Redundancy allowance in Vietnam 2022: How are the conditions and benefits of redundancy allowance regulated?
How are the conditions for redundancy allowance regulated in Vietnam?
For regulations on conditions for receiving redundancy allowance, Article 47 of the Labor Code 2019 specifies as follows:
Article 47. 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.
2. 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 severance allowance or redundancy allowance has been paid by the employer.
3. The salary as the basis for the calculation of redundancy allowance shall be the average salary of the last 06 months under the employment contract before the termination.
4. The Government shall elaborate this Article.
Accordingly, the employer is responsible for paying redundancy allowance to employees who meet the following conditions:
- Have worked regularly for the employer for a full 12 months or more.
- Job loss due to:
+ Change of structure and technology: Change of organizational structure, reorganization of labor; product changes, product structure; changes in production and business processes, technologies, machinery and equipment associated with production and business lines;
+ Economic reasons: Crisis or recession; implement the State's policies when restructuring the economy or implementing international commitments;
+ Division, separation, consolidation, merger of enterprises;
+ Selling, leasing, transforming the type of enterprise;
+ Transfer of ownership or right to use assets of enterprises or cooperatives
Redundancy allowance in Vietnam 2022: How are the conditions and benefits of redundancy allowance regulated?
How is the latest redundancy allowance calculated in Vietnam?
Also according to Article 47 of the Labor Code 2019, eligible employees will receive a redundancy allowance for each working year equal to 01 month's salary but must be at least equal to 02 months of salary.
Concrete:
Redundancy allowance = Working time calculated for benefits x Monthly salary calculated for benefits
How is the working time to calculate redundancy allowance in Vietnam?
Regarding the working time to calculate the redundancy allowance, in Clause 3 Article 8 of Decree 145/2020/ND-CP stipulates that the working time to calculate the redundancy allowance is the total time the employee has worked for the employer minus the time he has participated in unemployment insurance (UNEMPLOYMENT INSURANCE) and the time that has been paid only severance allowance, redundancy allowance.
The calculation of working time to calculate specific redundancy allowance is as follows:
Working time calculated for benefits = Total actual working time - Time spent on unemployment insurance - Working time paid severance pay, redundancy
Inside:
- The total time the employee has actually worked includes:
+ Direct working time;
+ Probationary period;
+ The time sent by the employer to study;
+ Time off for sickness and maternity leave;
+ Time off for treatment and rehabilitation when suffering from labor accidents or occupational diseases that are paid by the employer;
+ Time off to perform public obligations that is paid by the employer;
+ The work stoppage time is not due to the fault of the employee;
+ Weekly breaks;
+ Paid time off work;
+ Time for performing the tasks of the representative organization of employees;
+ Period of temporary suspension of work.
- The time spent participating in unemployment insurance includes:
+ The time the employee has participated in unemployment insurance;
+ The time the employee is not required to participate in unemployment insurance but is paid by the employer along with the salary an amount equivalent to the unemployment insurance contribution.
- The working time to calculate the redundancy allowance is calculated by year (full 12 months), so odd-month cases will be rounded:
+ Having odd months or equal to 06 months is calculated as 1/2 year;
+ Over 06 months is calculated as 01 year.
How is the monthly salary for calculating redundancy allowance regulated in Vietnam?
According to the provisions of Clause 5 Article 8 of Decree 145/2020 / ND-CP, the monthly salary calculated for redundancy allowance is the average salary of 6 consecutive months under the labor contract before the employee loses his/her job.
In case the employee works under several consecutive labor contracts, the salary calculated for redundancy allowance shall be determined as follows:
- Is the average salary of 06 consecutive months under the labor contract before terminating the last labor contract.
- If the final labor contract is declared invalid (because the salary is lower than the regional minimum or the level in the collective labor agreement), the subsidized wage will be agreed upon by the parties but must not be lower than the regional minimum or the salary according to the collective labor agreement.
Above is some of the information we provide to you. Best regards!
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