This is one of the noteworthy contents in the Draft of the Amended Labor Code, which is still in the period of public consultation and is expected to take effect from January 01, 2021.
Article table of contents
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To be specific, according to the Draft, when a labor contract terminates under one of the following circumstances, the employer is responsible for paying severance allowance to employees who have worked regularly for at least 12 months. Each year of service is entitled to half a month's salary, except for cases where the employee is receiving a pension under the law on social insurance:
- Expiry of the labor contract.
- Completion of the work under the labor contract.
- Mutual agreement to terminate the labor contract.
- The employee is sentenced to imprisonment, death penalty, or is prohibited from performing the work stated in the labor contract according to the legally effective verdict or decision of the Court.
- The employer, if an individual, dies, is declared by the Court to be without civil act capacity, missing, or has died; the employer, if not an individual, ceases operations or the legal representative or the authorized person is no longer available.
- The employee unilaterally terminates the labor contract according to the provisions of Article 36 of the Draft.
- The employer unilaterally terminates the labor contract according to the provisions of Article 37 of the Draft.
It can be observed that the Draft has excluded the case specified in Clause 6 Article 36 of the Labor Code 2012 (i.e., Clause 5 Article 35 of the Draft) from the cases where the enterprise is required to pay severance allowances upon termination of the labor contract.
If this content in the Draft is approved, effective from January 1, 2021, employees who die, are declared by the Court to be without civil act capacity, missing, or have died will no longer be entitled to severance allowances as currently stipulated in the Labor Code 2012.
Nguyen Trinh
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