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 6 consecutive months before the employee resign the job.

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, 6 months or less are counted as 1/2 year, and more than 6 months are counted as 1 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 Do – Social Insurance Department – Payroll

References:

Social Insurance Law No. 58/2014/QH13 dated November 20, 2014

Labor Code No. 45/2019/QH14 dated November 20, 2019

Decree 145/2020/ND-CP dated December 14, 2020