Workforce Plans for Factory Closures in Vietnam: Contents and Procedures. FLAT regularly handles this issue when foreign investors deal with the workforce plan for a factory closure in Vietnam: one wrong step can trigger administrative fines, loss of asset rights or prolonged disputes. This article follows a lawyer’s review sequence: the legal basis in force as of October 2026, how it applies to a concrete file, the procedure to follow and the risks to settle before signing anything.
Core legal basis — the workforce plan for a factory closure
Closing a factory and terminating most of its workforce is a case requiring a workforce utilisation plan under Article 44 of the Labour Code 45/2019/QH14. The plan must state the numbers and lists of employees retained, retrained, retired and terminated, together with their entitlements and the funding sources securing them. Before deciding, the employer must consult the workplace employee representative organisation and notify the plan to the provincial People’s Committee and to each affected employee.
Applying the rules to your situation
The workforce plan is not paperwork for its own sake: it is the document against which labour authorities, the union and employees themselves test the legality of the entire reduction. Closures that end in strikes or adverse inspection findings almost always begin with a plan missing funding figures or skipping consultation with the employee representative organisation — two procedural defects that cannot be cured retroactively once termination notices have gone out.
Procedure and documents to prepare
- Step 1: fix headcount data by group: retained until closure day, retrained or redeployed, retirement-eligible, and the termination group with dates.
- Step 2: budget each group’s full entitlements: job-loss allowance under Article 47 or severance under Article 46 of the Labour Code, wages, unused leave, insurance balances and the funding source.
- Step 3: consult the plan with the workplace employee representative organisation on record; adjust where feedback is sound and lock the official version.
- Step 4: notify the plan to the provincial People’s Committee and each affected employee, then issue individual termination notices in line with the notified plan.
Risks to anticipate
The first risk is skipping or rubber-stamping consultation with the employee representative organisation, handing employees grounds to challenge and strike against the whole reduction. The second is budgeting the wrong allowance regime (job-loss and severance allowances differ in conditions and levels), inflating closure costs at settlement. The third is notifying employees before the authorities and the union, reversing the procedural order inspectors check first.
Answers to client questions
What must a workforce plan for a factory closure contain?
Under Article 44 of the Labour Code 45/2019/QH14 the plan must include: the numbers and lists of employees retained, retrained for continued employment, retired, and to be terminated; each group’s entitlements; and the measures and funding sources securing implementation. Missing any of these content groups leaves the plan incomplete when labour authorities inspect.
What are the procedural steps for adopting the workforce plan?
The employer drafts the plan, consults the workplace employee representative organisation, finalises and issues it, then notifies the provincial People’s Committee and each affected employee. Consultation with employee representatives is a mandatory, minuted step, not one-way information.
How should employees be notified of the closure correctly?
Notification rests on the official plan: each employee learns their group, the expected termination date and the corresponding entitlements. Plan notification differs from the individual termination notice — the latter must still observe the advance notice periods by contract type under Article 45 of the Labour Code.
What allowances do employees terminated on closure receive?
It depends on the reduction’s legal character: a job-loss allowance under Article 47 of the Labour Code (for structural change, economic reasons, reorganisation or dissolution under Article 42) at one month’s wage per year of service with a two-month minimum; or severance under Article 46 in other ordinary terminations at half a month per year. Classifying the correct regime inside the plan is mandatory.
Action conclusion
Build the workforce plan as the closure project’s central document, with headcount, money figures and the employee representatives’ consultation signature. Every individual termination notice issued afterwards must trace back to a line in this plan.
This article has been quality-reviewed by the FLAW AI Legal Council