Are foreign workers entitled to severance allowance in Vietnam?

Severance pay is an important benefit for employees in Vietnam, including foreigners. It is a right that employees should understand to protect their interests when terminating their labor contract after being with the employer for 12 months or more. The employer is responsible for paying this benefit within 14 working days from the date of termination, except in special cases where it can be extended but not exceeding 30 days. However, employees who violate discipline or quit without a legitimate reason will not receive this benefit. The calculation of severance pay is based on the employee's average salary for the six consecutive months before resigning. The period of employment used to calculate severance pay is the total time the employee has worked minus the time they have participated in unemployment insurance and already received severance pay. The employer is responsible for paying the allowance, and it is accounted for as a business expense. In Vietnam, severance pay is an important benefit for employees, including foreign employees, as clearly stipulated in the Labor Code and related guiding documents. This is a right that employees should clearly understand to protect their interests when terminating the labor contract after being with the employer for 12 months or more. The employer is responsible for paying this benefit within 14 working days from the date of termination of the labor contract, except in special cases where it can be extended but not exceeding 30 days. However, employees who violate discipline or voluntarily quit their jobs without a legitimate reason will not be entitled to this benefit. Detailed Content Understanding severance benefits will help employees, including foreigners, ensure their legitimate rights when terminating their labor contracts in Vietnam. Below is basic information about severance pay for foreigners. Conditions for Receiving Severance Pay The employee has worked regularly for 12 months or more. Terminate the labor contract in accordance with the provisions of Article 35 of the Labor Code, for example, contract expires, both parties agree to terminate the contract, etc. Severance Pay Rate For each year of work, the employee is entitled to half a month's salary. The salary used as the basis for calculating severance pay is the average salary according to the labor contract of the six consecutive months before the employee resigned the job. The level of severance allowance equals one-half x years entitled to allowance x the average salary of six consecutive months according to the contract before leaving. Severance Calculation Period The period of employment used to calculate severance pay is the total time the employee has actually worked for the employer minus the time the employee has participated in unemployment insurance as stipulated by the Law on Unemployment Insurance, and the time the employee has already received severance pay from the employer. The period of employment used to calculate severance pay is calculated in years, full 12 months. If there are odd months, six months or less are counted as one-half year, and more than six months are counted as one full year of work. Payment Responsibility The employer is responsible for paying this allowance within 14 working days from the date of termination of the labor contract, except in special cases where it can be extended but not exceeding 30 days. The cost of paying severance allowances for employees is accounted for as production, business expenses, or operating costs of the employer. Above is the information regarding severance allowances for foreign employees working in Vietnam. In case you need consultation, please contact us. Quynh Du, Social Insurance Department, Payroll. References Social Insurance Law No. 58-2014-QH13 dated Nov. 20, 2014 Labor Code No. 45-2019-QH14 dated Nov. 20, 2019 Decree 145-2020-NDCP dated Dec. 14, 2020