Every management team wants a clean linkage: miss the KPI and lose the bonus, miss it again and face discipline, miss it persistently and be dismissed. That managerial instinct collides with a legal fact in Vietnam: “low KPI” is not a disciplinary offence, and the lawful route for handling it runs through an entirely different mechanism.
Where KPIs belong: regulations, appraisal policy or contract
Internal labour regulations under clause 2, Article 118 of the 2019 Labour Code catalogue acts of misconduct and their sanctions — rule-breaking behaviour such as lateness, disclosure of secrets or breach of safety procedure. A KPI, by contrast, measures output results, not behaviour. Welding a results target (sales, output, deadlines) into the regulations and attaching sanctions is a structural error: in a dispute the employer will fail to prove the employee’s “fault” in the disciplinary sense, because a weak result may stem from the market, from resources, or from an unrealistic target.
The KPI’s lawful home is the appraisal policy on degree of work completion, issued by the employer after consulting the workplace representative organisation, combined with clauses in the labour contract and a separate bonus policy. That appraisal policy is the legal foundation for point a, clause 1, Article 36: an employee who “regularly fails to complete the work” measured against the policy’s criteria may be unilaterally terminated by the employer, with 45 days’ notice (indefinite-term contract) or 30 days’ notice (fixed-term contract).
Why low KPI cannot ground disciplinary dismissal
Dismissal as a discipline sits in Article 125 with a closed list of cases: theft, embezzlement, gambling, deliberate injury, drug use at the workplace; disclosure of business or technological secrets or IP infringement causing serious damage; workplace sexual harassment as defined in the internal regulations; re-offending while a wage-deferral or demotion sanction is still unexpired; and unauthorised absence reaching the statutory counts. “Low sales numbers” appears in none of them — a dismissal decision citing KPI will be treated as an unlawful dismissal with the full reinstatement and compensation consequences.
This does not leave the employer powerless against weak performance. The lawful toolkit runs: withholding or reducing bonuses under the bonus policy (bonuses are policy payments, and conditioning them on targets is legitimate); recording non-completion and withholding raises under the appraisal policy; retraining or reassignment; and finally unilateral termination under Article 36 where “regular failure” is evidenced by multi-period appraisal data under a validly issued policy. Discipline enters only where low output is paired with concrete misconduct — falsifying KPI data, refusing assigned work.
Transparency: what makes a KPI system survive a challenge
Appraisal policies that collapse under challenge usually fail at three points: the criteria were not issued through the proper sequence (no consultation with the workplace representative organisation); targets were changed mid-period or applied retroactively; and appraisal data is inconsistent or was never communicated to the employee. A defensible system needs: a written policy circulated before the appraisal period; quantified, measurable criteria fed by objective data sources; minuted result discussions acknowledged by the employee each period; and a documented improvement opportunity before termination is contemplated.
For employee complaints about appraisal outcomes, a two-level internal channel (line manager, then HR/director) should precede formal dispute steps through a labour mediator and the court. Adjudication practice places particular weight on “regularity” and prior warning: a single weak KPI period, without documented improvement discussions, is almost never a sufficient basis for lawful termination.
Frequently Asked Questions
Should KPIs go into the internal regulations?
Results targets should not be placed in the regulations to carry discipline. Under Article 118 of the 2019 Labour Code the regulations govern misconduct and sanctions; KPIs belong in the appraisal policy on work completion, issued after consulting the workplace representative organisation, alongside the labour contract and bonus policy. Only concrete misconduct — falsified figures, refusal of assigned work — is disciplinable.
Can an employee be dismissed for low KPI?
Not by disciplinary dismissal: Article 125 of the 2019 Labour Code is a closed list and contains no “low KPI”. The correct route is unilateral termination under point a, clause 1, Article 36 where the employee regularly fails to complete work measured by a valid appraisal policy, with 45 or 30 days’ notice depending on contract type.
How can the employee complain?
Through the company’s internal channel first, then the individual labour dispute sequence (mediator, labour arbitration or court). A termination found unlawful obliges the employer to reinstate the employee and compensate under Article 41 of the 2019 Labour Code.
What does transparency require?
The appraisal policy must be issued and circulated before the period it governs, after consulting the workplace representative organisation; criteria must be measurable from objective data, never changed mid-period or applied retroactively; and each period’s result should be discussed and acknowledged with the employee, with improvement opportunities documented.
This article has been quality-reviewed by the FLAW AI Legal Council