Vietnam: Downsizing policy for redundant employees when a public service unit converts to a joint stock company

Vietnam: Downsizing policy for redundant employees when a public service unit converts to a joint stock company (Artwork)

Article 6 of Vietnam's Decree 108/2014/ND-CP as amended and supplemented by Vietnam's Decree 113/2018/ND-CP and Decree 143/2020/ND-CP stipulating the downsizing policy as follows:

Firstly, early retirement

(1)Subjects to downsizing if their age is at least 5 years old and at least 2 years old compared to the retirement age specified in Clause 2, Article 169 of the Labor Code 2019, paying social insurance premiums for at least 20 years and working in heavy, dangerous or hazardous industries on the list jointly released by the Ministry of Labor, War Invalids and Social Affairs and Ministry of Health of Vietnam for at least 15 years; or working for in areas having region-based allowances of at least 0.7 for at least 15 years shall benefit from the following welfares, besides pension policies under laws on social insurance:

• Do not have pensions deducted;

• Receive 03-month salary for each early retirement year;

•  

  Receive 05-month salary for the first 02 working years with full social insurance premiums. From the 21st working years onwards, each working years with social insurance premiums paid shall be granted a half of 01-month salary.

   

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(2) Subjects to downsizing if their age is at least 5 years old and at least 2 years old compared to the retirement age specified in Clause 2, Article 169 of the Labor Code 2019, paying social insurance premiums for at least 20 years shall get their pensions under laws on health insurance and welfares as follows 

• No deduction from the pension rate due to early retirement;

• To receive a 5-month salary allowance for the first twenty years of work, with full payment of social insurance. From the fifth year onwards, for each working year with social insurance contributions, a subsidy of half a month's salary will be provided.

• To receive 3 months' salary allowance for each year of retirement before the retirement age specified in Clause 2, Article 169 of the Labor Code 2019.

(3) Subjects to downsizing if their age is at least 5 years old and at least 2 years old compared to the retirement age specified in Clause 2, Article 169 of the Labor Code, and paying social insurance premiums for at least 20 years and working in heavy, dangerous or hazardous industries on the list jointly released by the Ministry of Labor, War Invalids and Social Affairs and Ministry of Health of Vietnam for at least 15 years; or working for in areas having region-based allowances of at least 0.7 for at least 15 years shall be granted pensions under laws on social insurance and shall not have pensions deducted.

• shall be granted pensions under laws on social insurance

•  

  shall not have pensions deducted.

   

(4)Subjects to downsizing if their age is at least 5 years old and at least 2 years old compared to the retirement age specified in Clause 2, Article 169 of the Labor Code, paying social insurance premiums for at least 20 years

• shall be granted pensions under laws on social insurance

• shall not have pensions deducted.

Secondly, labor transfer to organizations unfunded by the State budget

Displaced employees specified in Article 5 hereof working for organizations that are not funded by the State budget shall receive the following allowances:

• The current 03-month salary;

•  

  1/2-month salary for the each working years with full social insurance premiums

Thirdly, resignation policies

They are subjects to downsizing if their age is at least 5 years old and at least 2 years old compared to the retirement age specified in Clause 2, Article 169 of the Labor Code and are not eligible to enjoy the early retirement policy in item (1) or are 2 years younger than the retirement age specified in Clause 2, Article 169 of the Labor Code 2019 or are not eligible for early retirement policy in item (2). If they quit their jobs immediately, they will be entitled to the following allowances:

If employees stipulated in Article 6 hereof being under 53 years (for men) or under 53 years old (for women) and ineligible for early retirement under clause 1, Article8 hereof voluntarily resign, they shall receive the following allowances:

• An assistance equal to the current salary of 03 working months;

•  

  1/5-month salary for the each working years with full social insurance premiums

Finally, resignation after vocational training

Employees specified in Article hereof who are under 46 years old, disciplined, healthy, responsible and take charge of positions irrelevant to their qualifications wishing to resign their jobs, they are provided vocational training and receive the following allowances:

• The full current monthly salary and still be paid social insurance and health insurance premiums during the vocational training for maximum 06 months;

• An allowance equal to 06-month salary;

• 03 month salary after finishing their vocational training courses;

• A half of monthly salary for the each working years with full social insurance premiums;

• The vocation training duration is recognized as working period but it is not included in the seniority.

​In particular, for employees working under labor contracts of public non-business units converted to joint stock companies, at the time of valuation, the unit cannot arrange jobs at the joint stock company according to the labor use plan: They shall be entitled to the policy for redundant employees when reorganizing one-member limited liability companies owned by the State according to regulations.

Le Vy

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