Guidelines on calculating severance allowance for public employees when organizing organizational structure in Vietnam

Guidelines on calculating severance allowance for public employees when organizing organizational structure in Vietnam​ (Image from the Internet)

On January 17, 2025, the Minister of Home Affairs of Vietnam issued Circular 1/2025/TT-BNV guiding the implementation of policies for officials and public employees and employees in the restructuring of the organizational structure of the political system.

Guidelines on calculating severance allowance for public employees when organizing organizational structure in Vietnam

According to Article 6 of Circular 1/2025/TT-BNV, the Ministry of Home Affairs provides guidance on calculating severance allowance for public employees during organizational restructuring as follows:

Employees and employees specified in Article 2 of Circular 1/2025/TT-BNV who are allowed by the competent authority to terminate employment shall retain the period of social insurance contributions or receive a lump-sum social insurance payment as prescribed by social insurance law, as provided for in clause 3, Article 10 of Decree 178/2024/ND-CP; simultaneously, they are entitled to 03 policies as stated in clauses 1, 2, and 4 of Article 10 of Decree 178/2024/ND-CP, including severance allowance, calculated as follows:

- For those who terminate employment within the first 12 months:

Allowance Amount = Current Monthly Salary x 0.8 x Time Calculated for Severance Allowance

- For those who terminate employment from the 13th month onwards:

Allowance Amount = Current Monthly Salary x 0.4 x Time Calculated for Severance Allowance

Where:

- The current monthly salary is determined as follows:

+ For those receiving salaries according to the Government's wage scale:

The current monthly salary includes: the wage level according to rank, grade, position, title, professional title, and wage-related allowances (including: leadership position allowance; seniority beyond scale allowance; professional seniority allowance; professional preference allowance; professional responsibility allowance; public service allowance; political-social organizations responsibility allowance, if any), specifically:

Current Monthly Salary = |Coefficient by rank, grade, position, title, professional title x Statutory Pay Rate| + |Leadership position allowance coefficient (if any) x Statutory Pay Rate| + Amount of allowances calculated according to wage level, by rank, grade, position, title, professional title (if any)

The statutory pay rate used to calculate the above current monthly salary is the statutory pay rate set by the Government of Vietnam in the month immediately preceding the month of termination.

+ For those receiving wages as agreed in a labor contract, the current monthly salary is the monthly wage recorded in the labor contract.

- The time calculated for severance allowance is the period of mandatory social insurance contribution in Party agencies, State, political-social organizations, and armed forces as specified in Article 1 of Decree 178/2024/ND-CP:

+ If the period of mandatory social insurance contribution is 05 years or more, the maximum time calculated for severance allowance is 05 years (60 months).

+ If the period of mandatory social insurance contribution is less than 05 years, the time calculated for severance allowance equals the period of mandatory social insurance contribution.

In addition to the severance allowance, public employees are entitled to an additional allowance of 1.5 months' current salary for each year of mandatory social insurance contribution with the following formula:

Allowance Amount = Current Monthly Salary x 1.5 x Number of Years of Mandatory Social Insurance Contribution

Simultaneously, they are entitled to unemployment insurance policies as guided in Circular 28/2015/TT-BLDTBXH dated July 31, 2015, by the Minister of Labor, Invalids, and Social Affairs, guiding the implementation of Article 52 of the Law on Employment and several articles of Decree 28/2015/ND-CP dated March 12, 2015, by the Government of Vietnam, detailing the implementation of certain articles of the Law on Employment on unemployment insurance (as amended and supplemented by Circular 15/2023/TT-BLDTBXH dated December 29, 2023).

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