accordance with the provisions of law.

On determining labor relations:

[2] Mr. Tran Cong T started working at L Limited Liability Company according to the Job Invitation Letter dated August 20, 2013 with the following content: “Type of labor contract: Fixed term (12 months or more). Probationary period: 02 months. After the probationary period (from September 9, 2013 to November 9, 2013), Mr. T did not receive notice of the probationary results but continued to work. L Limited Liability Company stated that after 02 months of probation, Mr. T did not meet the requirements of the job, so the Company decided to give Mr. T an additional 01 month of probation to create conditions for Mr. T to complete the task and to have more time to evaluate Mr. T's capacity. However, there is no document showing that Mr. T and L Limited Liability Company had an agreement to extend the probationary period.

[3] Clause 1, Article 27 of the Labor Code stipulates that the probationary period is “ No more than 60 days for jobs with professional titles requiring professional and technical qualifications from college level or higher ”. In the Self-declaration dated June 14, 2014, the representative of L Limited Liability Company stated: “ The Company clearly understands that, after the end of the probationary period (60 days), if the labor contract has not been signed, the employee will officially work under a contract with a fixed term of 12 months”.  Thus, the representative of L Limited Liability Company admitted that after the end of the probationary period, Mr. T became an official employee under a labor contract with a term of 12 months. In fact, L Limited Liability Company negotiated with Mr. T about the termination of the labor contract on December 28, 2013; When negotiations were unsuccessful, on December 29, 2013, the General Director of L Limited Liability Company issued Decision No. 15/QDKL-2013 on unilaterally terminating the labor contract with Mr. T. Therefore, there is sufficient basis to affirm that the relationship between Mr. T and L Limited Liability Company after the end of the probationary period is a labor contract relationship.

On the legality of termination of employment contract: 

[4] L Limited Liability Company unilaterally terminated the labor contract with Mr. Tran Cong T on December 29, 2013; the reason for terminating the labor contract was "Regularly failing to complete work according to the labor contract", falling under the case specified in Point a, Clause 1, Article 38 of the 2012 Labor Code. At the time L Limited Liability Company unilaterally terminated the labor contract with Mr. T, there were no labor laws applicable as a basis for assessing the level of work completion of employees.

[5] Before the 2012 Labor Code took effect, the basis for determining that an employee regularly failed to complete work according to the labor contract was stipulated in Clause 1, Article 12 of Decree No. 44/2003/ND-CP dated May 9, 2003 of the Government detailing and guiding the implementation of a number of articles of the Labor Code, as follows:

“ 1. An employee who regularly fails to complete work according to the labor contract is one who fails to complete the labor norms or assigned tasks due to subjective factors and is recorded or reminded in writing at least twice a month, but then still fails to correct the situation.

The level of failure to complete work is recorded in the labor contract, collective labor agreement or labor regulations of the unit .

Decree No. 44/2003/ND-CP dated May 9, 2003 of the Government has expired since July 1, 2013. However, the provisions in Clause 1, Article 12 above are not contrary to the basic principles of the Labor Code and should be applied as the basis for resolving the case.

[6] L Limited Liability Company presented the Job Description, Notice of Violation dated December 6, 2013 and Notice of Violation dated December 16, 2013, Plan and Performance Evaluation Table dated December 12, 2013 and based on these documents, it was concluded that Mr. T did not complete the work according to the labor contract. Mr. T claimed that he was not given the Job Description and did not receive the 02 reminders from the Company. L Limited Liability Company could not provide evidence to prove that Mr. T was given the Job Description and the Notice of Violation by the Company. Thus, the evidence provided by L Limited Liability Company is not sufficient to determine that Mr. Tran Cong T regularly fails to complete work according to the labor contract as prescribed in Clause 1, Article 12 of Decree No. 44/2003/ND-CP dated May 9, 2003 of the Government.

[7] After the probationary period ended, L Limited Liability Company had not signed a labor contract with Mr. Tran Cong T; the Company also did not have a collective labor agreement or labor regulations. Therefore, there was no basis to assess the level of non-completion of work by the employee. The Court of First Instance and the Court of Appeal concluded that Mr. Tran Cong T frequently failed to complete work according to the labor contract and that Mr. T's request to sue was unfounded.

For the above reasons;

DECISION

Pursuant to Clause 3, Article 343, Clause 1 and Clause 2, Article 345 of the Civil Procedure Code;

Accept the Chief Justice's Appeal No. 04/2016/KN-LD dated December 26, 2016; annul the entire Labor Appeal Judgment No. 01/2015/LD-PT dated April 13, 2015 of the Supreme People's Court of Appeal in Ho Chi Minh City and the First Instance Labor Judgment No. 01/2014/LD-ST dated August 12, 2014 of the People's Court of Binh Thuan Province regarding the dispute over the unilateral termination of the labor contract between the plaintiff, Mr. Tran Cong T, and the defendant, L Limited Liability Company.

Transfer the case file to the People's Court of Phan Thiet city, Binh Thuan province for retrial in accordance with the provisions of law.

CONTENT OF PRECEDENT

“[2] Mr. Tran Cong T started working at L Limited Liability Company according to the Job Invitation Letter dated August 20, 2013 with the following content: “Type of labor contract: Fixed term (12 months or more). Probationary period: 02 months. After the probationary period (from September 9, 2013 to November 9, 2013), Mr. T did not receive notice of the probationary results but continued to work.

L Limited Liability Company believes that after 02 months of probation, Mr. T did not meet the requirements of the job, so the Company decided to give Mr. T an additional 01 month of probation to create conditions for Mr. T to complete the task and to have more time to evaluate Mr. T's capacity.  However, there is no document showing that Mr. T and L Limited Liability Company had an agreement to extend the probation period.

[3] Clause 1, Article 27 of the Labor Code stipulates that the probationary period is “No more than 60 days for jobs with professional titles requiring professional and technical qualifications from college level or higher”. In the Self-declaration dated June 14, 2014, the representative of L Limited Liability Company stated: “The Company clearly understands that after the end of the probationary period (60 days), if the labor contract has not been signed, the employee will be officially employed under a 12-month fixed-term contract”.

Thus, the representative of L Limited Liability Company admitted that after the probationary period ended, Mr. T became an official employee under a 12-month labor contract. In fact, L Limited Liability Company negotiated with Mr. T about the termination of the labor contract on December 28, 2013; when the negotiation was unsuccessful, on December 29, 2013, the General Director of L Limited Liability Company issued Decision No. 15/QDKL-2013 on unilaterally terminating the labor contract with Mr. T. Therefore, there is sufficient basis to affirm that the relationship between Mr. T and L Limited Lia

bility Company after the probationary period ended is a labor contract relationship.”

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