Hanoi-Vietnam: Calculation of severance allowance paid to employees at a joint stock company

The predecessor of the Information Technology and Construction Consultancy Joint Stock Company was the Information Technology Center under the Ministry of Construction, established in 1990. On February 16, 2000, the Information Technology Center was converted into the Information Technology and Construction Consultancy Company under the Ministry of Construction. On January 30, 2007, the Information Technology and Construction Consultancy Company was equitized into the Information Technology and Construction Consultancy Joint Stock Company (currently, the state holds 49% of the capital).

Through the System for Receiving and Responding to the Enterprise's Recommendations, the Company requests the competent authorities to guide the payment of severance allowances for the following cases:

Mr. Luong Hong Cuong started working on March 28, 1983, at the Brick Tile and Ceramics Construction Plant (under the Ministry of Construction). On July 15, 1994, Mr. Cuong moved to work at the Hotel and Cultural Services Company (under the Ministry of Culture and Information). On August 10, 2000, Mr. Cuong transferred to the Information Technology and Construction Consultancy Joint Stock Company. On August 1, 2018, Mr. Cuong terminated his employment contract.

The Information Technology and Construction Consultancy Joint Stock Company inquires whether the calculation of the time to pay severance allowances for Mr. Cuong from August 10, 2000, to July 31, 2018, is correct. And whether the Company has the responsibility to pay severance allowances for Mr. Cuong for the time he worked at previous units (from March 28, 1983, to August 9, 2000).

Regarding this matter, the Department of Labor Relations and Wages under the Vietnam Ministry of Labor, Invalids, and Social Affairs responds as follows:

The Labor Code of 1994 (now replaced by the Labor Code of 2012) was effective on January 1, 1995. From the effective date of the Labor Code of 1994, job transfer no longer applies to employees working under employment contracts.

When an employee leaves an enterprise, he/she will terminate the employment contract, and the employer is responsible for paying severance allowances to the employee according to regulations. In cases where the employee subsequently works for another enterprise, they shall enter into a new employment contract with the new employer.

According to Article 48 of the Labor Code 2012; Clause 1, Article 14 of Decree 05/2015/ND-CP dated January 12, 2015, by the Government of Vietnam, the employer is responsible for paying severance allowances to employees who have worked regularly for them for 12 months or more when the employment contract is terminated under the provisions of Clauses 1, 2, 3, 5, 6, 7, 9 ; Article 36 and in cases where the employer unilaterally terminates the employment contract according to Article 38 of the Labor Code.

According to Clause 2, Article 9 of Circular 47/2015/TT-BLDTBXH dated November 16, 2015, by the Ministry of Labor, Invalids, and Social Affairs, the employer is responsible for paying severance allowances according to Article 48 or redundancy allowances according to Article 49 of the Labor Code for the actual working time by the employee for them, and severance allowances for the actual working time at the enterprise before the transfer of ownership or right to use the property (including the working time in the State sector recruited lastly into the enterprise transferred ownership or right to use the property before January 1, 1995) when the employee terminates the employment contract.

Based on the above regulations and referring to the inquiry from the enterprise, in case the employee’s working time at the Construction Information Technology Company (now the Information Technology and Construction Consultancy Joint Stock Company) is from August 10, 2000, to August 1, 2018 and the termination of employment contract is legally, the Information Technology and Construction Consultancy Joint Stock Company is responsible for paying severance allowances to the employee as stipulated in Article 48 of the Labor Code and Article 14 of Decree No. 05/2015/ND-CP mentioned above for the employee's working time at the joint-stock company and the period before equitization (from August 10, 2000, to August 1, 2018).

According to the Online Newspaper of the Government of Vietnam

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE