Issues with severance payments when laying off employees in Vietnam, The Issues with severance payments when laying off employees in Vietnam, severance payments when laying off employees in Vietnam, pay severance payments when laying off employees in Vietnam, Issues with severance payments when laying off employees in Vietnam

Issues with severance payments when laying off employees in Vietnam

Currently, the outbreak of the Covid-19 pandemic in Vietnam has caused many employers to close their businesses and lay off employees. Thus, when dismissing an employee, does the employer have to pay severance payments, payments in lieu of notice, etc., and/or any other types of payment will be due and payable to employees?

Firstly, in the case of an employee who stops working because the employer has to temporarily close due to the epidemic

According to Article 99 of the Vietnam Labor Code, the employer needs to pay the employee’s suspension wage. From there, according to clause 3 of this article, the employer will discuss with his employees on the salary for severance as follows:

  • In case of stopping work for 14 working days or less, the agreed-upon stoppage salary is not lower than the minimum wage;
  •  In case of having to stop working for more than 14 working days, the salary for stopping work shall be agreed upon by both parties but must ensure that the salary for stopping work in the first 14 days is not lower than the minimum salary.

Accordingly, Decree 90/2019/ND-CP stipulates the minimum wage of each region, specifically:

  • Region I: 4,420,000 VND/month
  • Region II: 3,920,000 VND/month
  • Region III: 3,430,000 VND/month
  • Region IV: 3,070,000 VND/month   

Secondly, in case the employer agrees with its staff to suspend the performance of the contract under Article 30 of the Labor Code 2019.

At this time, the amount that the employer has to pay will be dependent on the agreement of both parties and even the parties can discuss that the employer does not need to pay the employee’s salary in case of suspension of contract performance.

Thirdly, in the case of unilateral termination of the contract under Point c, Clause 1, Article 36 of the 2019 Vietnam Labor Code

If the employers prove that they has taken all remedial measures, but they are still forced to reduce the workplace and the employers have notified their employees in advance for the unilateral termination of the contract, the employers have obligation to pay severance allowance to employees who have worked regularly for the employers for full 12 months or more, each working year is entitled to half a month’s salary allowance.

Fourthly, in the case of dismissal of employees due to structural and technological changes according to Article 42 of the Labor Code

According to Clause 1 of this Article, employers need to pay unemployment allowances to employees according to the provisions of Article 47. BLLD. Accordingly, employers shall pay job loss allowances to employees who have worked for them regularly for 12 months or more but lose their jobs as prescribed in Articles 42 and 43 of this Code, each working year is entitled to be paid 1 month’s salary but at least equal to 2 months’ salary.

In fact, in case the employer meets difficuties in cutting staff, the second way is the way the employer often use because the employer is normally in the higher position than the employees for gaining an agreement.

Thus, now because of the Covid-19 pandemic, many problems about labor and employment have emerged in society. One of the most prominent issues is the issue of severance payments when employees are laid off. Employers need to pay close attention to the changes occurring during this tumultuous period and strictly comply with the provisions of the law on payment of severance payments when layoff employees. In addition, employers can also contact a reputable law firm to receive advice and in-depth answers to issues about severance payments during the Covid crisis.

ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.


    Your infomation

    ***Other service of ASL LAW – full service Vietnam law firm ***
    Retainer service to enterprises International trademark registration
    Oversea investment consultancy for Vietnamese enterprisesPatent in Vietnam
    PCT Patent in Vietnam PCT Patent Vietnam Entry
    Intellectual property services (Vietnam IP Firm) Vietnam Patent Agent
    Trademark in Vietnam Vietnam Patent Firm
    Vietnam Trademark Agent Patent translation in Vietnam
    How to register trademark in Vietnam Vietnam Patent Translation Agent
    Copyright in Vietnam Vietnam IP Firm
    Vietnam Trademark Vietnam IP Agent
    Notes to company formation in VietnamM&A
    How to open company in VietnamBanking & financial services
    Open representative office in VietnamContract consultancy
    Establish company in VietnamEmployment and labor
    Corporate services in VietnamLitigation and dispute resolution
    Vietnam Law FirmFranchise in Vietnam
    Vietnam Antidumping Law Firm Vietnam Franchise registration
    Vietnam countervailing law firm Vietnam Business Law Firm
    Vietnam Real estate law firm Vietnam construction law firm
    Law firm in Hanoi Law Firm in Ho Chi Minh
    Contact Me on Zalo
    WhatsApp chat