What is duration for company to settle all salary payments for employees after termination of their employment contracts in Vietnam?

What is duration for company to settle all salary payments for employees after termination of their employment contracts in Vietnam?

Article 48 of the Labor Code 2019 stipulates responsibilities of the parties upon termination of an employment contract, specifically as follows:

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.

2. Priority shall be given to payment of the employees’ salaries, social insurance, health insurance, unemployment insurance, severance allowance and other benefits under the collective bargaining agreement and employment contracts in case of shutdown, dissolution or bankruptcy of an enterprise or cooperative.

3. The employer has the responsibility to:

a) Complete the procedures for verification of duration of participation in social insurance and unemployment insurance, return them and original copies of the employee’s other documents (if any);

b) Provide copies of the documents relevant to the employee’s work if requested by the employee. The employer shall pay the cost of copying and sending the documents.

Thus, when terminating the employment contract in Vietnam, the company must settle all payments related to the employee's benefits within 14 working days, except for some special cases, but not more than 30 days. 

How much is fine for the company that fails to comply with regulations on time limits for settling salary payments for 25 employees in Vietnam?

According to Clause 2, Clause 4, Article 12 of Decree 12/2022/ND-CP, the following provisions are made:

2. The following fines shall be imposed upon an employer for commission of one of the following violations: Changing the term of an employment contract using its annex; failing to comply with regulations on time limits for settling all payments in respect of the rights and interests of employees when terminating the employment contracts; failing to pay or insufficiently paying severance allowances to employees in accordance with regulations of law; failing to pay or insufficiently paying redundancy allowances to employees in accordance with regulations of law; failing to make or insufficiently making the prescribed payments to employees when unilaterally terminating their employment contracts in breach of law; failing to complete procedures for certification of duration of participation in social insurance and unemployment insurance, and return the certification and original copies of other documents to employees after terminating their employment contracts in accordance with regulations of law; failing to provide copies of the documents relevant to the employee’s working period if requested by the employee after terminating his/her employment contract:

a) A fine ranging from VND 1.000.000 to VND 2.000.000 shall be imposed if the violation involves 01 - 10 employees;

b) A fine ranging from VND 2.000.000 to VND 5.000.000 shall be imposed if the violation involves 11 - 50 employees;

c) A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the violation involves 51 - 100 employees;

d) A fine ranging from VND 10.000.000 to VND 15.000.000 shall be imposed if the violation involves 101 - 300 employees;

dd) A fine ranging from VND 15.000.000 to VND 20.000.000 shall be imposed if the violation involves 301 employees or more.

4. Remedial measures

a) The employer is compelled to make full payments of severance allowances or redundancy allowances plus the interest on such amounts, which is calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees in case of failing to pay or insufficiently paying severance or redundancy allowance as specified in Clause 2 of this Article;

b) The employer is compelled to complete procedures for certification and return documents, which have been kept by the employer, to employees in case of failing to complete procedures for certification of duration of participation in social insurance and unemployment insurance, and return the certification and original copies of other documents to employees after terminating their employment contracts in accordance with regulations of law as specified in Clause 2 of this Article;

c) The employer is compelled to pay an amount of money equal to the employee’s salary as agreed in the employment contract for the remaining notice period from the termination date in case of failing to comply with regulations on notice period as specified in Point a Clause 3 of this Article.

In Clause 1, Article 6 of Decree 12/2022/ND-CP stipulates as follows:

1. The fines for administrative violations prescribed in Chapter II, Chapter III and Chapter IV of this Decree shall be imposed upon violating individuals, except the fines in Clauses 1, 2, 3, 5 Article 7, Clauses 3, 4, 6 Article 13, Clause 2 Article 25, Clause 1 Article 26, Clauses 1, 5, 6, 7 Article 27, Clause 8 Article 39, Clause 5 Article 41, Clauses 1 through 12 Article 42, Clauses 1 through 8 Article 43, Clauses 1 through 6 Article 45, Clause 3 Article 46 of this Decree. The fine imposed upon an organization is twice as much as that imposed upon an individual for committing the same administrative violation.

According to this Article, if the company fails to pay salaries to 25 employees on time after termination of their employment contracts in Vietnam, company N may be fined from VND 4,000,000 to VND 10,000,000. 

In addition, forcing the company to pay full severance allowances or redundancy allowances to employees plus the interest on such amounts which is calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees in case of failing to pay or insufficiently paying severance or redundancy allowance in Vietnam.

What is salary payment through the contractor’s foreman in Vietnam?

Pursuant to Article 100 of the Labor Code 2019 stipulating salary payment through the contractor’s foreman, according to which:

1. Where a contractor’s foreman or equivalent intermediary is employed, the employer who is the principal owner must maintain a list of the names and addresses of such persons accompanied by a list of their employees, and must ensure that their activities comply with the law on salary payment and occupational safety and health.

2. In case the contractor’s foreman or equivalent intermediary fails to pay or pays insufficient wages to the employees and does not ensure other rights and interests of the employees, the employer who is the principal owner shall be responsible for salary payment and for ensuring the rights and interests of the employees.

In this case, the employer who is the principal owner has the rights to request compensation from the contractor’s foreman or equivalent intermediary, or to request the competent authority to resolve the dispute in accordance with the provisions of the law.

With this provision, the salary payment through the contractor’s foreman in Vietnam will be paid according to the above provisions.

Best Regards!