Short answer: under Article 20 of the Labor Code 2019 (45/2019/QH14, still in force), labor contracts come in only two types: definite-term (maximum 36 months) and indefinite-term. On unilateral termination: employees need no cause (Article 35), while employers must fall within 1 of 7 statutory cases (Article 36) — and this rule applies equally to both contract types. The most common mistake: “contract expiry” is not “unilateral termination”.
1. Quick comparison table
| Criterion | Definite-term labor contract | Indefinite-term labor contract |
|---|---|---|
| Duration (Art. 20) | Maximum 36 months | No fixed end date |
| Expiry, employee keeps working | New contract must be signed within 30 days | Not applicable |
| No new contract after 30 days | Automatically becomes an indefinite-term contract | — |
| Renewing a definite-term contract | Only ONCE, then an indefinite-term contract must be signed | — |
Unilateral termination: employees vs employers
| Criterion | Employee (Art. 35) | Employer (Art. 36) |
|---|---|---|
| Cause required? | NO cause required | MUST fall within 7 statutory cases |
| Prior notice | 45 / 30 / 03 working days | 45 / 30 / 03 days (illness case: always 03 days) |
| No notice required | 7 employee-protection cases | 2 cases (points d, e of Art. 36) |
| Prohibited from terminating | None | 3 cases (Art. 37) |
2. Analysis of each difference
The two contract types and the “renewal trap”
A definite-term labor contract lasts at most 36 months. Upon expiry, if the employee keeps working, the parties have 30 days to sign a new contract; after 30 days without a new contract, it automatically becomes an indefinite-term contract. Notably, a definite-term contract may be renewed only ONCE — after that renewal, any continuation requires an indefinite-term contract. This is a frequent violation where companies chain one-year contracts repeatedly.
Employee unilateral termination: no cause needed
Article 35 of the 2019 Labor Code allows employees to terminate unilaterally without stating any cause, subject only to prior notice: 45 days for indefinite-term contracts, 30 days for definite-term contracts, and 03 working days for certain special cases. In 7 employee-protection cases listed by law (e.g. maltreatment, harassment, unpaid wages), employees may terminate without prior notice.
Employer unilateral termination: statutory grounds mandatory
Conversely, Article 36 permits employers to terminate unilaterally only in 1 of 7 statutory cases (employee regularly failing to complete work, prolonged illness, force majeure such as natural disaster or fire, employee absent after the statutory deadline, etc.). Prior notice is 45/30/03 days respectively; for the employee-illness case it is always 03 days. Employers are exempt from notice in 2 cases (points d, e of Article 36) and are prohibited from unilateral termination in 3 cases under Article 37 (employee under medical treatment, on maternity leave or nursing a child under 12 months, on annual leave, etc.).
Key point: “contract expiry” is not “unilateral termination”
Expiry of the contract term is a ground for termination of the contract under Article 34 of the Labor Code — the employment relationship ends by operation of law upon expiry, without applying the notice procedures of Articles 35/36. Therefore the phrase “the company unilaterally terminates because the contract expired” is legally wrong: upon expiry the contract terminates by law; it is not a party “unilaterally terminating”. This confusion leads to wrong procedures and wrong compensation obligations.
Unlawful termination: consequences for each party
An employee who terminates unilaterally in violation of law must compensate half a month’s salary under the contract plus an amount for the days of notice not given. An employer who terminates unilaterally in violation of law must reinstate the employee, pay salary for the days the employee could not work, plus at least 02 months’ salary under the contract.
3. Practical notes
- Outdated-law trap: Decree 12/2022/ND-CP on administrative sanctions in the labor sector has been replaced by Decree 283/2026/ND-CP (effective 10/9/2026). Internal documents still citing Decree 12/2022 should be updated.
- Articles 20, 35 and 36 of the 2019 Labor Code were not amended by laws issued in 2024–2026 — the analysis above remains fully valid at the time of writing.
- Companies should review definite-term contracts renewed more than once: legally, these contracts may already have converted into indefinite-term contracts.
- When an employee leaves, clearly distinguish “contract expiry” (Art. 34) from “unilateral termination” (Art. 35/36) in the decision/record to avoid disputes over severance and compensation.
4. Conclusion
Definite-term and indefinite-term labor contracts differ in the 36-month cap and the one-time renewal limit, but each party’s unilateral termination right does not depend on the contract type: employees need no cause, employers must have grounds within the 7 statutory cases. Mastering the boundary between “expiry” and “unilateral termination” helps both sides avoid wrong procedures and undeserved compensation liabilities.
Need a labor contract review? FLAT Law Firm advises on drafting and reviewing labor contracts and handling contract termination disputes under the 2019 Labor Code. Contact us at contact us.
Information in this article is for general reference under the laws in force at the time of writing (14/10/2026) and is not legal advice for any specific case.
Transparency note: This article was drafted by FLAT Law Firm’s AI content production system and has passed the AI content review council (AI Legal Council QA). It has not been reviewed by a human lawyer.
