What are the regulations on the conditions and calculation of redundancy allowance for employees in Vietnam in 2023?
What are the conditions for employees to enjoy redundancy allowance in 2023?
Pursuant to Clause 1, Article 47 of the 2019 Labor Code of Vietnam stipulating as follows:
Redundancy allowance
1. Where an employment contract is terminated according to Clause 11 Article 34 of this Labor Code 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.
Thus, the condition for enjoying redundancy allowance in 2023 is that the employee must fully meet the following conditions:
(i) The employee has worked on a regular basis for the employer for at least 12 months.
(ii) The employee lose her/his job due to:
- Changes in structure and technology, including: Changes in the organizational structure, personnel rearrangement; Changes in processes, technology, equipment associated with the employer’s business lines; Changes in products or product structure.
- Changes due to economic reasons, including: Economic crisis or economic depression; Changes in law and state policies upon restructuring of the economy or implementation of international commitments.
- Full division, partial division, consolidation, merger of the enterprise;
- Sale, lease, conversion of the enterprise;
- Transfer of the right to ownership or right to enjoyment of assets of the enterprise or cooperative.
Conditions and calculation of redundancy allowance for employees in Vietnam in 2023
How is the 2023 redundancy allowance in Vietnam calculated?
Pursuant to the provisions of Article 47 of the 2019 Labor Code of Vietnam and Article 8 of Decree No. 145/2020/ND-CP, the redundancy allowance in 2023 is calculated on the following grounds:
- Calculation method: 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.
- The monthly salary as the basis for calculation of redundancy allowance:
Pursuant to Clause 5, Article 8 of Decree No. 145/2020/ND-CP, the salary as the basis for calculation of severance allowance and redundancy allowance is the average salary of the last 06 months under the employment contract before the employee terminates the last employment contract.
Note:
+ In case the employee works for the employer under consecutive employment contracts, the salary as the basis for calculation of severance allowance and redundancy allowance is the average salary of the last 06 months before the last employment contract is terminated.
+ In case the last employment contract is invalidated due to lower salary than the region-based minimum wage announced by the Government or lower than the salary specified in the collective bargaining agreement, the salary as the basis for calculation of severance allowance and redundancy allowance shall be negotiated by both parties but must not be lower than the region-based minimum wage or the salary specified in the collective bargaining agreement.
- The employment period as the basis for calculation of redundancy allowance:
Pursuant to Clause 3, Article 8 of Decree No. 145/2020/ND-CP, the employment period as the basis for calculation of severance allowance or redundancy allowance is the total period over which the employee has worked for the employer in reality (hereinafter referred to as “actual work period”) minus (-) the period over which the employee participates in unemployment insurance and the period over which the employer pays severance allowance or redundancy allowance. Where:
(i) The actual work period includes:
+ Actual work period;
+ Probation period;
+ Employer-provided training period;
+ Sick leave and maternal leave according to social insurance laws;
+ Paid recovery period after an occupational accident or disease according to occupational hygiene and safety laws;
+ Paid leave period for fulfillment of citizen’s duties;
+ Work suspension period through no fault of the employee;
+ Weekly breaks;
+ Period over which the employee has to perform duties of the employee representative organization;
+ Work suspension period.
(ii) The period over which the employee participates in unemployment insurance includes: the period over which the employee participates in unemployment insurance and the period over which participation in unemployment insurance is not mandatory but the employer has paid in addition to salary an extra amount equal to the unemployment insurance premium.
What is the time limit for payment of redundancy allowance in Vietnam?
In the case of the period of payment of redundancy allowance, Clause 2, Article 18 of Decree No. 28/2015/ND-CP provides as follows:
Settlement of redundancy allowances
…
2. Payment of redundancy allowance
a) Social insurance organization shall pay redundancy allowance for the first month of the employees within 05 working days from receipt of the decision of redundancy allowances;
b) Social insurance organizations shall pay redundancy allowance for the employees from the second redundancy allowance month onwards within 05 working days from the 07th day of the month of redundancy allowance if they do not receive a decision of suspension or termination of redundancy allowance for the employees. If the above 07th day is a holiday, the payment deadline of redundancy allowances shall be the next working day.
Thus, up to about four months after resignation, eligible employees will receive redundancy allowance.
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