In case the employer who is not an individual terminates its operation (dissolves), the employer is responsible for paying the severance allowance to the employee as prescribed in Article 48 Labor Code.

The Vietnam Silk Garment Company Limited (in Hochiminh City) is completing dissolution procedures. Through the receiving and responding system to businesses’ recommendations, the company would like to ask, what benefits were the employees who signed an indefinite term contract before 2009, how to calculate? For an indefinite term contract signed in 2009, what benefits will the employee receive and how is it calculated?

Regarding this issue, the Department of Labor Relations and Wages, Ministry of Labor - Invalids and Social Affairs has the following opinions:

Under the provisions of Clause 7, Article 36 of the Labor Code, the labor contract terminates when the individual employer dies, is declared incapable of civil acts, missing or dead by the Court; The employer who is not an individual terminates its operation.

Under the provisions of Clause 7, Article 36 of the Labor Code, the labor contract terminates when the individual employer dies, is declared incapable of civil acts, missing or dead by the Court; The employer who is not an individual terminates its operation.

According to Clause 1, Clause 2, Article 48 of the Labor Code, when the labor contract terminates according to the provisions of Clauses 1, 2, 3, 5, 6, 7, 9 and 10 Article 36 of this Code, Employers are responsible for paying severance pay to employees who have worked regularly for 12 months or more, with half a month's salary per working year.

The working time used to calculate the severance pay is the total time the employee actually worked for the employer minus the time the employee participates in unemployment insurance in accordance with the Law on Social Insurance and the period of time. The work has been paid the severance allowance by the employer.

Based on the above regulations and the content of the question of the Company, in case the employer who is not an individual terminates its operation (dissolution), the employer is responsible for paying the severance allowance for employees according to Article 48 of the Labor Code.

The method of calculation of severance pay for employees is specified in Article 48 of the Labor Code, Decree 05/2015 / ND-CP dated January 12, 2015 of the Government detailing and guiding the implementation. Some contents of the Labor Code, Decree 148/2018 / ND-CP dated October 24, 2018 of the Government amending and supplementing a number of articles of Decree 05/2015 / ND-CP.