How to differentiate severance allowance, job-loss allowance and unemployment allowance in Vietnam?

Criteria

Severance allowance

Job-loss allowance

Unemployment allowance

Legal basis

Article 48 of the Labor Code in 2012

Article 49 of the Labor Code in 2012

Articles 49 and 50 of the Law on Employment in 2013

Entities paying allowance

Employer

Employer

Social Security Agency

Wage used to calculate allowances

The average wage in accordance with the labor contract during 6 months preceding the time the employee loses his/her work.

The average wage in accordance with the labor contract during 6 months preceding the time the employee loses his/her job.

The average monthly wage of 6 consecutive months before the worker becomes unemployed on which unemployment insurance premiums are based.

Working duration

The working time used to calculate the allowance is calculated on an annual basis (12 months). In case there is an incomplete month, if it is from 01 month to less than 06 months, it will be calculated as 1/2 year; if it is from 06 months or more, it will be calculated as 01 year of work.

This is calculated by subtracting the actual working time the worker has worked from the time the worker has participated in unemployment insurance and the working time for which the worker has received severance allowance from the previous employer (if any).

The period of employment used to calculate the entitlement to allowances is calculated on an annual basis (12 months). In the case of an incomplete month, if it is from 01 month up to less than 06 months, it will be calculated as 1/2 year; if it is from 06 months or more, it will be calculated as 01 year of work.

This is calculated by subtracting the total actual working time of the employee from the time the employee has participated in unemployment insurance and the time for which the employee has received severance allowance from the previous employer (if any).

The duration of unemployment allowance receipt is based on the number of months of payment of unemployment insurance premiums. This duration is 3 months if the period of payment of unemployment insurance premiums is between full 12 months and full 36 months, which is added with 1 month for each additional period of payment of full 12 months, but must not exceed 12 months.

Level of allowance

Each year of work for the purpose of receiving allowances, the employee will receive an allowance equivalent to 1/2 (one-half) month of salary.

Each year of work for the purpose of receiving allowances, the employee will receive an allowance equivalent to 01 month of salary. However, if the period of work used to calculate the allowance is less than 18 months, the employer is responsible for providing a severance allowance to the employee equal to at least 02 months of salary.

The monthly unemployment allowance level equals 60% of the average monthly wage of 6 consecutive months before the worker becomes unemployed on which unemployment insurance premiums are based.

However:

- It must not exceed 5 times the basic wage level, for workers receiving wages under the State-prescribed regime.

- It must not exceed 5 times the region-based minimum wage level under the Labor Code, for workers who pay unemployment insurance premiums under the wage regime decided by employers at the time of termination of the labor contract or working contract.

Eligibility

The employee has a total actual working time for the company of at least 12 months and falls under one of the following circumstances:

- The labor contract has expired;

- The work specified in the labor contract has been completed;

- Both parties agree to terminate the labor contract;

- The employee is sentenced to imprisonment, death penalty, or prohibited from performing the work specified in the labor contract according to the legally effective judgment or decision of the court;

- The employee has passed away, declared legally incapacitated by the court, missing, or confirmed deceased;

- The company terminates its operations;

- The employee unilaterally terminates the labor contract legally;

- The company unilaterally terminates the labor contract legally.

The employee has a total actual working time for the company of at least 12 months and falls under one of the following two cases:

- The company terminates the employment of the employee due to restructuring, technological changes, or economic reasons.

- The company terminates the employment of the employee due to mergers, consolidations, or business separations.

Having participated in unemployment insurance while working under a labor contract or employment contract, specifically:

+ For a period of at least 12 months within the 24 months prior to the termination of the labor contract or fixed-term employment contract or an indefinite-term employment contract.

+ For a period of at least 12 months within the 36 months prior to the termination of the labor contract based on a seasonal or specific project with a duration of at least 03 months but less than 12 months.

- Termination of the labor contract or employment contract, except in cases where the employee unilaterally terminates the labor contract, the employment contract is terminated illegally, or the employee is receiving retirement pension or monthly disability allowance.

- Having submitted an application for unemployment benefits at the job service center.

- Being unemployed for more than 15 days after submitting the application for unemployment insurance, except for cases specified in Clause 4, Article 49 of the Law on Employment in 2013.