SEVERANCE ALLOWANCE FOR THE EMPLOYEES PARTICIPATING IN UNEMPLOYMENT INSURANCE

I worked at MP Vietnam Co., Ltd. from early 2007 to November 2019. After that, both parties agreed to terminate the labor contract. Currently, I’ve requested MP Vietnam Co., Ltd to pay me the severance allowance. They said that I have participated in Unemployment Insurance from 2009 through the company. From 2007 to 2009, I had been assigned to study so I will not receive the severance allowance for this time.

I would like to know if the answer of MP Vietnam Co., Ltd is appropriate. Thank you.

FDVN's opinion:

Thank you for concerning and trusting in FDVN’s legal services. We have studied the law provisions to provide you with our advice. Please kindly see the answer below:

According to the information provided by you, you and your company agreed to terminate the labor contract in the case specified in Clause 3, Article 36 of the Labor Code 2012.

According to Clause 1, Article 48 of Labor Code 2012: “1. In case a labor contract terminates in accordance with Clause 1, 2, 3, 5, 6, 7, 9 or 10, Article 36 of this Code, the employers shall pay a severance allowance to the employee who has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year.”

Besides, according to Clause 3, Article 14 of Decree No. 05/2015/NĐ-CP amended by Clause 5, Article 1 of Decree No. 148/2018/NĐ-CP, working time serving as the basis for calculating severance pay for employee is determined as follows:

 “3. Working duration as the basis for calculation of severance pay or redundancy pay is the total period of time the employee has worked for the employer minus (-) the unemployment insurance period and the period over which severance pay or redundancy pay is paid by the employer (if any). Where:

a) The period of time an employee has worked for an employer includes: the period the employee has worked for the employer in reality; period of training provided by the employer; sick leave and maternity leave defined by social insurance; paid leave for the recovery period after an occupational accident or occupational disease defined by regulations of law on occupational hygiene and safety; weekly days off specified in Article 110, paid leaves specified in Article 111, Article 112 and Article 115 of Clause 1 Article 116 of the Labor Code; leave period for trade union activities prescribed by regulations of law on trade unions; paid leave for the fulfillment of citizen’s duties; work suspension period that is not at the employee’s fault; work suspension period specified in Article 129 of the Labor Code.

b) Unemployment insurance period includes: the period over which unemployment insurance premiums are paid by the employee, the period considered unemployment insurance payment period defined by unemployment insurance laws, the period over which an amount equivalent to unemployment insurance premiums are paid together with the employee’s salary prescribed by regulations of law on employment and unemployment insurance;

c) The working period shall be rounded up to the next half year to calculate severance pay or redundancy pay (a period of from 1 month to under six months will be rounded up to 1/2  year; a period of 6 months or longer will be rounded up to 1 year).”

Thus, you won’t receive the severance allowance for the time from 2009 to November 2019 from the employer because you had participated in the unemployment insurance within this time.  

Besides, the time you had been assigned to study by the employer must be considered the working period to calculate the severance allowance. Your company must pay you the severance allowance for the time from 2007 to the end of 2008. For each working year, the rate of this allowance is a half of a month’s salary.

We hope that our opinions are useful to you.

Legal advisor: Nguyen Thi Suong

FDVN Law Firm

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