Under the regime of unemployment insurance, the
employer is not subject to this regime if the employer has less than 10
employees. Many employers who has never contributed to unemployment insurance
regime for any of its’ employee question whether they still have to have to pay
severance for its’ employees or not?
According to Article 48 of the Labor Code, the
employer is responsible to pay a severance allowance to any employee who has
regularly worked for a full twelve months or more and is a subject as specified
under the Article 36 of Labor Code. The severance allowance shall be one half
of one month’s wage for each year of employment.
We assume that the termination of labor contract
of the employee is legal and under the circumstances of Article 36 (i.e. expiry
of labor contract; the job completion in accordance with labor contract; Mutual
agreement of contract termination; the employee sentenced to a jail term or to
the death penalty, or prohibited from performing the job under the labor
contract; the employee’s death or by court declaration of having lost legal capacity
for civil acts, missing or being deceased; the employer’s death or cease to
operation; the employee’s legally unilateral termination of labor contract; the
employer’s legally unilateral termination of labor contract):
For responding to the above question, we must
divide the case into some below scenarios:
1.
For
any employee who has been working for less than 12 months, those employees will
not be subject of severance allowance.
2.
For
the employees who have been working for a full twelve months or more, the
employer has to pay them the severance allowance.
The calculation formulation of severance
allowance is as follows (Article 48.2 of the Labor Code): “The length
of a working period for calculating a severance allowance on retrenchment means
the total working time the employee actually worked for the employer minus the
period for which the employee received unemployment benefits in accordance with
the Law on Social Insurance and the working period for which the employer has
already paid a severance allowance”
With the above calculation formulation and in
this case that the employer has not paid unemployment insurance for its’
employee, the employer will mostly have to pay severance allowance for the
total working time its’ employee actually have worked.
In case that the employee unilaterally
terminates indefinite-term labor contract (i.e. – by giving 45 day notice of
termination), likely he/she is subject to severance allowance because it is
under the circumstance of Article 36.9 of Labor Code.
According to Article 36.9 of Labor
Code, the employee unilaterally terminates the labor contract in
accordance with Article 37 of Labor Code which regulates that the employee
working pursuant to an indefinite term labor contract has the right to
unilaterally terminate the contract but must provide the employer with at least
45 days’ advance notice, except for the case of female employee who is pregnant
and has a certificate from a competent medical consulting or treating establishment
certifying that continued employment would adversely affect her foetus. In such
case the female employee must give advance notice to the employer depending on
the period determined by the medical consulting or treating establishment.
With respect to the regime of foreign employee
in this case, currently, the labor laws of Vietnam have not yet covered all
aspects arising from employment relationship, thus it is ambiguous whether the
foreign employee is subject to severance allowance or not. Under the laws of
Vietnam, the foreign employee is only subject to the medical insurance and not
subject to social insurance.
I opine that the foreign employee is subject to
severance allowance since the foreign employee working in Vietnam is one of the
applicable entities of Labor Code. This is unfair when the foreign
employee is sick or in pregnant or maternity but the employer does not agree to
give him/her any allowance.