If the company changes the type of operation, when the severance allowance for employees who termina

I worked for Company X for 3 years, then Company X transformed its operation into a Joint Stock Company. Up to now, it has been 10 years since I terminated the labor contract, but Company X only paid me a severance allowance for 7 years from the date the Company converted into a joint-stock company. I would like to know if the payment is lawful and what I should do to claim my rights.

FDVN’s Opinions:

According to Item c1, c2, Point c, Clause 4, Article 8 of Decree 145/2020/ND-CP which took effect on February 1, 2021, there are two cases of calculating the severance allowance period upon termination of a labor contract when the Company has transformed the type of business as follows:

Case No.01: The labor contract is terminated under Clause 1, 2, 3, 4, 6, 7, 9, 10 of Article 34 of Labor Code 2019 as follows:

“1. The employment contract expires, except for the case specified in Clause 4 Article 177 of this Code.

2. The tasks stated in the employment contract have been completed.

3. Both parties agree to terminate the employment contract.

4. The employee is sentenced to imprisonment without being eligible for suspension or release as prescribed in Clause 5 Article 328 of the Criminal Procedure Code, capital punishment or is prohibited from performing the work stated in the employment contract by an effective verdict or judgment of the court.

6. The employee dies; is declared by the court as a legally incapacitated person, missing or dead.

7. The employer that is a natural person dies; is declared by the court as a legally incapacitated person, missing or dead. The employer that is not a natural person ceases to operate, or a business registration authority affiliated to the People’s Committee of the province (hereinafter referred to as “provincial business registration authority”) issues a notice that the employer does not have a legal representative or a person authorized to exercise the legal representative’s rights and obligations.

9. The employee unilaterally terminates the employment contract in accordance with Article 35 of this Code.

10. The employer unilaterally terminates the employment contract in accordance with Article 36 of this Code.”

• The actual work period as the basis for calculation of severance allowance shall be the total work period under the employment contracts with the employer BEFORE AND AFTER the conversion.

Case No. 2: The employment contract is terminated because the employer dismisses the employee due to a change in structure or technology; for economic reasons or when changing the type of business:

In this case, the employee is entitled to both severance allowance and job loss allowance.

Thời gian người lao động đã làm việc thực tế cho người sử dụng lao động được tính trả trợ cấp mất việc làm: là tổng thời gian làm việc thực tế theo các hợp đồng lao động cho người sử dụng lao động SAU khi chuyển đổi loại hình doanh nghiệp. 

• The actual work period as the basis for the calculation of redundancy allowance shall be the total work period under the employment contracts with the employer AFTER the conversion.

Therefore, you can base on the above provisions to determine which time you are eligible for severance pay. If you find out that the Company has made a mistake in applying the law, you can complain or sue the competent People's Court for consideration and settlement.

Hoàng Thúy Quỳnh – FDVN Law Firm.

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