Obligations of an employer when terminating labor contracts

Wed, 20 Oct 2021 12:31:00  |  Print  |  Email   Share:

In March 2013, Mr. Van Duc Huy Lam (Dak Nong province) signed a labor contract with the company and paid social insurance from May 2013 to the present. Due to the company's difficulties, shortening the apparatus, streamlining the personnel, he is informed about the termination of his labor contract from January 1, 2020.

Mr. Lam asked, in the process of working he was not disciplined, so when the labor contract was terminated, how about the benefits he would enjoy?

Regarding this issue, Lawyer Tran Van Toan, Khanh Hung Law Office - Hanoi Lawyer Association replied as follows:

According to the provisions of Clause 1, Article 44 of the Labor Code, an employer (company) has the following obligations in case of structural change:

In case there is a change in the structure or technology that affects the employment of many employees, the employer is responsible for elaborating and implementing a labor use plan according to the provisions of Article 46 of this Code; in case new jobs are created, priority shall be given to re-training these employees for continued employment.

In case the employer cannot find new jobs and have to dismiss the employees, the employer shall pay job-loss allowances to the employees following the provisions of Article 49 of this Code.

According to Clause 1, Article 13 of Decree No. 05/2015/ND-CP dated January 12, 2015, of the Government detailing and guiding the implementation of some contents of the Labor Code, then, the change of structure and technology specified in Clause 1, Article 44 of the Labor Code includes the following cases: Changes of organizational structure, reorganization of employments; Changes of products, product structure; Changes of the business manufacturing process, technology, machinery, and equipment associated with the production and business lines of the employer.

Job-loss allowance: According to the provisions of Article 49 of the Labor Code, an employer shall pay a job-loss allowance to employees who have worked regularly for them for 12 months or longer and lost their jobs according to the provisions of Article 44 and 45 of this Code, 1 month's wage for each working year but at least equal to 2 months' wage.

The working period used for the calculation of job-loss allowance is the total time during which the employee actually works for the employer minus the time during which the employee participates in unemployment insurance following the Law on Social Insurance and the working period for which the employer has paid a severance allowance to the employee.

The wage used for the calculation of job-loss allowance is the average wage under the labor contract during 6 months preceding the time the employee loses his/her job.

In the case of Mr. Van Duc Huy Lam, he signed a labor contract with the company in March 2013 and paid social insurance from May 2013 to the present. Now the company is facing difficulties, it should change the structure, reduce the apparatus, streamline personnel and announce the termination of the labor contract with Mr. Lam from January 1, 2020. Mr. Lam asked what his benefits are if he had to quit his job in this case?

First of all, in the case that the Company due to the restructuring of the labor force applies the reduction of labor for many people, it must strictly perform the obligations specified in Clause 1, Article 44 of the Labor Code, have the responsibility to formulate and implement the labor use plan according to the provisions of Article 46 of this Code; in case there are new jobs, priority shall be given to re-training the employees for continued employment.

In case the company cannot provide new jobs and has to dismiss the employees (including Mr. Lam), it must pay the job-loss allowance to the employees according to the provisions of Article 49 of this Code.

Mr. Lam has worked at this company from March 2013 to the end of December 31, 2019, the total is 6 years and 9 months, of which 2 months did not participate in social insurance and unemployment insurance and 6 years and 7 months participated in social insurance (including unemployment insurance). Responsibilities of the Company, responsibilities of social insurance for Mr. Lam's benefits when he loses his job are as follows:

Responsibilities of the Company: According to Clause 2, Article 49 of the Labor Code, guided at Point c, Clause 3, Article 14 of Decree No. 05/2015/ND-CP, working time to calculate the job-loss allowance for Mr. Lam’s time at the Company with the period of not paying social insurance and unemployment insurance is 2 months (from March 2013 to May 2013), Mr. Lam is calculated by year to calculate the job-loss allowance, with the level of entitlement is equal to ½ month's salary (the salary used to calculate the job-loss allowance is the average salary according to the labor contract of the 6 consecutive months before Mr. Lam lost his job).

The responsibility of social insurance is to pay the unemployment allowance for the time Mr. Lam worked and participated in social insurance and unemployment insurance from May 2013 to December 31, 2019, which is equal to 6 years and 7 months.

According to Article 50 of the Law on Employment 2013, the monthly unemployment allowance level equals 60% of the average monthly wage on which unemployment insurance premiums are based of the 6 preceding months before unemployment, but must not exceed 5 times the basic wage level, for employees receiving wages under the State-prescribed regime, or must not exceed 5 times the region-based minimum wage level under the Labor Code, for employees paying unemployment insurance premiums under the wage regime decided by the employer at the time of termination of the labor contract or working contract.

The duration of unemployment allowance receipt is based on the number of months of payment of unemployment insurance premiums, with between full 12 months to full 36 months, they will be entitled to 3 months of unemployment allowance, every next additional 12 months of full payment will be entitled to additional 1 month of unemployment allowance but not exceed 12 months.

In case that Mr. Lam has 6 years and 7 months of unemployment insurance payment, he is entitled to 6 months of unemployment allowance.

According to the provisions of Clause 7 Article 18 of Decree No. 28/2015/ND-CP dated March 12, 2015, of the Government detailing the implementation of some articles on unemployment insurance of the Law on Employment, the 7 months Mr. Lam has not been settled for unemployment allowance will be stored as a basis for calculating the period of the next unemployment allowance when he is eligible for unemployment allowance as prescribed.

The time for unemployment allowance receipt is counted from the 16th day after the date of submission of a complete dossier for receipt of unemployment allowance as prescribed in Clause 1, Article 46 of this Law.

When terminating the labor contract, the social insurance and the company are obliged to close the social insurance book, return the social insurance book confirming Mr. Lam’s duration of participation and payment of social insurance premiums, so that he can follow the procedures on unemployment allowance receipt, reservation of period of payment of unemployment insurance premiums, addition with the period of payment of unemployment insurance premiums at a new workplace (if there is a new job), or receipt of a lump-sum social insurance allowance as prescribed in Article 60 of the Law on Social Insurance.

Lawyer Tran Van Toan

Khanh Hung Law Office, Hanoi Lawyer Association

By: Online Newspaper of the Government/ Translator: Viet Nguyen-Bizic

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