Understanding monetary fines in lieu of labor disciplinary measures

Imposing monetary fines in lieu of labor disciplinary measures is an unlawful practice that still commonly occurs within enterprises. The article below outlines the legal regulations concerning monetary fines imposed in place of labor disciplinary actions and addresses several related issues in order to help individuals and organizations protect their lawful rights and interests.

I. Current situation regarding monetary fines in lieu of labor disciplinary measures

The imposition of monetary fines in place of labor disciplinary measures is an act expressly prohibited under labor law regulations. Despite such prohibition, such a practice remains prevalent in certain enterprises. In practice, many companies still arbitrarily incorporate provisions on monetary fines into their internal labor regulations or separate agreements with employees in order to handle labor violations.

II. Concept of monetary fines in lieu of labor disciplinary measures

1. What constitutes a monetary fine in lieu of labor disciplinary measures?

Pursuant to Article 117 of the Labor Code 2019, labor discipline refers to regulations governing compliance with working hours, technology, and production or business management issued by the employer in the labor rules and prescribed by law.

Accordingly, imposing monetary fines in lieu of labor disciplinary measures is a prohibited act in labor discipline handling whereby the employer requires the employee to pay a sum of money or deducts an amount from the employee’s salary for violations of labor rules instead of applying lawful disciplinary measures prescribed by law.

2. Are monetary fines and salary deductions the same?

Monetary fines and salary deductions in labor relations are entirely different in terms of legal nature and purpose, specifically as follows:

• Monetary fines: It refers to requiring an employee to pay a specific amount of money to the company for violating labor rules. Imposing monetary fines in lieu of labor disciplinary measures is a prohibited act under Clause 2 Article 127 of the Labor Code 2019. Employers are not permitted to impose monetary fines when handling labor discipline.
• Salary deductions: It refers to the employer deducting part of the employee’s salary in accordance with legal regulations in order to compensate for amounts previously paid out or damages previously incurred. Pursuant to Clause 1 Article 102 of the Labor Code 2019, employers are only permitted to deduct employees’ salaries to compensate for damages caused by employees to tools, equipment, or property of the employer in accordance with Article 129 of the Labor Code.

III. Legal regulations relating to monetary fines in lieu of labor disciplinary measures

1. What forms of labor disciplinary measures are recognized under current law?

Pursuant to Article 124 of the Labor Code 2019, the forms of labor disciplinary measures include:

• Reprimand;
• Deferral of salary increase for no more than 06 months;
• Demotion;
• Dismissal.

Accordingly, the above are the forms of labor disciplinary measures recognized under current law.

2. Who has the authority to impose labor disciplinary measures?

Point i Clause 2 Article 69 of Decree No. 145/2020/NĐ-CP provides that the person having authority to impose labor disciplinary measures is the person authorized to execute employment contracts on behalf of the employer as prescribed in Clause 3 Article 18 of the Labor Code, or another person specifically designated in the labor rules.

Referring to Clause 3 Article 18 of the Labor Code 2019, the person authorized to execute employment contracts on behalf of the employer includes one of the following:

• The legal representative of the enterprise or a person authorized in accordance with law;
• The head of an agency or organization possessing legal entity status in accordance with law, or a person authorized in accordance with law;
• The representative of a household, cooperative group, or other organization without legal entity status, or a person authorized in accordance with law;
• An individual directly employing labor.

Therefore, the authority to impose labor disciplinary measures belongs to the person authorized to execute employment contracts on behalf of the employer in accordance with the above provisions.

3. What are the administration sanctions for unlawfully imposing monetary fines?

Pursuant to Point b Clause 3 and Point d Clause 4 Article 19 of Decree No. 12/2022/NĐ-CP, employers who impose monetary fines or salary reductions in place of labor disciplinary measures may be subject to fines ranging from 20,000,000 VND to 40,000,000 VND. In addition, the employer is required to refund the unlawfully collected amounts or fully repay the deducted wages to the employee.

In general, the sanction for unlawfully imposing monetary fines ranges from 20,000,000 VND to 40,000,000 VND.

IV. Questions relating to monetary fines in lieu of labor disciplinary measures

1. What evidence should employees prepare when filing a complaint regarding unlawful monetary fines?

When filing a complaint concerning unlawful monetary fines, employees should prepare evidence proving the employer’s violations. Important evidence includes:

• Sanction decision: An official document bearing the company’s seal and signature specifying the fine amount and reasons for the penalty.
• Receipt or payment voucher: If the employee has directly paid the monetary fine.
• Labor rules (if any): Provisions prescribing monetary fines in disciplinary handling (the use of monetary fines in lieu of disciplinary measures is prohibited by law).
• Other supporting evidence: Messages, emails, or recordings of conversations with managers or human resources personnel concerning the imposition or threat of monetary fines. Testimony from colleagues witnessing the incident or subject to similar penalties may also serve as evidence.

2. Can employees request reimbursement of unlawfully imposed monetary fines?

Pursuant to Point d Clause 4 Article 19 of Decree No. 12/2022/NĐ-CP, in addition to being subject to administrative sanctions, employers are required to refund the unlawfully collected amounts or fully repay the deducted wages to employees where unlawful monetary fines have been imposed instead of lawful labor disciplinary measures.

Accordingly, employees are fully entitled to request reimbursement of unlawfully imposed monetary fines from the employer.

3. Is a monetary fine clause in an employment contract lawful?

The acts of imposing monetary fines or reducing salaries in place of labor disciplinary measures are prohibited under Clause 2 Article 127 of the Labor Code 2019.

Additionally, Article 49 of the Labor Code 2019 provides that an employment contract shall be wholly invalid in the following cases:

• The entire content of the employment contract violates the law;
• The person entering into the employment contract lacks proper authority or violates the principles for entering into employment contracts prescribed in Clause 1 Article 15 of the Labor Code;
• The work agreed upon in the employment contract is prohibited by law.

An employment contract shall be partially invalid where only part of its content violates the law without affecting the remaining parts of the contract.

Therefore, if an employment contract contains a monetary clause, such provision is unlawful and shall be deemed invalid.

4. Can an employee resign immediately when unlawfully subjected to monetary fines?

Pursuant to Article 35 of the Labor Code 2019, employees have the right to unilaterally terminate their employment contracts, provided that prior notice is given to the employer as follows:

• At least 45 days for indefinite-term employment contracts;
• At least 30 days for definite-term employment contracts with a duration from 12 months to 36 months;
• At least 03 working days for definite-term employment contracts with a duration of less than 12 months;
• For certain specific industries, professions, or jobs, the notice period shall comply with Government regulations (this point is guided by Article 7 of Decree No. 145/2020/NĐ-CP).

- Employees are entitled to unilaterally terminate employment contracts without prior notice in the following cases:

• The employee is not assigned the agreed work, workplace, or working conditions, except as prescribed in Article 29 of the Labor Code;
• The employee is not fully paid or is paid late, except as prescribed in Clause 4 Article 97 of the Labor Code;
• The employee is abused, assaulted, insulted, or subjected to conduct affecting health, dignity, or honor, or is subjected to forced labor;
• The employee is sexually harassed in the workplace;
• A pregnant female employee is required to cease working according to Clause 1 Article 138 of the Labor Code;
• The employee reaches retirement age under Article 169 of the Labor Code, unless otherwise agreed by the parties;
• The employer provides dishonest information pursuant to Clause 1 Article 16 of the Labor Code affecting the performance of the employment contract.

Accordingly, employees may resign when unlawfully subjected to monetary fines (or unilaterally terminate the employment contract) without being deemed unlawfully terminating the contract, provided that they comply with the statutory notice periods set out above.

5. Can employees file complaints or initiate lawsuits when subjected to monetary fines?

Pursuant to Clause 1 Article 3 and Point a Clause 1 Article 10 of Decree No. 24/2018/NĐ-CP, labor complaints are understood as requests by employees for competent authorities to reconsider labor-related decisions or acts of employers where there are grounds to believe that such decisions or acts violate labor law and infringe upon employees’ lawful rights and interests. Complainants have the right to file complaints themselves or authorize others to do so on their behalf.

Pursuant to Article 187 of the Labor Code 2019, authorities, organizations, and individuals competent to resolve individual labor disputes include:

• Labor conciliators;
• Labor arbitration councils;
• People’s Courts.

Additionally, Article 186 of the 2015 Civil Procedure Code provides that agencies, organizations, and individuals have the right to initiate lawsuits themselves or through lawful representatives before competent courts in order to protect their lawful rights and interests.

V. Why should you seek legal consultation from NPLaw regarding issues relating to monetary fines in lieu of labor disciplinary measures?

The above information provided by NPLaw aims to address common concerns relating to monetary fines imposed in place of labor disciplinary measures. With a team of experienced lawyers and legal specialists, NPLaw provides reputable and professional legal services, ensuring the best protection of clients’ lawful rights and interests. If you require assistance with legal matters, you may contact NPLaw for consultation and support.

The above information is provided for reference purposes only. Should clients require detailed advice regarding specific cases, please contact NPLaw Law Firm for prompt consultation.