Business restructuring is not simply about changing the organizational chart or streamlining the management structure. In reality, it's a complex legal process where changes in personnel structure must be backed by robust legal documentation. Preparing complete legal documentation for restructuring not only ensures stable business operations but also guarantees strict compliance with the 2019 Labor Code and the 2020 Enterprise Law.
In the context of 2024-2026, when labor inspections are tightened, a well-prepared set of documents is a shield protecting businesses from the risk of lawsuits from employees. Without thorough preparation, businesses could face compensation claims of up to tens of months' salary for each individual if they are declared unlawfully dismissed.
Components of the legal documentation for internal governance restructuring.
Before engaging with external agencies or employees, businesses need to establish a legal foundation from within. Internal records are crucial in establishing the legitimacy and authority of any future structural changes.
Resolutions and decisions of the board of members or board of directors
This is the most important initial document, reflecting the consensus of the highest level of management. This resolution should clearly state the actual reasons for the restructuring, such as technological changes, the need for organizational restructuring, or objective economic difficulties. This helps ensure objectivity and transparency before the law should disputes arise.
The decision to implement is made by the general manager or director.
Based on the Board of Directors' directive, the General Director will issue a detailed implementation decision. This document will concretize the objectives into practical actions and assign specific tasks to each specialized department, such as:
- Human Resources Department: Develop a labor plan and a list of surplus employees.
- Legal Department: Controls the legality of processes and notifications.
- Accounting Department: Budgeting for subsidy payments and fulfilling financial obligations.
Amended company charter and business registration certificate
If the restructuring process results in a change of business type, a change in charter capital, or a change in the legal representative, the business is required to update its legal entity records. Adjusting the business registration certificate at the Department of Planning and Investment helps ensure the legal validity of transactions with third parties and partners.
Labor records in the restructuring process are based on legal regulations.
Labor records are considered the backbone of the entire restructuring process. The accuracy of these documents will directly determine the success or failure of a business when facing labor inspections or civil litigation.
Labor utilization plan after restructuring
According to Article 44 of the 2019 Labor Code, a detailed labor utilization plan must be prepared. This is not just a list of personnel, but a strategic human resources plan that includes:
- The list of employees will continue to be used at either the old or new position.
- List of workers sent for retraining to continue their employment.
- List of employees who have been transferred to part-time work.
- List of employees whose employment contracts will be terminated due to redundancy.
Minutes of the meeting with the employee representative organization at the workplace.
The law requires businesses to engage in substantive discussions with the grassroots trade union executive committee regarding labor utilization plans. These meeting minutes are the most important evidence demonstrating that the business has followed democratic procedures in the workplace, showing respect for the rights and interests of the collective workforce.
Notification sent to the Department of Labor, War Invalids and Social Affairs
When terminating the employment of multiple workers, businesses must send a written notice to the local labor management agency (usually the Department of Labor, War Invalids and Social Affairs). The notice period must be at least 30 days before the official termination date to allow the state agency to exercise its supervisory authority.
List of redundant employees and termination notices.
The notification form sent to each individual employee needs to be carefully drafted. It must clearly state the reason for termination based on the approved employment plan, the specific termination date, and list any benefits the employee will be entitled to.
Checklist of legal documents to prepare for business restructuring.
To help HR and legal departments avoid missing any important documents, businesses can refer to the comprehensive checklist below. Ensuring all necessary documents are properly accounted for will help the process run more smoothly and securely.
| File group | Type of document to prepare | Signatory/Responsible Person |
|---|---|---|
| Legal entity documents | Resolutions/Decisions on policies, amended charters, minutes of Board of Directors/Board of Trustees meetings. | Chairman of the Board of Directors/Board of Trustees |
| Labor process records | Labor utilization plan, Trade Union meeting minutes, Notification sent to the Department of Labor, War Invalids and Social Affairs. | General Manager/Director |
| Employee's personal profile | Notice of termination of employment contract, Decision to terminate employment contract, Minutes of liquidation/handover | Human Resources Director/Director |
| Completion of obligations record | Unemployment benefit payment certificate, Social insurance closing confirmation | Chief Accountant/HR Department |
Note that, depending on the size and specifics of the industry, this checklist may be supplemented with confidentiality commitments or non-compete agreements to maximize the protection of the company's commercial interests after employees leave.
Standard procedures for legal restructuring documentation in 2025.
Following the correct procedure not only helps businesses optimize time but also eliminates legal loopholes that could be exploited in disputes. The following four-step process is derived from modern labor law consulting practices.
Step 1: Approve the policy and issue the overall plan.
The management team needs to carefully review financial reports and market fluctuations. Based on this, they should issue a restructuring resolution, clearly defining the scope of implementation (the entire company or just a department) and the objectives to be achieved after streamlining.
Step 2: Develop a labor utilization plan and seek feedback from the trade union.
The HR department works closely with the legal department to revise the staffing plan. After a draft plan is finalized, the company holds meetings and obtains written feedback from the Trade Union. The goal is to seek consensus and minimize potential conflicts among employees.
Step 3: Fulfill the obligation to notify the management agency.
Submit a formal notification document along with the labor utilization plan to the local labor management agency. Businesses should retain proof of registered mail delivery or receipt of documents from the one-stop service center as a basis for verification within the legally mandated 30-day period.
Step 4: Deciding on contract termination and severance pay.
After the notice period is complete, the company issues a decision to terminate the employment contract for each redundant individual. The final step is to pay severance pay according to Article 47 of the 2019 Labor Code. Specifically, the company pays employees who have worked regularly for 12 months or more and lose their jobs one month's salary for each year of service, but at least two months' salary. Finally, the company completes the procedures to close the social insurance account so that the employees can stabilize their lives as soon as possible.
The line between legitimate restructuring and fabricated reasons for dismissal.
In reality, the line between legally reorganizing the workforce and exploiting restructuring to eliminate unwanted individuals is very thin. Understanding this helps businesses manage their own risks.
When is restructuring considered a legitimate reason?
Restructuring is considered legal when a business can demonstrate an objective change in organizational structure or technology. For example, merging two departments due to a successful digital transformation, or closing a branch due to continuous losses, as confirmed by audited financial statements. All legal documentation for restructuring in this case must demonstrate a logical progression from the initial plan to the implementation and redundancy process.
Signs of unlawful dismissal: fabricating reasons for dismissal.
Conversely, a restructuring process would be considered fraudulent if a company lays off employees but then immediately hires new people in the same positions with different titles. Or, if the company only cuts employees who are in direct conflict with management without a comprehensive staffing plan. When the documentation lacks a systematic approach, the court has the right to question the authenticity of the reasons for the restructuring.
Risks and administrative penalties for incomplete documentation.
Many businesses mistakenly believe that restructuring is the owner's prerogative. However, the lack of legal documentation for restructuring can have serious financial and reputational consequences.
Penalties according to Decree 12/2022/ND-CP
According to Decree 12/2022/ND-CP on administrative penalties in the field of labor, businesses may face the following penalties:
- A fine of 10 million to 20 million VND will be imposed if a labor utilization plan is not prepared, or if the plan is prepared but lacks mandatory contents.
- Fines will be imposed for failing to consult with the employee representative organization at the workplace.
- Fines will be imposed for failing to notify or notifying late the local labor authority about the dismissal of multiple employees.
Labor disputes and their economic consequences.
If the application process is deemed invalid, the termination of the contract will be considered an unlawful unilateral termination of the employment contract. According to case law and judicial practice, the company must reinstate the employee, compensate for lost wages, and pay at least two months' salary as compensation for losses. For a company restructuring hundreds of employees, this compensation amount could lead to bankruptcy.
Notes on the storage of records and legal evidence
For restructured legal documents to be truly effective in providing protection, archiving needs to be done professionally and systematically.
- Statute of limitations for lawsuits: According to labor law, the statute of limitations for employees to request a court to resolve individual disputes is one year. However, businesses should retain records related to restructuring for 5 to 10 years for tax audits or periodic labor inspections.
- Digital transformation of records: The trend for 2025 encourages the digitization of labor records. The use of digital signatures and electronic archiving systems not only facilitates quick retrieval during inspections but also ensures integrity, making them difficult to forge or lose.
- Absolute consistency: All information regarding the reasons for restructuring in internal resolutions, labor utilization plans submitted to the Department, and notices sent to employees must match perfectly. Any discrepancies may be considered a sign of fabricated reasons for unlawful dismissal.
Frequently Asked Questions about Restructuring Documentation Practices
My company is a small startup and doesn't have a labor union yet. What should I do?
If I only cut 2 employees in one department, do I need to create a plan?
What happens if an employee refuses to sign the termination notice?
Conclude
Building and perfecting the legal documentation for restructuring is a crucial task to ensure the sustainable survival of a business during transitional periods. A successful restructuring process is not just about financial figures or new organizational charts, but also about how the business acts professionally through a transparent and legally compliant legal documentation system. Adhering to the procedures from policy approval and labor plan development to notification to regulatory authorities not only minimizes the risk of disputes but also affirms the company's credibility and responsibility towards its employees. In the modern management era, thorough legal preparation is the strongest foundation for businesses to thrive after challenging personnel changes.
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Content production is overseen by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network, CPA Vietnam with over 30 years of experience in accounting, auditing, and financial consulting.
