If I work for 3 years and then resign, will I receive severance allowance in Vietnam? If I retire on pension, will I receive severance allowance in Vietnam?

If I work for 3 years and then resign, will I receive severance allowance in Vietnam?

We have a few questions that we hope to get answered as follows: Employees working with our company from January 2, 2018 to June 30, 2021. During this period, we sign a 2-month probationary contract: From January 2, 2018 to March 2, 2018 and do not participate in social insurance, health insurance, and unemployment insurance. From March 3, 2018 - June 30, 2021, we signed an official labor contract and participated in social insurance, health insurance, and unemployment insurance. So in this case, when an employee quits, does our company have to pay severance benefits to the employee? If yes, how to calculate and level of severance allowance for this case?

According to Article 46 of the 2019 Labor Code, regulations on severance allowance are as follows:

1. Employees will receive severance allowance if they meet the following conditions:

- Termination of the labor contract in one of the following cases

+ Labor contract expires;

+ Completed work according to the labor contract;

+ Both parties agree to terminate the labor contract;

+ The employee unilaterally terminates the legal labor contract;

+ The employer unilaterally terminates the legal labor contract;

....

2. Work regularly for 12 months or more for the employer;

3. Not eligible to receive pension;

4. Not subject to dismissal.

**About calculation: For each year of work, half a month's salary is subsidized

(1) Working time to calculate severance allowance = Total time the employee has worked - Time the employee has participated in unemployment insurance

Severance allowance = 1/2 x Salary to calculate severance allowance x (1) Working time to calculate severance allowance

From the information she provided, it is determined that employees from March 3, 2018 have participated in social insurance, health insurance, and unemployment insurance. Therefore, the company does not have to pay severance benefits to this employee.

To put it simply, severance allowance will partially compensate for the period during which the employee has not paid unemployment insurance (12 months of unpaid unemployment insurance will result in half a month's salary being paid). However, the company has fulfilled its obligations, after signing the official contract, it has participated in paying social insurance, unemployment insurance, and health insurance for employees. Therefore, on June 30, 2021, when an employee quits his job, we do not have to pay this allowance but only carry out our responsibilities according to Article 48 of the 2019 Labor Code.

If I work for 3 years and then resign, will I receive severance allowance in Vietnam? If I retire on pension, will I receive severance allowance in Vietnam? (Image from the Internet)

If I qualify for pension, will I receive severance allowance in Vietnam?

My question is, I legally terminated my labor contract but am still eligible to receive a pension. Is it correct that the Director said that severance allowance is not applied?

Pursuant to Clause 1, Article 46 of the 2019 Labor Code stipulating eligibility for pension, severance allowance is available:

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.

Thus, in case you are eligible for pension according to the provisions of the law on social insurance, you will not be entitled to this severance allowance. Therefore, the company Director's answer is in accordance with the above regulations in Vietnam.

Does period of participation in unemployment insurance count towards receiving severance allowance in Vietnam? 

Let me ask, according to current regulations, is the period of participating in unemployment insurance counted towards receiving severance allowance? That is, if you calculate the time to receive severance allowance, will you also include the time to participate in unemployment insurance?

Pursuant to Clause 2, Article 46 of the 2019 Labor Code, which stipulates that the period of participation in unemployment insurance is included in receiving severance benefits, it is resolved as follows:

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.

Thus, according to the above regulations in Vietnam, it can be seen that the time spent participating in unemployment insurance is not added to calculate the severance allowance period, but the working time used 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 according to the provisions of the law mentioned above.

Best regards!