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Workers' right to severance pay

Update: June, 25/2014 - 09:04

HA NOI (VNS) — An employee's right to and the quantum of severance pay depends on the circumstances and reasons he or she loses a job or stops working for an employer.

Severance pay is the benefit paid to employees when their labour contract expires or is otherwise terminated either unilaterally by the employer or as agreed to by both parties, or as regulated by the law in other cases.

For instance, employees have a right to receive severance pay if they lose their jobs because an enterprise is restructuring, merging, consolidating or dividing. They also have the right if they lose their jobs because of technological changes or economic reasons.

In case restructuring, technological changes or economic reasons lead to the risk of unemployment for many workers, the enterprise is responsible for elaborating and implementing a labor utilisation plan after discussions with the local representative organisation of the employees and after giving a 30-day notice to the provincial labour authority.

A list of laid-off employees must be included in the labor utilisation plan.

If jobs are lost because of merger, consolidation, separation, and division of the enterprise, the succeeding employer must comply with the already elaborated labour utilisation plan in case the existing workforce cannot be fully employed.

In the aforementioned cases, the employer has to offer a severance package based on how long an employee has worked for the enterprise. Typically, severance pay is equal to half a month's wages per working year when the labour contract expires, or a month's wages per working year, with two months' wages a minimum in other cases.PLF-LAW FIRM

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