Do bankrupt companies pay severance allowance to employees in Vietnam? Will foreigners who terminate their employment contract receive severance allowance in Vietnam?
Please ask: Do bankrupt companies pay severance allowance to employees in Vietnam? Will foreigners who terminate their employment contracts receive severance allowance in Vietnam? How much severance allowance if I work for 8 years in Vietnam? Please advise.
Do bankrupt companies pay severance allowance to employees in Vietnam?
Can you tell me if the company goes bankrupt, in addition to salary and insurance, will company pay severance allowance for employees? If yes, how many months? Because the previous company did not have any regulations or collective agreements.
Reply:
When the company goes bankrupt, the two parties will terminate the employment contract (Clause 7, Article 34 of the Labor Code 2019).
And according to Article 48 of the 2019 Labor Code:
Priority shall be given to payment of the employees’ salaries, social insurance, health insurance, unemployment insurance, severance allowance and other benefits under the collective bargaining agreement and employment contracts in case of shutdown, dissolution or bankruptcy of an enterprise or cooperative.
In addition, according to Article 46 of the 2019 Labor Code:
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 this regulation in Vietnam, when going bankrupt, the company is responsible for paying severance allowance to employees who have worked regularly for them for full 12 months or more.
Also note: The order of division of assets will comply with Article 54 of the Law on Bankruptcy 2014. If the property value is not enough to pay as prescribed in Clause 1 of this Article, each object shall have the same priority order payable in proportion to the amount owed.
Will foreigners who terminate their employment contracts receive severance allowance in Vietnam?
Foreigners are not subject to unemployment insurance, so they will be paid a severance allowance when they terminate their employment contracts, right?
Reply:
Pursuant to the provisions of Article 43, Clause 1, Article 3 of the Employment Law 2013, an employee eligible to participate in unemployment insurance is defined as a Vietnamese citizen from full 15 years of age or older, capable of have labor capacity and have a need to work, and are working under various types of labor contracts and working contracts in accordance with the provisions of the Labor Code.
=> According to this regulation in Vietnam, foreign workers working in Vietnam are not eligible to participate in unemployment insurance.
At the same time, according to the provisions of Clause 1, Article 46 of the 2019 Labor Code on 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.
Combining the two provisions above, in case a foreign worker terminates his/her employment contract in the cases specified in Clauses 1, 2, 3, 4, 6, 7, 9 and 10, Article 34 of the Labor Code 2019, your company must pay severance allowance to employees in Vietnam.
How much severance allowance if I work for 8 years in Vietnam?
I have been working since 2001 until now, I quit my job (agreement to terminate the employment contract), do not work anywhere anymore. I started participating in compulsory social insurance, unemployment insurance, unemployment insurance,... from 2009 up to now. I heard that from 2001 to 2009 I will receive severance allowance. Is it true? If yes, how much money?
Reply:
The two parties agree to terminate the employment contract as one of the cases of termination of the employment contract under Clause 3, Article 34 of the Labor Code 2019.
Article 46 of the 2019 Labor Code also provides:
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.
According to regulations in Vietnam, the working time to calculate severance allowance is the total time the employee has actually worked for the employer minus the time the employee has participated in unemployment insurance. In 2009, you just started participating in unemployment insurance, so the working period from 2001 to the end of 2008 (08 years) you will be entitled to severance allowance.
Based on the above provisions in Vietnam, in this case, you will receive a severance allowance equal to 4 months' salary (average salary of the 6 consecutive months according to the employment contract before you quit your job).
You base on the above regulation and determine the salary to calculate specific severance allowance to know how much severance allowance you will receive in Vietnam.
Best regards!
