Businesses Dissolved Due to Economic Reasons: What Compensation Must Be Offered to Employees?

Based on the regulations stipulated in Clause 2, Article 13 of Decree 05/2015/ND-CP, the economic reasons referred to in Clause 2, Article 44 of the Labor Code 2012 include the following cases:

- Economic crisis or recession;

- Implementation of State policies during economic restructuring or compliance with international commitments.

According to the information you provided, your company is dissolving for economic reasons. Therefore, when terminating labor contracts with employees for this reason, the company is responsible for addressing employment issues for the employees. Specifically, as stipulated in Clause 2, Article 44 of the Labor Code 2012:

"In cases where, due to economic reasons, multiple employees are at risk of losing their jobs or are required to leave their jobs, the employer must develop and implement an employee utilization plan in accordance with the provisions of Article 46 of this Code.

In cases where the employer cannot resolve the employment issue and must terminate employees, the employer must pay job-loss allowances to the employees in accordance with the provisions of Article 49 of this Code."

Therefore, as a principle, when employees are at risk of losing their jobs due to economic reasons, your company is responsible for developing and implementing an employee utilization plan. In cases where employees must be laid off, the company must pay job-loss allowances to the employees.

Specifically, the payment amounts are applied as follows:

- Each employee who has worked regularly for your company for 12 months or more and loses their job is to be paid: one month’s salary for each year of work, but not less than two months' salary.

- The period of work used to calculate the job-loss allowance is the total actual working time of the employee for the company, excluding the period the employee participated in unemployment insurance and the period the company already paid severance benefits (if any).

- The salary used to calculate the job-loss allowance is the average salary based on the labor contract over the six contiguous months before the employee loses their job.

Your company should base its resolution on these regulations to process the job-loss allowance policies for the employees.

Respectfully!