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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.
Yes, an employee hired through an Employer of Record can be terminated. However, the process must follow the employment laws of the country where the employee works, as well as the employment contract and the EOR’s procedures.
The client company normally identifies the business or performance reason for the termination. The EOR then assesses whether the proposed approach is legally supportable, explains the required process, prepares the formal documentation, and manages final employment payments.
You should not communicate a final termination decision to an EOR employee before consulting the EOR. An early conversation can create legal and employee relations complications if the termination grounds, notice period, severance, or supporting documents have not yet been reviewed.
Performance management in an Employer of Record arrangement is a shared responsibility. The client company manages the employee’s daily work and performance, while the EOR handles formal employment processes and local compliance.
Clear coordination between both parties is especially important when performance concerns may lead to a warning, performance improvement plan, or termination.
The client company is responsible for managing the employee’s role, priorities, and day to day performance. Although the EOR is the legal employer, the client works most closely with the employee and has the clearest view of their work.
The client company typically manages:
Performance concerns should be supported by specific examples rather than general statements such as the employee being a poor fit. Employers should document what was expected, what happened, when feedback was provided, and what support was offered.
This documentation helps the EOR understand the situation and assess the appropriate next steps under local employment requirements.
The EOR manages the employee’s formal employment relationship and helps ensure that any performance related process complies with local regulations.
The EOR typically manages:
The EOR may also advise the client to gather additional documentation, provide more time for improvement, or follow another formal process before termination can be considered.
Clients should involve the EOR before issuing formal warnings or communicating a final employment decision. This gives the EOR time to review the proposed approach and identify potential compliance risks.
Some performance and offboarding activities require close coordination between the client company and the EOR.
Both parties normally work together to manage:
For example, the client may explain the employee’s performance gaps during a performance improvement plan, while the EOR ensures that the process and supporting documents meet local requirements.
If termination becomes necessary, both parties should agree on the timing, key messages, final payments, system access, equipment return, and employee handover before the exit meeting takes place. This helps protect the business while giving the employee a clear and respectful offboarding experience.
| You can | You should not do |
|---|---|
| Set performance expectations | Promise a specific termination date before legal review |
| Give regular feedback | Issue formal termination documents on behalf of the EOR |
| Document missed targets | Tell the employee they are dismissed without involving the EOR |
| Provide coaching and support | Deduct salary or benefits without a lawful basis |
| Recommend a performance plan | Assume your home country’s termination rules apply |
| Raise a termination request | Skip warnings, consultation, or notice requirements |
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. Because the EOR is the legal employer, it normally issues the formal termination documents and manages the local employment process. However, this does not remove every risk from the client company.
The client remains responsible for providing accurate information, documenting performance concerns, following the agreed process, and avoiding discriminatory or retaliatory decisions. Termination costs, settlements, legal expenses, or claims may also be allocated between the client and the EOR under their service agreement.
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.
Offboarding an employee hired through an Employer of Record requires coordination between the client company and the EOR. The client provides the business context and employee records, while the EOR manages the formal employment process under local law.
Because notice periods, severance, documentation, and final pay rules vary by country, the process should begin before the employee is informed of a final decision.
The client company should contact the EOR as soon as termination or separation is being considered.
The request should include:
Clear and complete information allows the EOR to assess the case accurately and recommend the most appropriate next steps.
The EOR reviews the proposed reason, available documentation, employment contract, and local legal requirements.
Depending on the circumstances, the EOR may recommend:
The client should not confirm the termination date or communicate a final decision until this review is complete.
Before the employee is informed, both parties should confirm the financial and contractual obligations connected to the separation.
These may include:
The final calculation depends on the employee’s location, contract, length of service, and reason for termination.
The client and EOR should agree on how the decision will be communicated.
This includes deciding:
The conversation should be clear, respectful, and consistent with the approved legal process.
During the exit meeting, the employee should receive a clear explanation of the decision, final working arrangements, notice requirements, payments, and next steps.
The EOR normally handles the formal employment communication, while the client may explain business decisions, performance concerns, or handover expectations.
Both parties should avoid introducing new reasons or information that were not included in the earlier review.
The client company is responsible for protecting business information and ensuring an orderly transfer of work.
The handover plan may include:
Access removal should be timed carefully so that it supports both security and a respectful employee experience.
The EOR normally manages the employee’s final payroll and statutory employment closure.
This may include:
The employee should also receive a clear timeline for when final payments and documents will be delivered.
After the employee has left, the client and EOR should confirm that all required steps have been completed.
This includes checking that:
A documented closing review helps reduce the risk of missed payments, unresolved access, or employee disputes after the final working date.
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 employment law 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.
No. The client can request and support the decision, but the EOR is normally responsible for carrying out the formal employment process as the legal employer.
The client normally manages daily responsibilities, objectives, feedback, and performance. The EOR provides local HR and compliance guidance when formal action may be required.
An EOR helps reduce risk by managing the process under local law, but it cannot make an unsupported or unlawful termination risk free. The client must provide accurate information and follow the agreed process.
Not always. Severance depends on the country, termination grounds, contract, tenure, and applicable employment rules.
The EOR should be contacted as soon as a performance issue may lead to formal disciplinary action or termination. Early involvement gives both parties more time to create the correct documentation and timeline.
Yes. The client and EOR can coordinate a performance improvement plan, but its structure and role in a possible termination should be reviewed according to local requirements.
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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