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A manager at a Singapore-headquartered company messages the HR team on a Tuesday afternoon. Their Vietnam-based team member, hired six months ago through an EOR, is underperforming. The work isn’t meeting expectations, the feedback conversations haven’t landed, and the manager wants to end the employment quickly and move on.
“Can we just give two weeks’ notice and let them go?”
The answer, in Vietnam as in most of Southeast Asia, is no. And the gap between that assumption and the reality of local labor law is where expensive mistakes happen.
Performance management and termination for EOR-employed staff in SEA is one of the least-discussed parts of the EOR relationship and one of the most consequential. This article explains how it actually works, what managers need to understand before things get difficult, and where the EOR’s role begins and ends.
In the United States, employment is generally at-will: either party can end the relationship at any time, for any reason, with little notice. This assumption travels silently into how many Western founders and managers think about their overseas teams.
Southeast Asia operates on an entirely different legal foundation. Most SEA markets use a cause-based termination system. Employment can be ended, but only for defined reasons, with documented processes, proper notice, and in many cases, mandatory severance — regardless of what the employment contract says.
This is not a technicality. Courts across Indonesia, Vietnam, and the Philippines consistently rule in favor of employees in termination disputes, and the financial consequences of getting the process wrong can easily exceed the cost of several months of employment.
Understanding this before you make any performance or exit decision is not optional. It is the foundation everything else rests on.
In an EOR arrangement, the split of responsibility during a termination matters enormously. Getting it wrong delays the process, creates legal exposure, or leaves the employee and the manager operating without a clear plan.
Here is how it typically works:
This means the EOR issues the termination documentation, calculates and processes severance, manages final payroll, and ensures the process complies with local labor law. Any legal exposure from a wrongful termination claim sits with the EOR’s entity, not directly with the client company.
The EOR cannot decide to terminate an employee, that decision belongs to the client. More importantly, the client is responsible for building and documenting the performance record that justifies the termination. If that documentation is weak or absent, the EOR cannot protect the client from a dispute.
The most common mistake is a client company that decides to terminate and assumes the EOR will handle everything from there. In practice, the EOR needs to be brought in early, ideally before the performance conversation reaches the point of no return, so that the right documentation framework is in place from the start.
The single most protective thing a manager can do is build a documented performance record long before termination is on the table. In most SEA markets, the ability to terminate for poor performance depends entirely on whether the employer can show they raised concerns, provided support, gave warnings, and gave the employee a genuine opportunity to improve.
This means:
Document feedback as it happens. Written records of performance conversations, specific concerns raised, and the employee’s response create the paper trail that supports any future process. Verbal conversations that are not documented may as well not have happened from a legal standpoint.
Use formal warning letters where required. In Indonesia, for example, employers must issue up to three formal warning letters over a defined period before terminating for poor performance. Each letter must be specific, signed by the employee to confirm receipt, and filed. Skipping this step means the termination has no legal basis regardless of how poor the performance has been.
Structure a performance improvement plan properly. A PIP in the SEA context is not just a management tool — it is a legal document. It should clearly define the performance gaps, set measurable targets with a defined timeline, outline what support will be provided, and explicitly state that failure to meet the criteria may result to disciplinary action including termination. This should be prepared in consultation with your EOR’s in-country HR team.
Loop in your EOR early. As soon as performance concerns are serious enough that termination is a possible outcome, tell your EOR. They can advise on the documentation requirements for the specific country, ensure the process is set up correctly from the start, and flag anything that could complicate an exit later.
The broad principle is the same across the region — due process, documentation, notice, severance — but the mechanics differ significantly by country. Here is what managers need to know about the three largest markets.
Indonesia has some of the most employee-protective labor laws in the region, reinforced by the Job Creation Law and its subsequent amendments. Termination for poor performance requires three formal warning letters issued over a period of up to six months. Each warning must clearly document the performance issue and give the employee an opportunity to respond.
Even after following the correct process, termination must go through a bipartite negotiation between employer and employee before a formal severance calculation is made.
Severance in Indonesia is calculated based on years of service and includes three components: severance pay, long service pay, and compensation of rights. For an employee with three years of service terminated for performance reasons, the total payout can represent several months of salary.
Attempting to terminate without following this process exposes the employer to reinstatement orders and significant financial penalties.
Vietnam operates a strict cause-based system. Employers cannot terminate an employment contract simply because the relationship is not working. Grounds for termination include repeated failure to perform job requirements (which must be defined in an internal labor policy or performance framework) and acts of serious misconduct.
For indefinite-term contracts, the required notice period is 45 days. For fixed-term contracts, it is 30 days. Employees with 12 or more months of service are entitled to severance calculated at half a month’s salary for each year worked.
Wrongful termination in Vietnam carries severe consequences: courts can order reinstatement plus back pay for the full period since dismissal, plus a penalty of at least two months’ salary on top. A 2018 case saw a Ho Chi Minh City court award the equivalent of approximately USD 87,000 to a wrongfully dismissed employee.
Trade union involvement is also required in many termination cases, which adds procedural steps that must be completed before the termination decision is finalized.
The Philippines Labor Code gives employees strong security of tenure protections. Termination is only lawful for just causes (employee fault, such as serious misconduct or willful disobedience) or authorized causes (business reasons, such as redundancy or retrenchment).
For performance-based terminations, employers must follow a two-notice rule: a written notice specifying the grounds and giving the employee at least five days to respond, followed by a written notice of the actual decision to terminate. Failing to follow this procedure renders the termination procedurally defective, which entitles the employee to nominal damages even if the substantive grounds were valid.
Separation pay is mandatory for authorized cause terminations (for example, redundancy) at one month’s pay per year of service. It is not required for just cause terminations, but the documentation burden to establish just cause is high and disputed regularly before the NLRC (National Labor Relations Commission).
It is worth being direct about the financial stakes. Across the region, wrongful termination remedies typically include:
In Indonesia and Vietnam in particular, disputes can take months or years to resolve through labor tribunals. During that period, the financial exposure compounds. A poorly handled termination of a single employee earning a mid-level SEA salary can cost the equivalent of a year or more of their compensation when all costs are totaled.
This is not an argument against terminating underperforming employees. It is an argument for doing it correctly from the start.
At Glints TalentHub, performance management and offboarding are part of our EOR service — not afterthoughts.
When a client raises a performance concern, our in-country HR teams advise on the documentation framework required in that specific market, help structure warning letters and PIPs that meet local legal standards, and guide the timeline from initial concern through to resolution. We have handled terminations across Indonesia, Vietnam, the Philippines, Malaysia, Thailand, Singapore, and Taiwan — and we understand that the right approach in Jakarta is not the same as the right approach in Manila.
We also ensure that final settlements, severance calculations, and offboarding processes are handled accurately and on time, protecting both the client and the departing employee from unnecessary friction.
The EOR model removes significant complexity from international hiring. It does not remove the need for managers to understand how employment works in the countries where their team sits.
Performance management and termination in Southeast Asia require documentation, process, notice, and patience, in that order. The managers who handle this well are the ones who start building the record early, loop in their EOR before things become urgent, and resist the temptation to move as fast as they would in an at-will market.
The process takes longer than most managers expect. But getting it right the first time is significantly cheaper than learning why it matters the hard way.
This article is brought to you by Glints TalentHub. Leading companies are actively building their borderless teams in Southeast Asia, Taiwan, and beyond. However, the prospect of going borderless can be daunting due to complex regulations and cultural ambiguities. With Glints TalentHub, you’ll have a dedicated team of in-market legal, HR, and talent experts by your side at every step of the way.
Glints TalentHub offers an end-to-end, tech-enabled talent solution that encompasses talent acquisition, EOR, and talent development. We empower businesses to leverage the strengths of regional talent efficiently to build high-performing, cost-efficient teams.
Schedule a no-obligation consultation with our experts to receive a tailored proposal today!
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