Vietnam: Are employees entitled to severance allowance and pension at the same time?
Vietnam: Are employees entitled to severance allowance and pension at the same time?
According to the provisions of Article 8 of Decree 145/2020/ND-CP, regulations on severance allowance, redundancy allowance are as follows:
Severance allowance, redundancy allowance
1. The employer shall pay severance allowance in accordance with Article 46 of the Labor Code to the employee who has work on a regular basis for at least 12 months when his/her employment contract is terminated in accordance with Clauses 1, 2, 3, 4, 6, 7, 9 and 10 Article 34 of the Labor Code, except in the following cases:
a) The employee is eligible for retirement pension as prescribed in Article 169 of the Labor Code and social insurance laws.
b) The employee leaves his/her job for at least 05 consecutive days without justified reasons according to Point e Clause 1 Article 36 of the Labor Code. Justified reasons are prescribed in Clause 4 Article 125 of the Labor Code.
2. The employer shall pay redundancy allowance in accordance with Article 47 of the Labor Code to the employee who has work on a regular basis for at least 12 months when he/she loses his/her job in the cases specified in Clause 11 Article 34 of the Labor Code.
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Thus, according to the above regulations, The employer shall pay severance allowance to employees who meet the conditions for receiving severance allowance specified in Article 46 of the 2019 Labor Code, except for the following conditions: following cases:
- The employee is eligible for retirement pension as prescribed in Article 169 of the 2019 Labor Code and social insurance laws.
- The employee leaves his/her job for at least 05 consecutive days without justified reasons according to Point e Clause 1 Article 36 of the 2019 Labor Code.
Thus, in cases where employees have met the conditions for retirement pension according to current legal regulations, they will no longer receive severance allowance from the employer according to regulations.
Vietnam: Are employees entitled to severance allowance and pension at the same time?
When will employees be entitled to severance allowance in Vietnam?
Pursuant to Article 46 of the 2019 Labor Code, regulations on severance pay are as follows:
Severance allowance
1. In case an employment contract is terminated as prescribed in Clauses 1, 2, 3, 4, 6, 7, 9 and 10, Article 34 of this Code, the employer is responsible for paying severance allowance to the employee who has worked on a regular basis for a period of at least 12 months. Each year of work will be worth half a month’s salary, except for the cases in which the employee is entitled to receive retirement pension as prescribed by social insurance laws, and the cases specified in Point e Clause 1 Article 36 of this Labor Code.
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Accordingly, the condition to receive severance allowance is when the employee terminates the employment contract in the following cases:
- The employment contract expires, except for the case specified in Clause 4 Article 177 of 2019 Labor Code.
- The tasks stated in the employment contract have been completed.
- Both parties agree to terminate the employment contract.
- The employee is sentenced to imprisonment without being eligible for suspension or release as prescribed in Clause 5 Article 328 of the Criminal Procedure Code, capital punishment or is prohibited from performing the work stated in the employment contract by an effective verdict or judgment of the court.
- The employee dies; is declared by the court as a legally incapacitated person, missing or dead.
- The employer that is a natural person dies; is declared by the court as a legally incapacitated person, missing or dead. The employer that is not a natural person ceases to operate, or a business registration authority affiliated to the People’s Committee of the province (hereinafter referred to as “provincial business registration authority”) issues a notice that the employer does not have a legal representative or a person authorized to exercise the legal representative’s rights and obligations.
- The employee unilaterally terminates the employment contract
- The employer unilaterally terminates the employment contract
According to Article 40 of the 2019 Labor Code, the obligations of employee upon illegal unilateral termination of the employment contract are as follows:
Obligations of the employee upon illegal unilateral termination of the employment contract
The employee who illegally unilaterally terminates his/her employment contract shall:
1. Not receive the severance allowance.
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Accordingly, when an employment contract expires or an employee unilaterally terminates the employment contract or the tasks stated in the employment contract have been completed, he/she will receive severance allowance.
However, if the employee unilaterally terminates his/her employment contract illegally, he/she will not receive severance allowance.
In addition, the condition to receive severance allowance is that the employee must have worked for a employer for a period of at least 12 months
When is the start date for retirement benefits in Vietnam?
Pursuant to Clause 2, Article 3 of Decree 135/2020/ND-CP stipulates as follows:
Retirement date and start date for retirement benefits
1. Retirement date is the last day of the month in which one reaches the full retirement age as prescribed.
If an employee continues in employment after his full retirement age as prescribed, the retirement date is the date of termination of employment.
2. The start date for retirement benefits is the first day of the month following the month of the retirement date.
3. If the employee's dossier does not indicate his day and month of birth, but year of birth only, January 1 of his year of birth shall be used as the basis for determining of the retirement date and start date for retirement benefits.
Thus, according to the above regulations, the start date for retirement benefits is the first day of the month following the month of the retirement date.
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