Severance Pay For Foreign Employees In Vietnam


Foreign employees in Vietnam work under an employment contract. Even after voluntarily quitting, they are still entitled to certain legal rights as well as the obligation to compensate if violating the contract.

Currently, in the system of legal documents issued by the Government and the Ministry of Labor-War Invalids and Social Affairs regulating on the implementation of the Labor Code on foreign employees working in Vietnam, there is no Circular or Decree that mention severance benefits for other nationals working in Vietnam.

The Social Insurance Act (2006) also states that employees who are qualified for unemployment insurance and mandatory or voluntary social insurance must be Vietnamese citizens. Therefore, foreign employers in Vietnam can not participate in these types of insurance but only receive the obligations and rights in health insurance.

In cases of termination of the labor contract, according to the Labor Code (2012), except for one case in which employees are dismissed due to disciplinary reasons, employees who have not joined unemployment insurance during their working years will receive extra severance allowance from the employer.

A significant point in the Labor Code is the listing of the subjects to whom the above mentioned law applies:  

  1. Vietnamese employees, apprentices, trainees, and other employees provided in this Code.
  2. Employers.
  3. Foreign employees working in Vietnam.
  4. Other agencies, organizations and individuals directly related to labor relations.

Although specific types of workers are not regulated in certain provisions, the legal matters mentioned in the Labor Code still generally apply to foreign employees, including the rights to receive severance allowance:  “The employer 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.”

Foreign employees working in Vietnam, who do not participate in unemployment insurance, are entitled to receiving severance payment if they have work for an employer for 12 months and longer and terminate the contract under the provisions of law.

PLF Law Firm 

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