Method of Calculation and Entitlement Levels for Severance Allowance upon Termination of Employment Contract

First, for each year of employment, the severance allowance is equivalent to half a month’s salary. The salary used for calculating severance allowance is the average salary according to the labor contract over the six consecutive months preceding the employee’s termination.

Second, the actual working time used to calculate severance allowance is determined as follows:

- The duration the employee has worked for the employer;- The probationary period, vocational training, and apprenticeship for working for the employer;- The period during which the employee was sent by the employer to study;- The period of leave to enjoy policies;- The period of leave for union activities as prescribed by the law on unions;- The period of work suspension, unauthorized leave not attributable to the employee’s fault;- The period of leave due to temporary suspension of work or detention but is reinstated due to the competent state authority’s conclusion that no crime was committed.

Third, the working time for the severance allowance is calculated on a yearly basis (full 12 months). In case of odd months, from full 01 month to less than 06 months is counted as 1/2 year; from full 06 months onwards is counted as 01 year of work.

Note: The working time used to calculate severance allowance is the total actual time the employee has worked for the employer minus the period in which the employee participated in unemployment insurance according to the Law on Social Insurance and the period for which the employer has paid the severance allowance.

Legal Bases:

- Labor Code 2012;- Decree 05/2015/ND-CP;- Circular 47/2015/TT-BLDTBXH.

- Ha Linh -

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