Many people, when quitting their job, want to receive a severance allowance from the old company, but do not know how the law regulates this problem. Most do not know about the current beneficiaries of severance allowance. So, in this article, LSX legal firm will answer the question: “Severance allowances under Vietnamese Law on Social Insurance”
Legal grounds
- Labor Code 2019
- Law on Social Insurance 2019
- Decree 145/2020/ND-CP
Subjects entitled to severance allowance
Clause 1, Article 46 of the Labor Code 2019 (guided by Article 8 of Decree 145/2020/ND-CP) on severance pay:
In case an employment contract is terminated as prescribed in Clauses 1, 2, 3, 4, 6, 7, 9, and 10, Article 34 of this Code, the employer is responsible for paying severance allowance to the employee who has worked on a regular basis for at least 12 months. Each year of work worth half a month’s salary.
Accordingly, when foreign workers fall into the following cases, they will be entitled to severance allowance:
- The employment contract expires, except for the case specified in Clause 4 Article 177 of this Code.
- The tasks stated in the employment contract have been completed.
- Both parties agree to terminate the employment contract.
- The employee sentenced to imprisonment without being eligible for suspension or release as prescribed in Clause 5 Article 328 of the Criminal Procedure Code, capital punishment, or prohibited from performing the work stated in the employment contract by an effective verdict or judgment of the court.
- The employee dies; declared by the court as a legally incapacitated person, missing or dead.
- The employer that is a natural person dies; 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 in accordance with Article 35 of this Code.
- The employer unilaterally terminates the employment contract in accordance with Article 36 of this Code.
Law on social insurance on severance allowances
According to Articles 54 and 55 of the Law on Social Insurance 2014 as amended by Point a, Clause 1, Article 219 of the Labor Code in 2019, employees entitled to a pension must generally meet 02 conditions for the time of payment for social insurance and the prescribed retirement age.
Retirement age:
Employees working in normal conditions from full 60 years and 3 months for men and 55 years and 4 months for women when they retire in 2021. Each year thereafter, the retirement age of men will increase by 3 months until they reach the age of 62 in 2028; while the retirement age of women will increase by 4 months until they reach 60 years old in 2035.
In some special cases, employees can even retire before the above age from 5 to 10 years, even many years before.
Social insurance payment period:
In most cases, employees have to pay social insurance contributions for full 20 years or more.
Particularly for female employees who work as commune-level cadres and civil servants or are part-time workers in communes, wards, or townships, they only need to pay social insurance premiums for the full 15 years or more.
How to handle cases of failure to pay severance pay to employees?
According to Clause 2, Article 12 of Decree 12/2022/ND-CP. Failure to pay severance pay to employees will be administratively sanctioned:
A fine imposed on the employer who commits one of the following acts:
- Amending the term of the contract with an appendix to the labor contract; failure to comply with regulations on the time limit for payment of employee benefits upon termination of the labor contract;
- Fails to pay or fails to pay enough severance allowance to employees as prescribed by law;
- Fails to pay or fails to pay job loss allowances to employees as prescribed by law;
- Failing to pay or not paying enough money to employees as prescribed by law when unilaterally terminating the labor contract illegally;
- Fail to complete the procedures for confirming the time of payment of social insurance and unemployment insurance premiums and return them together with the originals of other papers kept by the employee after the termination of the labor contract as prescribed by law;
- Do not provide copies of documents related to the employee’s working history if the employee requests it after the termination of the employment contract.
The fines for the above act:
- Firstly, from VND 1,000,000 to VND 2,000,000 for violations from 01 to 10 employees;
- Secondly, from 2,000,000 VND to 5,000,000 VND for violations from 11 to 50 employees;
- Thirdly, from 5,000,000 VND to 10,000,000 VND for violations from 51 to 100 employees;
- Fourthly, from 10,000,000 VND to 15,000,000 VND for violations from 101 to 300 employees;
- Fifthly, from 15,000,000 VND to 20,000,000 VND for violations of 301 employees or more.
- …
On the other hand, when failing to pay severance pay to employees; the employer also subjects to remedial measures to pay the full amount of severance allowance or job loss allowance to the employee with interest on the unpaid amount calculated according to the highest interest rate on demand deposits of state-owned commercial banks announced at the time of sanctioning for the act of not paying or not paying enough severance allowance or job loss allowance for employees.
Legal service of LSX Legal Firm
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Related questions
According to Article 46 of the Labor Code, the payment of unemployment benefits is the responsibility of the employer. Employees only need to meet the conditions mentioned above.
Foreign workers can enjoy severance allowance if they meet all conditions when they work in Vietnam for full 12 months or more.
An employment contract shall be completely invalid in the following cases:
The entire contents of the employment contract are illegal;
A person concludes the employment contract ultra vires or against the rules for employment contract conclusion specified in Clause 1 Article 15 of this Labor Code;
The work described in the employment contract is prohibited by law;
An employment contract shall be partially invalid when part of its contents is illegal but does not affect its remaining contents.
Contact LSX
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