CAN FOREIGN WORKERS IN VIETNAM RECEIVE SEVERANCE ALLOWANCE?

According to:

– Labor Code 2019

– Decree No. 145/2020/ND-CP detailing and guiding the implementation of a number of articles of the Labor Code on labor conditions and labor relations

Currently, the Covid-19 disease is no longer a problem affecting the business of enterprises as well as the interests of employees. Official Dispatch No. 1064/LDTBXH-QHLDTL guiding the payment of severance pay and allowances to employees due to the impact of the Covid-19 epidemic cannot continue to apply during this time. Therefore, in order to continue to ensure the rights of employees during the period of stability, the company would like to update the latest regulations on severance pay that foreign workers working in Vietnam are entitled to, including eligibility conditions, allowance calculation, and special cases related to foreign workers working in Vietnam.

Definition of severance allowance

Severance allowance is known as the amount of money an employee is entitled to after leaving a company with a regular period of work at that company for a full 12 months or more. The period of calculation of severance allowance is the total time the employee has worked for the employer minus the time the employee has participated in unemployment insurance according to the provisions of the law on unemployment insurance and the working time has been paid severance allowance and job-loss allowance by the employer. And for each year working at the company, employees will be entitled to an allowance equal to half a month’s salary when the labor contract terminates.

In order to be entitled to severance allowance, the cause of the employee’s contract termination must be in the following cases listed below:

– Termination due to contract expiration;

– The tasks stated in the employment contract have been completed;

– Both parties agree to terminate the employment contract;

– The employee is sentenced to imprisonment and he/she is no longer able to perform the contract;

– The employee dies; is declared by the court as a legally incapacitated person, missing or dead;

– The employer that is a natural person dies; is declared by the court as a legally incapacitated person, missing or dead. The employer that is not a natural person ceases to operate, or a business registration authority affiliated to the People’s Committee of the province (hereinafter referred to as “provincial business registration authority”) issues a notice that the employer does not have a legal representative or a person authorized to exercise the legal representative’s rights and obligations

– The employee unilaterally terminates the employment contract by the law;

– The employer unilaterally terminates the employment contract by the law.

How to calculate severance allowance?

The salary used to calculate the allowance is the average salary according to the labor contract of the preceding 06 months before the employee quits his job.

The level of severance allowance: for each year of working, the employee will be paid half a month’s salary.

The formula for calculating severance allowance can be summarized as follows:

Which, the working time to calculate severance allowance is not enough years will be rounded as follows:

– Less than or equal to 06 months: Round to 1/2 year.

– Over 06 months: Round to 01 year.

Be aware that:

Employees who are eligible for pension under the provisions of Article 169 of the Labor Code 2019 and the Law on social insurance 2014 or the employee who voluntarily quits without a valid reason from 05 working days continuously or more without justifiable reason will not receive severance pay.

In case a foreign worker working in Vietnam is expelled according to a legally effective judgement or decision of a court, a decision of a competent state agency, or a work permit expires according to the provisions of Clause 12, Article 34, and Article 156 of the Labor Code 2019, the employee is also not entitled to severance pay upon termination of the labor contract.

Thus, foreign workers working in Vietnam are still entitled to the same severance allowance as other workers. However, it is necessary to pay attention to special cases that lose the right to receive severance allowance as mentioned above. In addition, if employees still have questions or have difficulties in this matter, they can seek legal advice from law offices or foreign labor management agencies for support and answers for each employee specific case.