# _a) Regulations_

According to the Labor Code, employment can be unilaterally terminated by the employer in case of "business restructuring" or "change of technology", provided a severance allowance of 1 month's salary for every year of service is paid to the terminated workers. However, when the need arises for a "massive layoff', the employer must discuss each case with the Executive Committee of the local trade union; if both parties agree, employment termination become effective 30 days afler the local labor office has been notified. In addition, unilateral employment termination is also possible without having to consult with trade unions in case of "natural disaster forcing the employer to scale down production" or if "the business terminates its operation". Here, the employer must pay a severance allowance of only one half month's salary for every year of service.

There are two types of labor disputes that may arise in the context of employment termination: those between the employer and the unions, and those between the employer and the individuals. Disputes between employers and unions must be solved as follows: a company with more than 10 employees must set up a local "Labor Reconciliation Council" representing both employers and employees. This council must propose an agreement; if any party does not accept the agreement, it can ask the provincial "Labor Arbitration Council" to make a new proposal; if the union refuses this new proposal it can request the People's Committee of the Province to settle the dispute or stage a strike; if the employer does not agree with the new proposal, it can request the People's Court to reconsider the decision. Disputes between employers and individuals are simpler: either party may directly ask the People's Court to settle the dispute. Thus, in such a case there is no need to form a "Labor Reconciliation Council" nor can there be any involvement of People's Committees.

# _b) Evidence_

Most private sector companies hire workers on very short-tern contracts. This allows employers to deal with labor redundancies and adjust employment levels within the legal framework by simply not renewing contracts. A case study in Haiphong shows that most fulltime workers in the private footwear, garment and food processing sectors are on 6 months to I year contracts, and that no employer ever had to reduce its labor force by breaking a contract (Belser, 1999). The MPDF survey (MPDF, 1999) shows that out of 95 interviewed firms, only 20% sign more than 1 year contracts for most of their labor force and that a majority of the companies sign 6 months to 1 year contracts.

Foreign investors who have signed joint ventures agreements with State-owned enterprises have less flexibility. Usually, most of their workers are on life long contracts. The story summarized in the next section shows that although the Labor Code establishes a clear procedure for employment termination and dispute settlement, such procedures remain unfamiliar in Vietnam. In addition, the case study brings to attention the fact that unions can ultimately refer disputes over employment termination to the Provincial People's Committee. This means that, in such cases, it is an executive branch of the Government which is responsible for interpreting the Labor Code. This contrast with countries where Governments can impose compulsory arbitration through independent courts. The procedure in Vietnam thus resembles the situation in Spain, for example, where collective dismissals require the approval of the Ministry of Labor, which usually grants its approval only if unions agree.

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