When will employees receive severance allowance in Vietnam in 2024? How to calculate severance allowance in 2024?
How to calculate severance allowance in Vietnam in 2024?
Pursuant to the provisions of Article 46 of the 2019 Labor Code, it is stipulated 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.
2. The qualified period of work as the basis for calculation of severance 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 calculation of severance 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.
Thus, according to the above regulations, if an employee quits his job according to regulations and is eligible to receive severance allowance, each year of work will be worth half a month’s salary.
Specifically, the formula for calculating severance allowance is as follows:
Severance allowance = 1/2 x Working time to calculate severance allowance x Salary to calculate severance allowance.
Where:
- The qualified period of work as the basis for calculation of severance 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.
- The salary as the basis for calculation of severance allowance shall be the average salary of the last 06 months under the employment contract before the termination.
For example:
The employee signed an employment contract starting from January 1, 2007, and participated in the unemployment insurance from January 1, 2009. On December 31, 2022, the employment contract was terminated, and at that time, the worker's salary according to the employment contract was 15,000,000 VND per month.
Therefore, the amount of severance allowance that the employee will receive is calculated as follows:
15,000,000 x 0.5 x 2 = 15,000,000 VND.
When will employees receive severance allowance in Vietnam in 2024? How to calculate severance allowance in 2024? (Image from the internet)
In 2024, when will employees receive severance allowance in Vietnam?
Pursuant to the provisions of Article 46 of the 2019 Labor Code, in case an employment contract is terminated as prescribed in Clauses 1, 2, 3, 4, 6, 7, 9 and 10, Article 34 of the 2019 Labor 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.
Thus, employees are entitled to severance allowance in the following cases:
- The employment contract expires, except for the case specified in Clause 4 Article 177 of the 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 2015 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 in accordance with Article 35 of the 2019 Labor Code.
- The employer unilaterally terminates the employment contract in accordance with Article 36 of the 2019 Labor Code.
Note: If the employee falls into one of the following cases, they are not entitled to receive severance pay.
- The employee is entitled to receive retirement pension as prescribed in Article 169 of the 2019 Labor Code and law on social insurance;
- The employee is not present at work without acceptable excuses for at least 05 consecutive working days as prescribed in Point e, Clause 1, Article 36 of the 2019 Labor Code.
Vietnam: Does the employment period as the basis for calculation of severance allowance include work suspension period?
Pursuant to the provisions in Point a, Clause 3, Article 8 of Decree 145/2020/ND-CP, it is stipulates as follows:
Severance allowance, redundancy allowance
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3. 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:
a) 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 prescribed in Article 111, paid leave prescribed in Article 112, Article 113, Article 114, Clause 1 Article 115; period over which the employee has to perform duties of the employee representative organization prescribed in Clause 2 and Clause 3 Article 176; and work suspension period prescribed in Article 128 of the Labor Code.
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According to the above regulations, employment period as the basis for calculation of severance allowance only include work suspension period through no fault of the employee. In case of work suspension due to the employee's fault, it will not be used as the basis for calculation of severance allowance.
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