Guidance on Calculating Severance Allowance after Termination of Employment

Conditions for receiving severance allowance shall be stipulated in Article 46 of the Labor Code 2019. If eligible, follow the guidance below:

The working time for calculating severance allowance is the total actual working time the employee has worked for the employer minus the time the employee has participated in unemployment insurance according to the regulations of the law on unemployment insurance and the time the employer has already paid severance allowance or job loss allowance.

(A) Working time to be calculated for severance allowance = (1) Total actual working time of the employee – (2) Time participating in unemployment insurance

Severance Allowance = (A) Working time calculated for severance allowance * Average salary of the last 06 consecutive months according to the labor contract before termination * 1/2

In which: (Article 8, Decree 145/2020/ND-CP)

(1) Total actual working time of the employee for the employer includes: The time the employee directly worked; probation period; time the employee was sent for training by the employer; time off for sickness, maternity leave as regulated by the law on social insurance; time off for treatment and rehabilitation when having an occupational accident or occupational disease for which the employer pays the salary according to the law on occupational safety and hygiene; time off to fulfill citizen duties as prescribed by the law for which the employer pays the salary; time off due to no fault of the employee; weekly time off as per Article 111, paid time off as per Articles 112, 113, 114, and Clause 1 of Article 115; time spent on tasks as an employee representative organization as prescribed in Clauses 2 and 3 of Article 176; and the time being suspended from work as per Article 128 of the Labor Code.

(2) Time the employee participated in unemployment insurance includes: the time the employee participated in unemployment insurance according to the law and the time the employee was not required to participate in unemployment insurance according to the law but was paid by the employer together with the employee's salary, an amount equivalent to the employer's contribution to unemployment insurance for the employee as prescribed by the law on labor and unemployment insurance.

Note: The working time to calculate severance allowance and job loss allowance of the employee is calculated by the year (full 12 months); for fractional months less than or equal to 06 months it is calculated as 1/2 year, more than 06 months it is calculated as 01 year of work.

Respectfully!