Procedures for compensation for damage in Vietnam

Procedures for compensation for damage in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Compensation for damage in Vietnam

According to Article 129 of the Labor Code 2019, the liability of workers to compensate for damage is as follows:

- An employee who causes damage to equipment or otherwise damages the employer’s assets shall have to pay compensation in accordance with labor laws or the employer’s internal labor regulations.

In case the damage caused by an employee is not serious, not deliberate and is worth less than 10 months’ region-based minimum wage announced by the Government, the employee shall have to pay a compensation of not more than his/her 03 months’ salary, which shall be monthly deducted from his/her salary in accordance with Clause 3 Article 102 of the Labor Code 2019.

- An employee who loses the employer’s equipment or assets, or consumes the materials beyond the set limits shall pay a compensation for damage in full or in part at the market price or as stipulated in the internal labor regulations or the responsibility contract (if any).

In case this is caused by a natural disaster, fire, war, major epidemic, calamity, or another force majeure event which is unforeseeable and insurmountable, and all necessary measures and possibilities for avoidance have been taken, the compensation shall not required.

2. Procedures for compensation for damage in Vietnam

According to Article 71 of Decree 145/2020/ND-CP, the compensation procedures are prescribed as follows:

- In cases where an employee causes damages or loses an asset assigned by the employer or otherwise causes damage to the employer’s assets or exceeds the consumption limit, the employer will request the employee to prepare a written report on the incident.

- Within the time limit for claiming compensation specified in Article 72 of Decree 145/2020/ND-CP, the employer shall conduct a compensation hearing as follows:

+ At least 05 working days before the compensation hearing is held, the employer shall notify the participants, including: the persons specified in Point b and Point c Clause 1 Article 122 of the Labor Code 2019 and the valuer (if any). Make sure these participants receive the notification before the hearing takes place.

The notification shall specify the hearing time and location, full name of the employee that causes the damage and the damage caused by him/her;

+ Upon receipt of the employer’s notification, the mandatory participants mentioned in Point a of Clause 2 of Article 71 of Decree 145/2020/ND-CP shall send the employer confirmation of their participation.

In case any of the mandatory participants cannot participate in the hearing, the employee and the employer shall reach an agreement on change of time and/or location of the hearing. In case such n agreement cannot be reached, the employer shall make the final decision;

+ The employer shall conduct the compensation hearing at the time and location mentioned in Point a and Point b of Clause 2 of Article 71 of Decree 145/2020/ND-CP. In case any of the mandatory participants mentioned in Point a of this Clause does not confirm his/her participation or is not present, the employer shall still conduct the hearing.

- Minutes of the compensation hearing shall be taken and ratified before the end of the hearing. The minutes shall bear the signatures of the participants as prescribed in Point a Clause 2 of Article 71 of Decree 145/2020/ND-CP. In case a person refuses to sign the minutes, the minutes taker shall specify his/her full name and reasons for refusal in the minutes.

- The compensation decision shall be issued within the time limit for claiming compensation; specify the damage caused and the causes of damage; the compensation level; deadline and method of compensation payment. The decision shall be sent to the participants mentioned in Point a Clause 2 of Article 71 of Decree 145/2020/ND-CP.

- Other cases of compensation for damage shall comply with regulations of the Civil Code.

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