Regulations on redundancy pay in Vietnam

Regulations on redundancy pay in Vietnam

Cases of redundancy pay in Vietnam are specified in Article 47 of the Labor Code dated November 20, 2019 and Article 8 of Decree No. 145/2020/ND-CP dated December 14the 2020, effective from February 1st ,2021

1. Regulations on cases of redundancy pay in Vietnam

Employers are responsible for paying redundancy allowances to employees who have worked regularly for them for full 12 months or more but lose their jobs according to the provisions of Articles 42 and 43 of the Code. Labor, specifically:

a) In case of change of structure, technology or economic reasons

b) Upon division, separation, consolidation or merger; sale, lease, change the type of business; Transfer of ownership, right to use assets of enterprises or cooperatives

2. Regulations on conditions and levels of redundancy pay in Vietnam

- Where an labour contract is terminated according to above Clause and the employee has worked on a regular basis for the employer for at least 12 months,
the employer shall pay a redundancy allowance to the employee. Each year of work will be worth 01 month’s salary and the total redundancy allowance shall not be smaller than 02 month’s salary.

- In case labour contract is terminated as above, and employee has worked on a regular basis for the employer for at least of 12 months and loses his job but the qualified period for calculation of the redundancy allowance specified in Clause 3 of this Article is less than 24 months then the employer is responsible for paying a redundancy allowance to the employee at least equal to 02 months” salary.

3. Regulations on the qualified period of work as the basis for calculation of redundancy allowance in Vietnam.

The qualified period of work as the basis for calculation of redundancy allowance shall be the total period during which the employee actually worked for the employer minus the period over which the employee participated in the unemployment insurance in accordance with unemployment insurance laws and the period for which redundancy allowance or redundancy allowance has been paid by the employer, in which:

a)The total period during which the employee actually worked for the employer including: the period the employee has directly worked; probationary period; period being sent by the employer to attend school; the period of leave to enjoy the sickness and maternity benefits in accordance with the law on social insurance; sick leaves for treatment, occupational rehabilitation in case of occupational accident or occupational disease, which is paid by the employer in accordance with the law on occupational safety and sanitation; time off from work to perform civic duties in accordance with the law, which is paid by the employer; the time off work is not due to the fault of the employee; weekly leave according to Article 111, leave with full salary under Article 112, Article 113, Article 114, Clause 1 Article 115; the time for performing the tasks of the representative organization of employees as prescribed in Clauses 2 and 3 of Article 176 and the time of being temporarily suspended from work according to Article 128 of the Labor Code.

b)The period over which the employee participated in the unemployment insurance includes: the time the employee has participated in unemployment insurance according to the provisions of law and the period the employee is not required to participate in unemployment insurance as prescribed by law, but is paid by the employer together with the employee”s salary an amount equivalent to the level of unemployment insurance premium paid by the employer in accordance with the labor and unemployment insurance laws.

4. The salary as the basis for calculation of redundancy allowance is prescribed as follows:

a) The salary as the basis for calculation of redundancy allowance shall be the average salary of the last 06 months under the employment contract before the termination.

b) In case the employee works for the employer under many successive labor contracts as prescribed in Clause 2, Article 20 of the Labor Code, the salary used for calculation of redundancy allowance shall be the average salary of 06 consecutive months under the labor contract before the termination of the last labor contract. In case the last labor contract is declared invalid because the content of the salary is lower than the regional minimum wage announced by the Government or the salary stated in the collective labor agreement, the salary used as the basis for calculation of redundancy allowance shall be agreed upon by the two parties but must not be lower than the regional minimum wage or the salary stated in the collective labor agreement.

LAWYER VIETNAM LAW FIRM- Vietnamese Lawyers