In 2023: In which cases shall employees in Vietnam not receive severance allowance in Vietnam?

In 2023: In which cases shall employees in Vietnam not receive severance allowance in Vietnam?

Pursuant to Clause 1 Article 8 of the Decree 145/2020/NĐ-CP stipulating severance allowance, redundancy allowance as follows:

Severance allowance, redundancy allowance

1. The employer shall pay severance allowance in accordance with Article 46 of the Labor Code to the employee who has work on a regular basis for at least 12 months when his/her employment contract is terminated in accordance with Clauses 1, 2, 3, 4, 6, 7, 9 and 10 Article 34 of the Labor Code, except in the following cases:

a) The employee is eligible for retirement pension as prescribed in Article 169 of the Labor Code and social insurance laws.

b) The employee leaves his/her job for at least 05 consecutive days without justified reasons according to Point e Clause 1 Article 36 of the Labor Code. Justified reasons are prescribed in Clause 4 Article 125 of the Labor Code.

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As regulations above, employees in Vietnam shall not receive receive severance allowance in Vietnam in following cases:

- The employee is eligible for retirement pension as prescribed in Article 169 of the Labor Code and social insurance laws.

- The employee leaves his/her job for at least 05 consecutive days without justified reasons according to Point e Clause 1 Article 36 of the Labor Code.

Cases considered to have legitimate reasons include natural disasters, fires, illness of oneself or a relative with confirmation from a competent medical examination and treatment facility and other cases specified in labor regulations.

Is maternal leave included in the calculation of severance allowance in Vietnam?

Pursuant to Clause 3 Article 8 of the Decree 145/2020/NĐ-CP stipulating severance allowance, redundancy allowance as follows:

Severance allowance, redundancy allowance

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3. The employment period as the basis for calculation of severance allowance or redundancy allowance is the total period over which the employee has worked for the employer in reality (hereinafter referred to as “actual work period”) minus (-) the period over which the employee participates in unemployment insurance and the period over which the employer pays severance allowance or redundancy allowance. Where:

a) The actual work period includes: actual work period; probation period; employer-provided training period; sick leave and maternal leave according to social insurance laws; paid recovery period after an occupational accident or disease according to occupational hygiene and safety laws; paid leave period for fulfillment of citizen’s duties; work suspension period through no fault of the employee; weekly breaks prescribed in Article 111, paid leave prescribed in Article 112, Article 113, Article 114, Clause 1 Article 115; period over which the employee has to perform duties of the employee representative organization prescribed in Clause 2 and Clause 3 Article 176; and work suspension period prescribed in Article 128 of the Labor Code.

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As regulations above, maternal leave is included in the actual work period. Therefore, the maternal leave is included in the calculation of severance allowance in Vietnam.

What are requirements for severance allowance in 2023 in Vietnam?

Pursuant to Article 46 of the Labor Code in 2019 stipulating requirements for severance allowance in 2023 in Vietnam as follows:

Severance allowance

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.

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.

3. The salary as the basis for calculation of severance allowance shall be the average salary of the last 06 months under the employment contract before the termination.

4. The Government shall elaborate this Article.

Therefore, the conditions for receiving severance pay for employees in 2023 include:

- Having worked regularly for one employer for at least 12 months before leaving;

- The employment contract terminates under the following cases:

+ The contract expires, except as provided in Clause 4, Article 177 of the Labor Code in 2019.

+ The work is completed under the contract.

+ The parties agree to terminate the contract.

+ The employee is convicted of imprisonment but is not eligible for probation or does not fall under the case of being released according to the provisions of Clause 5, Article 328 of the Criminal Procedure Code 2015, sentenced to death or prohibited from doing the job stated in the contract according to the judgment, decision of the Court has legal effect.

+ The employee dies; declared by the court to be incompetent to act, missing or deceased.

+ The employer is an individual; declared by the court to be incompetent to act, missing or deceased.

The non-individual employer ceases to operate or is notified by the professional agency for business registration under the provincial People's Committee that there is no legal representative, a person authorized to exercise the rights and obligations of the legal representative.

+ The employee unilaterally terminates the contract according to the provisions of Article 35 of the Labor Code in 2019.

+ The employer unilaterally terminates the contract according to the provisions of Article 36 of the Labor Code in 2019.

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