If the company in Vietnam terminates the employment contract before the expiration date, what is the amount of compensation paid for employees?
If the company in Vietnam terminates the employment contract before the expiration date, what is the amount of compensation paid for employees? Thank you!
Is it compulsory for a company in Vietnam to give notice to an employee if the company terminates the employee's employment contract before the expiration date?
Pursuant to Clause 2 Article 36 of the Labor Code in 2019 stipulating the right of an employer to unilaterally terminates the employment contract as follows:
The right of an employer to unilaterally terminates the employment contract
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2. When unilaterally terminating the employment contract in any of the cases specified in Point a, b, c, dd and g Clause 1 of this Article, the employer shall inform the employee in advance:
a) at least 45 days in case of an indefinite-term employment contract;
b) at least 30 days in case of an employment contract with a fixed term of 12 – 36 months;
c) at least 03 working days in the case of an employment contract with a fixed term of less than 12 months and in the cases stipulated in Point b Clause 1 of this Article;
d) The notice period in certain fields and jobs shall be specified by the government.
3. When unilaterally terminating the employment contract in the cases mentioned in Point d and Point e Clause 1 of this Article, the employer is not required to inform the employee in advance.
As regulations above, the company must notify the employee in advance if the employee is terminated before the expiration of the employment contract in one of the following cases:
- The employee consistently fails to complete the work under the employment contract, as determined by the performance evaluation criteria in the company's regulations.
- The employee is sick or injured and has been treated for 12 consecutive months for an employee working under an indefinite-term employment contract or for 6 consecutive months for an employee working under a fixed-term employment contract with a term of 12 months to 36 months or for more than half of the employment contract term for an employee working under a fixed-term employment contract with a term of less than 12 months and the employee's ability to work has not yet recovered.
- Due to natural disasters, fires, dangerous diseases, enemy attacks, or relocation, downsizing of production and business at the request of the competent state agency, the employer has taken all measures to mitigate but still forced to reduce jobs;
- The employee is of retirement age, except in cases of agreement;
- The employee provides false information when concluding the employment contract, which affects the recruitment of employees.
The notification period is as follows:
- At least 45 days for an indefinite-term employment contract;
- At least 30 days for a fixed-term employment contract with a term of 12 months to 36 months;
- At least 3 working days for a fixed-term employment contract with a term of less than 12 months and for the case of an employee who is sick or injured and has been treated for 12 consecutive months for an employee working under an indefinite-term employment contract or for 6 consecutive months for an employee working under a fixed-term employment contract with a term of 12 months to 36 months or for more than half of the employment contract term for an employee working under a fixed-term employment contract with a term of less than 12 months and the employee's ability to work has not yet recovered.
- For some industries, occupations, and special jobs, the notification period shall be carried out in accordance with the regulations of the Government.
If the company in Vietnam terminates the employment contract before the expiration date, what is the amount of compensation paid for employees?
Pursuant to Article 41 of the Labor Code in 2019 stipulating obligations of the employer upon illegal unilateral termination of the employment contract as follows:
Obligations of the employer upon illegal unilateral termination of the employment contract
1. The employer that illegally unilaterally terminates an employment contract with an employee shall reinstate the employee in accordance with the original employment contract, and pay the salary, social insurance, health insurance and unemployment insurance premiums for the period during which the employee was not allowed to work, plus at least 02 months’ salary specified in the employment contract.
After the reinstatement, the employee must return the severance allowance or redundancy allowance (if any) to the employer.
Where there is no longer a vacancy for the position or work as agreed in the employment contract and the employee still wishes to work, the employer shall negotiate revisions to the employment contract.
Where the employer fails to comply with the provisions on notice period in Clause 2 Article 36 of this Labor Code, the employer shall pay a compensation that is worth the employee’s salary for the remaining notice period from the termination date.
2. In case the employee does not wish to return to work, in addition to the compensation prescribed in Clause 1 of this Article, the employer shall pay a severance allowance in accordance with Article 46 of this Code in order to terminate the employment contract.
3. Where the employer does not wish to reinstate the employee and the employee agrees, in addition to the compensation mentioned in Clause 1 of this Article and the severance allowance mentioned in Article 46 of this Labor Code, both parties shall negotiate an additional compensation which shall be at least 2 months’ salary under the employment contract in order to terminate the employment contract.
As regulations above, if a company terminates an employment contract before the expiration date in one of the following cases of unilateral termination of an employment contract, the company must compensate the employee for the following amounts:
(1) Salary, social insurance, health insurance, and unemployment insurance premiums for the days the employee was unable to work, and an additional amount of at least 2 months' salary under the employment contract must be paid to the employee.
However, if the company accepts the employee to return to work, the employee will return to the employer the severance pay and unemployment benefits if they have received from the company.
In case of violation of the regulations on the notice period, an amount of money equivalent to the salary under the employment contract for the days without notice must be paid.
(2) In the event that the employee does not want to return to work, the company must pay the following amounts: the amounts in item (1) and severance pay;
(3) In the event that the company does not want to accept the employee back and the employee agrees, the company will compensate the following amounts: the amounts in item (1); severance pay and an amount of at least 2 months' salary under the employment contract.
What is the time limit for a company in Vietnam to pay compensation for unlawful termination of an employment contract before the expiration date?
Pursuant to Clause 1 Article 48 of the Labor Code in 2019 stipulating responsibilities of the parties upon termination of an employment contract as follows:
Responsibilities of the parties upon termination of an employment contract
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.
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As regulations above, a company in Vietnam have to pay compensation within 14 working days following the termination of an employment contract.
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