Do companies not pay severance allowance to employees need mediation before filing a lawsuit in Vietnam?

Do companies not pay severance allowance to employees need mediation before filing a lawsuit in Vietnam?

Article 188 of the Labor Code 2019 stipulates procedures for the settlement of individual labor disputes by labor mediators as follows:

1. Individual labor disputes shall be settled through mediation by labor mediators before being brought to the Labor Arbitration Council or the Court, except for the following labor disputes for which mediation is not mandatory:

a) Disputes over dismissal for disciplinary reasons; unilateral termination of employment contracts;

b) Disputes over damages and allowances upon termination of employment contracts;

c) Disputes between a domestic worker and his/her employer;

d) Disputes over social insurance in accordance with social insurance laws; disputes over health insurance in accordance with health insurance laws ; disputes over unemployment insurance in accordance with employment laws; disputes over insurance for occupational accidents and occupational disease in accordance with occupational safety and health laws;

dd) Disputes over damages between an employee and organization that dispatches the employee to work overseas under a contract;

e) Disputes between the outsourced worker and the client enterprise.

2. The Labor Arbitration Council shall complete the mediation process within 05 working days from the receipt of the request from the disputing parties or the authority mentioned in Clause 3 Article 181 of this Labor Code.

3. Both disputing parties must be present at the mediation meeting. The disputing parties may authorize another person to attend the mediation meeting.

4. The labor mediator shall instruct and assist the parties to negotiate with each other.

In case the two parties reach an agreement, the labor mediator shall prepare a written record of successful mediation which bears the signatures of the disputing parties and the labor mediator.

In case the two parties do not reach an agreement, the labor mediator shall recommend a mediation option for the disputing parties to consider. In case the parties agree with the recommended mediation option, the labor mediator shall prepare a written record of successful mediation which bears the signatures of the disputing parties and the labor mediator.

Where the two parties do not agree with the recommended mediation option or where one of the disputing parties is absent for the second time without a valid reason after having been legitimately summoned, the labor mediator shall prepare a record of unsuccessful mediation which bears the signatures of the present disputing parties and the labor mediator.

5. Copies of the record of successful mediation or unsuccessful mediation shall be sent to the disputing parties within 01 working day from the date on which it is prepared.

6. In case a disputing party fails to adhere to the agreements specified in the record of successful mediation, the other party may request a Labor Arbitration Council or the Court to settle the case.

7. In case mediation is not mandatory as prescribed in Clause 1 of this Article, the labor mediator fails to initiate the mediation by the deadline specified in Clause 2 of this Article, or the mediation is unsuccessful as prescribed in Clause 4 of this Article, the disputing parties may:

a) request the Labor Arbitration Council to settle the dispute in accordance with Article 189 of this Labor Code; or

b) Request the Court to settle the dispute.

The law stipulates that individual labor disputes over allowances upon termination of employment contracts are not required to go through mediation procedures before requesting a court to settle in Vietnam. 

According to this Article, when you want to resolve a dispute related to severance allowance, you can ask the Court to resolve it without having to conduct mediation in Vietnam.

Can employees who file lawsuits to request for payment of severance allowance be exempted from court cost advances in Vietnam?

Article 12 of Resolution 326/2016/UBTVQH14 stipulates full remission of court cost and fee advances and court costs and fees as follows:

1. The following cases are eligible for the full remission of court cost advances and court costs:

a. Laborers who file lawsuits to request for payment of salaries, job loss allowance, severance allowance, social insurance payout, compensations for labor accidents or occupational diseases; settlement of claims for damages or compensations for unlawful dismissal or labor contract termination.

b. Persons who claim support or request identification of parents for minor children or adult children who have lost their civil act capacity.

c. Persons who lodge complaints about or file lawsuits against administrative decisions or acts of applying education and administrative measures in communes, wards or townships;

d. Persons who claim compensations for their life, health, honor or dignity.

dd. Children; poor individuals and households; the elderly; the disabled; people with meritorious services to the revolution; ethnic minority groups in severely disadvantaged communes; relatives of martyrs who are issued with the martyr certificates by competent regulatory agencies.

2. Entities mentioned in clause 1dd of this Article are eligible for the full remission of court fee advances and court fees according to clause 1, Article 4 hereof.

3. If the parties agree that one party shall be subject to the whole court cost or a partial court cost while this party is eligible for the full remission of court costs, the court shall consider approving the full remission of the partial court cost to which such party is subject as specified in the regulations hereof. This party is not eligible for the full remission of the court cost and fee which they pay for another party.

The employee files a lawsuit for severance allowance in the case of being exempted from the court cost advance in Vietnam. 

Therefore, when you sue for severance allowance from the company, you will be exempt from the court cost advance in Vietnam.

When must companies complete payment of severance allowance to employees in Vietnam?

Article 48 of the Labor Code 2019 provides for responsibilities of the parties upon termination of an employment contract as follows:

1. Within 14 working days following the termination of an employment contract, both parties shall settle all payments in respect of the rights and interests of each party. In the following cases, such period may be extended, but shall not exceed 30 days:

a) Shutdown of business operation of the employer that is not a natural person;

b) Changes in the organizational structure, technology or changes due to economic reasons;

c) Full division, partial division, consolidation, merger of the enterprise; sale, lease, conversion of the enterprise; transfer of the right to ownership or right to enjoyment of assets of the enterprise or cooperative;

d) Natural disasters, fire, hostility or major epidemics.

2. 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.

3. The employer has the responsibility to:

a) Complete the procedures for verification of duration of participation in social insurance and unemployment insurance, return them and original copies of the employee’s other documents (if any);

b) Provide copies of the documents relevant to the employee’s work if requested by the employee. The employer shall pay the cost of copying and sending the documents.

According to the above provisions in Vietnam, the company (employer) is responsible for paying severance allowance to the employee within 14 working days from the date of termination of the employment contract, in some cases. In particular, this time limit may be extended but must not exceed 30 days as prescribed above.

Best Regards!