Are foreign workers paid severance benefits?

Article overview

Severance benefits is financial support for employees when the labor contract ends. For foreigners working in Vietnam, the payment of severance benefits is made based on specific legal regulations in the Labor Code 2019. Through this article, Long Phan will provide detailed information. details on regulations, conditions, and procedures for paying severance benefits to foreigners.

Payment of severance benefits
Payment of severance benefits

Conditions for foreign workers to receive severance benefits

Pursuant to the provisions of Article 46 of the Labor Code 2019, general regulations on severance benefits for employees. Accordingly, foreign workers working in Vietnam will receive severance benefits if they meet the following two conditions:

  1. The employee has worked continuously for 12 months or more for the employer.
  2. The employee terminates the labor contract in one of the following cases:
  • Expiration of the labor contract, except for the cases specified in Clause 4, Article 177 of the Labor Code.
  • Complete work according to the labor contract.
  • Both parties agree to terminate the labor contract.
  • The employee is sentenced to imprisonment without a suspended sentence or is not subject to release or death penalty, and is prohibited from doing the work stated in the labor contract according to the judgment or decision of the Court have legal effect.
  • The employee dies, is declared by the Court to have lost civil act capacity, is missing or dead.
  • The employer is an individual who dies, is declared by the Court to have lost civil act capacity, is missing or dead.
  • If the employer is not an individual, the termination of operations or notification from the business registration authority under the provincial People’s Committee of the absence of a legal representative will also result in severance pay.
  • The employee unilaterally terminates the labor contract according to the provisions of Article 35 of this Code.
  • The employer unilaterally terminates the labor contract according to the provisions of Article 36 of this Code.

How to calculate severance pay for foreign workers

According to the provisions of Clause 1, Article 46 of the Labor Code 2019, for each year of work, employees are entitled to a subsidy of half a month’s salary. The salary used to calculate severance pay is the average salary of the 6 consecutive months under the labor contract before the employee quits his job.

Formula for calculating severance pay:

Severance pay = ½ x Working time x Salary

In there:

  • Working time to calculate severance pay: is the total time the employee actually worked for the employer, minus the time participating in unemployment insurance and the time receiving severance pay or unemployment benefits.
  • Salary for calculating severance pay: is the average salary of the 6 consecutive months before leaving the job.

Note:

  • If there are odd months less than or equal to 6 months, it will be calculated as ½ year of work.
  • Time over 6 months will be counted as 1 year of work.

CSPL: Clause 1, Article 46 of the Labor Code 2019, Clause 3, Article 8, Decree 145/2020/ND-CP.

How to calculate severance pay for foreign workers
How to calculate severance pay for foreign workers

When are foreign workers not paid severance benefits?

According to Article 46 of the Labor Code 2019 and Article 8 of Decree 145/2020/ND-CP, there are some cases in which foreign workers are not entitled to receive severance pay, specifically as follows:

  1. Cases of not receiving severance pay (according to Article 34):
  • Deported workers: If the foreign worker is deported according to a judgment or decision of the Court.
  • Dismissed: If the employee is disciplined and dismissed.
  • The employer terminates the job: According to the provisions of Article 42 and Article 43 of the Code.
  • Expired work permit: For foreign workers with expired work permits.
  • Unsatisfactory probation: If the probation is unsuccessful or one party cancels the probation agreement.
  1. Cases specified in Clause 1, Article 8 of Decree 145/2020/ND-CP, including:
  • If the employee is eligible to receive pension according to the provisions of the Law on Social Insurance, the enterprise does not need to pay severance benefits.
  • The employee voluntarily quits his job without a legitimate reason for 5 consecutive working days or more.
Foreign workers are not paid severance benefits
Foreign workers are not paid severance benefits

Consulting service on severance payment for foreign workers at Long Phan

Paying severance benefits to foreign workers requires businesses to comply with complex legal regulations. To support businesses in this process, Long Phan provides professional consulting services, including:

  • Consulting on legal regulations related to severance benefits for foreign workers.
  • Assist in reviewing and evaluating terms in foreign workers’ labor contracts.
  • Assist in preparing necessary documents to pay severance benefits, including documents proving working time and salary.
  • Consulting and supporting businesses in implementing administrative procedures related to severance payment.
  • Consulting and representing businesses in case of disputes related to severance pay.
  • Consulting on regulations on the relationship between severance pay and social insurance regimes for foreign workers.

Paying severance benefits to foreign workers is an important task, not only ensuring the legal rights of workers but also demonstrating the social responsibility of businesses. Using professional consulting services helps businesses fully comply with legal regulations, optimize payment processes and minimize legal risks. If you need detailed support regarding this process, please contact the hotline immediately 0906735386 to receive advice from Long Phan’s legal experts.