From 2023, 03 subjects in Vietnam will be removed from downsizing program

Hello, Lawnet would like to respond as follows:

The content below is proposed in the Draft Decree on staff downsizing issued by the Government. Accordingly:

1. Removal of 03 subjects from downsizing program in Vietnam

In the Draft Decree on staff downsizing, the Ministry of Home Affairs of Vietnam proposed removing the following 03 subjects:

First, contract employees

- Persons working under indefinite-term labor contracts in administrative agencies, public service providers that have not been granted full autonomy in task performance, finance, organizational structure, and personnel.

- Officers and individuals working under indefinite-term labor contracts at public service providers that have been granted full autonomy in task performance, finance, organizational structure, and personnel.

Second, chairpersons, members of the Members' Council, General Directors, Deputy General Directors, Directors, Deputy Directors, Chief Accountants, and controllers in single-member limited liability companies owned by the State or by political organizations, socio-political organizations (excluding General Directors, Deputy General Directors, Chief Accountants working under labor contract policies).

Third, persons working in the established workforce assigned by the competent state authorities to associations.

Regarding the category of staff downsizing for contract employees, the Draft proposes applying it to contract employees specializing in professional and business tasks at public service providers that self-sustain recurrent and investment expenses; public service providers that self-sustain recurrent expenses; and partially self-sustaining public service providers to align with the provisions of Decree 111/2022/ND-CP.

Moreover, this Decree on staff downsizing will not apply to contract employees specializing in professional and business tasks at public service providers funded by the state budget for frequent expenses, as these individuals sign contracts with a term not exceeding 12 months.

2. Policies for redundant officials and public employees in Vietnam

In the Draft Decree on staff downsizing, it is proposed to add Article 9, which stipulates policies for redundant personnel due to the arrangement of district and commune-level units who retire within 06 months from the date of the competent authority's decision to arrange are entitled to the following benefits:

- Officials;

- Public employees;

- Redundant officers and employees due to the reorganization of district and commune-level administrative units, apart from enjoying one of the policies, will receive additional allowances.

The Ministry of Home Affairs of Vietnam has proposed two options related to this policy adjustment as follows:

+ Option 1: For each month of early retirement before the official end date of the redundancy resolution plan determined by the competent authority, a subsidy of VND 1,800,000 (equivalent to one month’s statutory pay rate applied from July 1, 2023) is provided. For those with fewer months of early retirement compared to the retirement age specified in Appendix I and Appendix II Decree 135/2020/ND-CP, the number of subsidy months is calculated based on the number of months of early retirement compared to the said retirement age.

According to the Ministry of Home Affairs, besides the downsizing subsidy, an equal amount of additional allowance is provided to each person. If the redundancy resolution plan is 05 years, the maximum additional allowance each person receives is VND 108,000,000 (60 months x VND 1,800,000). However, the subsidy is not substantial enough to encourage redundant personnel to retire before the competent authority's redundancy resolution plan.

+ Option 2: For each month of early retirement before the end date of the redundancy resolution plan determined by the competent authority, a subsidy equivalent to half a month’s current salary is provided. For those with fewer months of early retirement compared to the retirement age specified in Appendix I and Appendix II of Decree 135/2020/ND-CP, the number of subsidy months is calculated based on the number of months of early retirement compared to the said retirement age.

For this option, besides the downsizing subsidy, an additional allowance is provided based on the current salary. If the redundancy resolution plan is 05 years and the average salary coefficient is 3.66, the average subsidy each person receives is approximately VND 197,640,000 (3.66 x VND 1,800,000 x 1/2 x 60 months). This subsidy is substantial enough to encourage streamlined personnel to retire before the official end date of the arrangement plan. However, it will significantly affect the budget as each person will receive different levels of subsidy, leading to comparisons among the recipients.

Additionally, the draft on staff downsizing also stipulates that, based on the balance of the local budget, the provincial People's Committee submits to the People's Council at the same level to issue support policies for redundant officials and public employees due to the reorganization of district and commune-level administrative units.

More details can be found in Draft

Please Login to be able to download