Guidance on the time for calculating severance pay

Wed, 19 May 2021 15:41:00  |  Print  |  Email   Share:

Working time to calculating severance allowance is the total time that the employee has actually worked for the employer minus the time the employee has participated in unemployment insurance and working period for which the employer has paid severance allowance.

The Crowe Vietnam Co., Ltd (in Ho Chi Minh City) operates in the field of accounting-audit consulting. During the process of consulting and auditing for customers, the Company encountered problems on how to determine severance allowance according to the enforcement of Decree No. 148/2018/ND-CP.

Through the Receiving and Responding System to businesses’recommendations, the Company would like to request the competent authorities to answer about the following specific cases:

- In case the company was established in 2012, has less than 10 employees, so it does not participate in unemployment insurance. In 2015, the company started participating in unemployment insurance for employees according to regulations. During the period of not participating in unemployment insurance, employees are entitled to severance allowance as prescribed by law.

So according to Decree No. 148/2018/ND-CP, in case these employees are still working at the company until 2019, how will the severance allowance be calculated?

- In case the company was established in 2012, the company has 10 or more employees, but only in 2017 the company participates in unemployment insurance for employees.

So, in the period from 2012 to the end of 2016, will employees be entitled to severance allowance if they quit in 2019 or not?

Regarding this issue, the Employment Department, the Ministry of Labor, War Invalids and Social Affairs has the following comments:

According to the provisions of Clauses 1 and 2, Article 48 of the Labor Code, when the labor contract is terminated according to the provisions of Clauses 1, 2, 3, 5, 6, 7, 9 and 10, Article 36 of the Ministry of Labor, according to the law,employers are responsible for paying severance allowances to employees who have worked regularly for full 12 months or more, and receiving a half-month salary allowance for each working year.

Working time to calculating severance allowance is the total time that the employee has actually worked for the employer minus the time the employee has participated in unemployment insurance and the working time that has been approved by the employer. The employer pays severance allowance.

Thus, in the event that up to now (in 2019) the employee terminates the labor contract in accordance with regulations, the company is responsible for paying the severance allowance according to the above provisions.

The time the employee has actually worked for the employer and the time the employee has participated in unemployment insurance is determined according to the provisions of Clause 3, Article 14 of Decree No. 05/2015/ND- The CP dated January 12, 2015 that was amended and supplemented in Decree No. 148/2018/ND-CP dated October 24, 2018 of the Government.

By: Online Newspaper of the Government / Translator: HaiYen-Bizic

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