As the basic legal framework regulating the relationship between employers and employees, Vietnam’s labor law is crucial for companies operating in Vietnam. This legal system not only protects the rights and interests of employees, but also provides companies with clear employment guidance. Among them, the provisions on severance compensation are an important part of the labor law and directly affect the human resources management and financial planning of the enterprise.

Severance compensation plays a key role in labor relations in Vietnam. It is not only a recognition and compensation for employees’ contributions during their employment, but also an important mechanism to protect employees’ rights and interests. For enterprises, reasonable calculation and payment of severance compensation is not only a legal obligation, but also an effective means to maintain corporate reputation and reduce labor disputes. Correctly understanding and implementing severance compensation policies will help companies establish a good employer brand in the Vietnamese market and attract and retain talents. At the same time, it is also an important part of corporate financial management. Reasonable compensation calculation and reservation can help companies better control costs and achieve sustainable development. Therefore, in-depth understanding and accurate implementation of severance compensation policy are indispensable management capabilities for any business operating in Vietnam.

Basic elements for calculating severance compensation

The calculation of severance compensation in Vietnam involves multiple factors, the most important of which are working years, average monthly salary and reason for leaving. The specific provisions and calculation methods of these elements are clearly stated in the Vietnam Labor Law (Law No. 45/2019/QH14).

Length of service is the basis for calculating severance compensation. According to Article 46 of the Vietnam Labor Law, working years refer to the total time an employee has actually worked for the employer, minus the time the employee has enjoyed unemployment insurance and the time the employer has paid severance pay. It is worth noting that the calculation of working years will be rounded to half a year. For example, 2 years and 3 months would be counted as 2.5 years, while 2 years and 1 month would be counted as 2 years. This calculation method not only protects the rights and interests of employees, but also provides employers with clear calculation standards.

Average monthly salary is another key factor. Article 90 of the “Vietnam Labor Law” stipulates that the monthly average salary is usually calculated based on the employee’s average salary in the six months before leaving the company. This includes basic salary, allowances and other periodic payments. Specifically, if an employee’s salary is calculated on an hourly, daily or weekly basis, the average salary for the actual hours worked is calculated; if the employee’s salary is calculated on a monthly basis, the average of the last 6 months is used. This provision ensures that compensation calculations are fair and reflect the employee’s most recent actual earnings level.

The reason for separation plays a decisive role in the calculation of compensation. Articles 46 and 47 of the “Vietnam Labor Law” stipulate in detail the compensation standards in different circumstances of resignation. For example, when the employer unilaterally terminates the labor contract (not due to the employee’s fault), the compensation coefficient is 1, that is, one month’s salary will be compensated for each year of work. In the case of layoffs due to company restructuring or technological changes, in addition to normal compensation, employees may also receive additional unemployment benefits. In contrast, if an employee voluntarily resigns, he or she will usually not receive compensation unless otherwise stipulated in the employment contract.

The comprehensive consideration of these three elements not only reflects the comprehensiveness and fairness of Vietnam’s labor laws, but also provides clear guidance for employers and employees. Employers need to carefully evaluate these factors to ensure the accuracy and legality of compensation calculations to avoid potential labor disputes and legal risks. At the same time, understanding these factors can also help employees better understand their rights and interests and make more informed choices when making career decisions.

Basic calculation formula

The basic calculation formula for severance compensation stipulated in Vietnam’s labor law is the key to understanding the entire compensation system. This formula may seem simple, but it contains layers of complexity and legal considerations. Let’s dive into the details of each component of this formula and its practical application.

Severance compensation = working years × average monthly salary × compensation coefficient

Working years: According to Article 46 of the Vietnam Labor Law, working years refers to the total time an employee actually works in the company. The following points need to be noted when calculating:

• Years of service will be rounded up to half a year. For example, 3 years and 7 months is accounted for as 3.5 years.
• The time the employee has enjoyed unemployment insurance needs to be deducted. This is to avoid duplication of compensation.
• Also deduct the time the employer has paid severance pay.
• The minimum calculation unit is 1 year. Even if the work is less than one year, as long as the compensation conditions are met, it will be calculated as 1 year.

Average monthly salary: The calculation of this part is based on Article 90 of the Vietnam Labor Law, which mainly considers the average salary of the employee in the 6 months before leaving the company. Specifically include:

• basic salary
• Various allowances (such as position allowance, responsibility allowance, etc.)
• Other regular payments
• It should be noted that non-routine income such as overtime pay and year-end bonuses are not included.

Compensation Factor: This is the most flexible part of the formula and changes based on different separation situations. Mainly refer to Articles 46 and 47 of the Vietnam Labor Law:

• Unilateral termination of the contract by the company (not due to employee fault): coefficient is 1
• Layoffs due to company restructuring or technological changes: coefficient 1, but additional subsidies may be available
• Employees who are unable to continue working due to health reasons: coefficient 0.5
• Fixed-term contract is not renewed when it expires: the coefficient is 0.5
• Employee voluntarily resigns: usually the coefficient is 0, unless otherwise stipulated in the contract

In practical applications, this formula also needs to consider some special circumstances:

• If the calculation result is lower than the legal minimum standard (usually half a month’s salary), the minimum standard will be paid.
• For foreign employees, bilateral labor agreements or special regulations may need to be considered.
• Certain industries (such as construction) may have special compensation standards.

In addition, Article 48 of the Vietnam Labor Law stipulates that employers must pay full severance compensation within 7 working days after terminating the labor contract. Late payment may result in additional liability.

This basic formula provides a clear framework for calculating severance compensation in Vietnam. However, in actual practice, employers need to make careful calculations based on specific circumstances and the latest legal regulations to ensure compliance and protect the rights and interests of both parties.

Calculation of compensation under different circumstances of resignation

Vietnam’s severance compensation system is a complex and important component of the labor law system, reflecting the country’s efforts to seek a balance between protecting workers’ rights and interests and safeguarding corporate interests. The Vietnam Labor Law (Law No. 45/2019/QH14) stipulates in detail the calculation method of compensation in different termination situations, providing clear guidance for employers and employees.

1. The company unilaterally terminates the labor contract

According to Article 46 of the Vietnam Labor Law, when the company unilaterally terminates the labor contract (not due to the employee’s fault), the compensation is calculated as follows:

Compensation = working years × average monthly salary × 1 (compensation coefficient)

Key points: One year is calculated only after 12 months of service, but if the remaining time is less than 12 months and exceeds one month, it is also calculated as one year ; the average monthly salary is based on the average of the six months before resignation ; minimum compensation No less than half a month’s salary.

For example: Zhang San has worked in the company for 2 years and 7 months, and his average monthly salary is 10 million VND.

Calculation: 3 (years) × 10 million × 1 = VND 30 million

In addition, Article 36 of the Vietnam Labor Law lists the legal reasons for the employer to unilaterally terminate the contract, such as the employee frequently failing to perform work duties, taking leave due to illness for more than 12 months in total (for an open-term contract), etc. If these conditions are not met, the employer may risk breaking the law if he terminates the contract unilaterally.

2. Layoffs caused by company restructuring or technological changes

In this case, according to Article 47 of the Vietnam Labor Law, the employee is entitled to two types of compensation:

• Severance pay: calculated in the same way as for unilateral termination .
• Unemployment subsidy: one month’s salary for every year of work, with a minimum of two months’ salary.

For example: Li Si has worked in the company for 3 years and 5 months, and his average monthly salary is 12 million VND.

Severance pay: 4 (years) × 12 million × 1 = VND 48 million

Unemployment subsidy: 4 (years) × 12 million = VND 48 million

Total compensation: 48 million + 48 million = VND 96 million

It is worth noting that Article 42 of the Vietnam Labor Law stipulates that when conducting layoffs, the employer needs to consult with the labor union or employee representatives and notify the labor management department 30 days in advance.

3. Employees are unable to continue working due to health reasons

According to Article 46 of the “Vietnam Labor Law”, the calculation formula is: compensation = working years × average monthly salary × 0.5 (compensation coefficient)

For example: Wang Wu is unable to continue working due to health problems. He has worked in the company for 4 years and 2 months, with an average monthly salary of 9 million VND.

Calculation: 4.5 (year) × 9 million × 0.5 = 20.25 million VND

It should be noted that Article 137 of the Vietnam Labor Law also stipulates that if an employee’s work ability is reduced due to work-related injuries or occupational diseases, the employer may need to bear additional liability for compensation.

4. Employees voluntarily resign

Under normal circumstances, employees who resign voluntarily do not receive severance compensation. However, Article 46 of the Vietnam Labor Law stipulates that if an employee resigns due to certain specific reasons (such as suffering abuse, sexual harassment, or being forced to work overtime, etc.), he may be entitled to compensation. In addition, some companies may stipulate in their internal policies compensation packages for voluntary resignation of long-serving employees, which is within the company’s discretion and is not mandated by labor laws.

5. Fixed-term contracts will not be renewed upon expiration.

According to Article 46 of the “Vietnam Labor Law”, the calculation method is: compensation = working years × average monthly salary × 0.5 (compensation coefficient)

Key point: Only applicable to employees who have worked continuously for more than 12 months. If the fixed-term contract expires for the second time, according to Article 20 of the Vietnam Labor Law, the employer must sign an indefinite-term contract with the employee, otherwise the original contract will automatically be converted into an indefinite-term contract.

For example: Zhao Liu signed a two-year fixed-term contract. After the contract expired, the company decided not to renew it. Zhao June’s average salary is 8 million VND.

Calculation: 2 (year) × 8 million × 0.5 = VND 8 million

In addition, Article 47 of the Vietnam Labor Law stipulates that employers are obliged to notify employees at least 15 days in advance whether to renew the contract. If timely notice is not given and the contract is automatically extended, the employer may be subject to additional legal liability.

Generally speaking , Vietnam’s severance compensation system is designed to be relatively comprehensive and aims to balance the rights and interests of employers and employees. For companies operating in Vietnam, they not only need to accurately calculate compensation, but also pay attention to comply with relevant procedural regulations, such as timely notification, reasonable placement, etc., to avoid potential legal disputes. At the same time, establishing a sound human resources management system, including regular performance evaluations, clear communication mechanisms, etc., can also help reduce unnecessary labor disputes and create a more harmonious working environment.

Special circumstances and considerations

In the Vietnamese labor law system, in addition to regular full-time regular employees, there are also some special employment situations, such as probationary employees, part-time employees and foreign employees. Labor relations management and rights protection under these special circumstances require additional considerations and regulations. “Vietnam Labor Law” (Law No. 45/2019/QH14) makes corresponding provisions for these special circumstances to ensure that workers’ rights and interests are reasonably protected, while also providing employers with flexible employment options.

For employees during the probation period, Articles 24 and 25 of the Vietnam Labor Law have clear provisions. The purpose of a probationary period is to provide an opportunity for employer and employee to get to know and evaluate each other. The law stipulates that the length of the probation period shall not exceed the time necessary for the nature and complexity of the work. Specifically, the probation period for management positions shall not exceed 60 days, for other professional and technical positions, the longest shall not exceed 30 days, and for other jobs the longest No more than 6 days. During the probation period, the employee’s salary shall not be less than 85% of the regular salary. It is worth noting that after the probation period, the employer must clearly notify the employee of the probation results. If the trial is successful, the employer must sign a formal labor contract with the employee; if it is unsuccessful, both parties have the right to terminate the labor relationship without paying compensation or giving advance notice. This provision is intended to balance the employer’s need to select suitable employees with the goal of protecting workers’ rights. However, employers need to be careful not to use consecutive probationary periods to avoid the responsibilities of regular employment.

Regarding part-time employees, Articles 34 and 35 of the Vietnam Labor Law stipulate this. The law recognizes the legality of part-time work and requires employers to ensure that part-time employees have the same rights as full-time employees. Specifically, the working hours of part-time employees shall not be less than a quarter of the normal working hours, and their wages, social insurance, medical insurance and other benefits shall be calculated based on the actual working hours or the agreed workload ratio. It is worth mentioning that the Vietnam Labor Law also stipulates that employers may not force full-time employees to convert to part-time work unless both parties reach an agreement. These regulations are designed to protect the legitimate rights and interests of part-time employees, while also providing companies with the possibility of flexible employment. However, in practice, employers need to pay special attention to part-time employee working time management and benefit calculations to avoid potential labor disputes.

For foreign employees, Articles 150 to 153 of the “Vietnam Labor Law” have special provisions, and you also need to refer to the “Vietnamese Regulations on Foreigners Working in Vietnam” (Decree No. 152/2020/ND-CP). According to these regulations, foreigners working in Vietnam must meet specific conditions, including having full civil capacity, having appropriate health conditions, being experts, managers, skilled workers or other persons for whom Vietnamese workers cannot meet the needs of production and operations, and not having committed any crime. Recorded or currently being held criminally responsible. Foreign employees must hold a work permit unless they are exempt from a work permit as stipulated by law. The work permit is valid for a maximum of 2 years and can be extended once for a maximum of 2 years each time. It is worth noting that before hiring foreign employees, employers must state their employment needs and obtain approval from relevant government departments. The regulations are designed to balance the need to attract foreign talent and protect the local job market. In addition to complying with the provisions of general labor laws, labor contracts for foreign employees must also contain some special clauses, such as work location, position, salary, and transportation costs for foreign employees to return to their home countries.

In practical application, these special circumstances and considerations require employers to adopt more careful and detailed human resource management strategies. For employees on probation, employers need to establish a clear evaluation mechanism and make timely decisions at the end of the probation period. When managing part-time employees, you need to establish flexible and fair working hours and compensation systems. For foreign employees, in addition to complying with general labor law regulations, they also need to pay special attention to the processing of work permits and residence procedures.

Calculation examples

In order to better understand the provisions on severance compensation in Vietnam’s labor law, let’s look at several detailed calculation cases. The cases cover different separation situations to demonstrate the complexity and flexibility of the law in practical application.

Case 1: Unilateral termination of contract

Mr. Ruan is a production line supervisor in a manufacturing company and has worked in the company for 3 years and 8 months. Due to the company’s business restructuring, it was decided to lay off some middle management personnel, including Mr. Ruan . Mr. Nguyen ‘s average monthly salary in the past 6 months was VND 15,000,000.

According to Article 46 of the Vietnamese Labor Law, Mr. Nguyen is entitled to severance pay. The calculation is as follows:

• Working years: 3 years and 8 months, calculated as 4 years (less than 1 year but more than 1 month, calculated as 1 year)
• Severance pay = 4 (years) × 15,000,000 (VND) = VND 60,000,000

In addition, since this is a company-initiated layoff, Mr. Ruan is also entitled to unemployment benefits according to Article 47 :

• Unemployment allowance = 4 (years) × 15,000,000 (VND) = 60,000,000 VND

Therefore, Mr. Nguyen ’s total compensation is:

60,000,000 + 60,000,000 = 120,000,000 VND

In this case, the company needs to note that according to Article 42 of the Vietnam Labor Law, when making layoffs, it must consult with the labor union or employee representatives in advance and notify the labor management department at least 30 days in advance. In addition, the company should also consider providing Mr. Ruan with vocational training or recommending new job opportunities to fulfill its social responsibilities.

Case 2: Fixed-term contract expires and is not renewed

Mr. Li signed a two-year fixed-term contract with an IT company as a software developer. The contract was about to expire and the company decided not to renew it. Mr. Li performed well while working in the company, but due to the end of the project, the company did not have a suitable position to continue to employ him . Mr. Le’s average monthly salary in the past 6 months was VND 20,000,000.

According to Article 46 of the Vietnam Labor Law, if a fixed-term contract expires and is not renewed, the compensation is calculated as follows:

• Working experience: 2 years
• Compensation coefficient: 0.5 (if the fixed-term contract expires and is not renewed)
• Compensation = 2 (year) × 20,000,000 (VND) × 0.5 = VND 20,000,000

It is worth noting that if this was the second fixed-term contract signed by Mr. Le and the company, according to Article 20 of the Vietnam Labor Law, the company should have signed an unfixed-term contract with him . If the Company violates this provision, it may face additional legal risks and liability for compensation.

In addition, the company should notify Mr. Li at least 15 days in advance of its decision not to renew the contract when it expires. If the company fails to notify in time, it may be required to pay the corresponding number of days’ wages as compensation.

Case 3: Employee resigned due to health reasons

Mr. Fan worked in a construction company for 5 years and 3 months as a site engineer. Due to long-term high-intensity work, his physical condition gradually deteriorated, and he was eventually diagnosed with occupational-related chronic lumbar spine problems and was unable to continue his current job. Mr. Fan decided to resign and concentrate on treatment. His average monthly salary in the past 6 months was VND 25,000,000.

According to Article 46 of the Vietnam Labor Law, if you resign due to health reasons and are unable to continue working, the compensation is calculated as follows:

• Working years: 5 years and 3 months, calculated as 6 years
• Compensation factor: 0.5 (resignation due to health reasons)
• Compensation = 6 (years) × 25,000,000 (VND) × 0.5 = VND 75,000,000

However, considering that Mr. Pham ’s health problems may be work-related, the company may be required to bear additional liability for compensation according to Article 137 of the Vietnam Labor Law. This may include:

• Full payment of medical expenses until Mr. Fan recovers .
• A certain percentage of salary is paid monthly as living allowance until Mr. Fan recovers his ability to work or is officially identified as having lost his ability to work .

The specific amount of compensation needs to be determined based on Mr. Fan’s disability level and actual medical expenses, and may far exceed the basic severance compensation.

This case highlights the importance of occupational health and safety. Companies should reflect on their working environment and work intensity and take necessary measures to prevent similar situations from happening. At the same time, the company should also consider providing Mr. Fan with appropriate job adjustments or internal transfer opportunities instead of directly accepting his resignation.

These cases demonstrate the complexity and flexibility of Vietnamese labor law in practical application. They not only involve basic compensation calculations, but also include considerations such as advance notice, occupational health and safety, and employee placement.

Common misunderstandings and precautions

It is important for both enterprises and employees to understand common misunderstandings in Vietnam’s labor law system and pay attention to relevant matters, so as to avoid unnecessary disputes and ensure the protection of legitimate rights and interests. Below we will explore in detail the three key aspects of the precise calculation of years of service, the determination of average monthly wages, and the handling of social security and other benefits.

Regarding the precise calculation of working years, the “Vietnam Labor Law” stipulates that every 12 months is counted as one year, but for the case of less than one year, as long as it exceeds one month, it is counted as one year. This provision may seem simple, but in practice it is often misunderstood. For example, some employers may think that an employee who has worked for 3 years and 11 months can only calculate compensation based on 3 years. This is obviously wrong. The correct approach is to think of it as 4 years. Another common misunderstanding is overlooking the calculation of probationary periods and paid training periods. By law, these hours also count toward years of service. In addition, for employees with multiple employment records, how to calculate the cumulative working years is also an easily confusing issue. The Vietnamese Labor Law stipulates that all working hours of an employee in the same company should be accumulated, even if there are interruptions in between. For example, if an employee leaves the company after working for 2 years, then rejoins the company one year later and works for 3 years, then when calculating severance compensation, the calculation should be based on 5 years. Accurate understanding and application of these provisions is critical to a fair and reasonable calculation of compensation.

The determination of average monthly salary is also a common point of dispute. The “Vietnam Labor Law” stipulates that compensation should be calculated based on the employee’s average salary in the six months before resignation. However, some complications often arise in actual operations. For example, if an employee has long-term sick leave or unpaid leave during those 6 months, should these times be excluded? Or, if an employee’s salary consists of multiple components such as basic salary, performance bonus, allowance, etc., how should the average be calculated? According to the guidance of the Vietnamese Ministry of Labor, in principle, all income actually received by employees under the labor contract should be included, including basic salary, fixed allowances, performance pay, etc. However, it does not include non-routine income such as one-time bonuses and overtime pay. In the case of long-term leave, the average salary for the actual working month shall prevail. If the employee has worked for less than 3 months in the past 6 months, the salary for the actual months worked shall prevail. The accurate calculation of the average monthly salary is not only related to the amount of compensation, but also directly affects the determination of the social insurance payment base, so extra caution is required.

The handling of social insurance and other benefits is also an important link that is easily overlooked. According to the Vietnamese Social Insurance Law, when terminating the labor relationship, the employer is obliged to handle social insurance transfer procedures for employees and settle all unpaid social insurance, medical insurance and unemployment insurance fees. A common misconception is that severance benefits offset these insurance costs, which is completely false. In fact, these are two separate obligations that the employer must fulfill separately. In addition, for other benefits, such as unused annual leave, the “Vietnam Labor Law” stipulates that it must be converted into wages and paid to employees. Some companies may ignore this, or try to convince employees to use up all their annual leave before leaving, which is not in compliance with the law. In addition, if other severance benefits, such as length of service bonuses, etc., are stipulated in the labor contract or company policy, these should also be settled at the time of resignation. It should be noted that these additional benefits cannot replace statutory severance compensation, but should be paid in addition.

Accurately understanding and implementing these details is not only a need for legal compliance, but also the basis for establishing good labor relations. For companies operating in Vietnam, it is recommended to formulate detailed internal policies and procedures to clearly stipulate matters such as the calculation method of working years, salary composition, and various benefits processing. At the same time, regular training is provided to human resources personnel to ensure that they fully understand relevant legal regulations and the latest policy changes. For employees, understanding these regulations can also help protect their own rights and interests, and they can seek professional legal advice when necessary. When dealing with sensitive issues such as severance compensation, maintain an open and transparent communication attitude, explain the calculation process in detail, and keep complete documentation. These practices can help reduce misunderstandings and disputes and maintain harmonious labor relations.

Legal Compliance Suggestions

Companies may consider establishing a dedicated legal compliance team or assigning a dedicated person to track and interpret the latest changes in Vietnam’s labor laws. This team or individual should regularly participate in relevant legal training, seminars, and maintain good communication with the local labor department. Their responsibilities include keeping the company’s human resources policies and procedures up-to-date and ensuring that these policies remain compliant with the latest legal requirements. For example, when the Vietnam Labor Law undergoes major revisions on January 1, 2021, many companies will need to adjust their severance compensation calculation methods accordingly. Catching and responding to these changes in a timely manner can effectively avoid legal risks.

Companies can develop detailed internal guidelines that spell out specific steps and considerations for calculating severance packages. This guide should cover the precise calculation method of working years, the determination standard of average monthly salary, and the handling of various special circumstances (such as probation period, paid training period, multiple entry, etc.). At the same time, the guide should also include procedures for handling social insurance, medical insurance, unemployment insurance and other related benefits. Such a guide can not only provide clear operational guidance for the human resources department, but also serve as a reference for employees to understand their rights and interests, helping to increase transparency and trust.

Companies can invest in developing or purchasing a professional human resources management system that can automatically calculate severance compensation and take into account the special provisions of Vietnamese labor laws. This kind of system can greatly reduce human errors and improve the accuracy and efficiency of calculations. At the same time, the system should be flexible and able to be updated quickly in response to legal changes. For example, the system should be able to correctly handle employment periods of less than a year but more than one month, treating them as one year for compensation calculations.

Regular internal audits are also an important measure to ensure compliance. Companies can conduct a comprehensive review of severance compensation calculations annually or biannually to check for calculation errors or inconsistencies. This kind of audit can not only detect and correct errors in time, but also identify potential risks and room for improvement in the human resources management process. If systemic problems are discovered, companies should take immediate steps to correct them and consider proactively contacting affected former employees to compensate for possible losses.

When handling specific resignation cases, it is recommended to use a multi-person review mechanism. For example, a preliminary calculation could be made by the directly responsible HR specialist and then reviewed jointly by the HR manager and the financial director. This multi-checking minimizes errors, especially when dealing with complex situations involving special circumstances such as multiple intakes, long-term sick leave or occupational injuries.

Maintaining transparent and open communication with employees is also an important part of ensuring compliance. When an employee applies for resignation or the company decides to terminate the labor contract, the calculation method and estimated amount of compensation should be communicated to the employee in a timely manner. Employees are encouraged to ask questions and each step of the calculation is explained in detail. This not only reduces misunderstandings and disputes, but also builds trusting labor relations. If employees have objections to the calculation results, the company should take it seriously and seek advice from a third-party professional agency if necessary.

The company can establish a complete document management system and save all documents related to the calculation of severance compensation, including labor contracts, salary records, attendance records, social insurance payment records, etc. These documents are not only the basis for calculating compensation, but also important evidence in response to possible labor disputes or government inspections. Under Vietnamese law, these records usually need to be kept for at least 5 years. By taking these comprehensive measures, companies can significantly improve the accuracy and compliance of severance compensation calculations.

Practical Tools and Resources

There are some practical tools and resources that can help when dealing with severance compensation calculations in Vietnam, including online calculators and relevant legal and regulatory documents. These tools and resources can not only improve calculation efficiency, but also ensure the accuracy and legality of calculation results.

Online calculators are the tool of choice for many businesses and individuals when dealing with severance package issues. There are several well-known human resources service websites in Vietnam that provide such calculators, such as Vietnamworks and JobStreet. These calculators are usually designed to be simple and easy to use. You only need to enter the employee’s basic information, such as years of service, average monthly salary, and reasons for leaving, to quickly get an approximate compensation amount. Some more advanced calculators can also take into account special circumstances such as probationary periods, paid training periods, etc. However, be aware when using these online tools that they often only provide a rough estimate and may not fully cover all complications. Therefore, when formally determining the amount of compensation, it is still recommended that professional human resources personnel conduct detailed accounting and refer to the latest legal regulations.

In addition to online calculators, understanding and consulting relevant laws and regulations at any time is also key to ensuring the accuracy of compensation calculations. The most basic legal basis is the “Vietnam Labor Law”, especially the relevant provisions on the termination of labor contracts and severance compensation. The new version of the Vietnam Labor Law passed in 2019 and implemented in 2021 has made some adjustments to the calculation method of compensation, so it is important to ensure that you refer to the latest version. In addition to labor laws, there are also some relevant decrees and notices that are also important, such as regulations on social insurance, medical insurance, and unemployment insurance. The official website of the Vietnam Ministry of Labor usually publishes the latest versions of these legal documents, and also provides some explanatory documents to help understand the specific application of legal provisions. Some international law firms and human resources consulting firms also regularly publish updated analyzes of Vietnam’s labor laws. These resources are particularly valuable to foreign companies and can help them better understand the nuances and practical application of the law.

It’s important to note that while these tools and resources can be of great help, they are not a complete substitute for professional legal and human resources advice. When dealing with complex or contentious separation cases, it is still recommended to consult with a local employment law expert or human resources consultant. They can provide more personalized and accurate advice based on specific circumstances, helping companies avoid potential legal risks. At the same time, companies should also encourage human resources teams to regularly participate in relevant training and seminars to continuously update their understanding and application capabilities of laws and regulations. By utilizing a combination of these tools, resources and professional advice, companies can better navigate the complexities of Vietnam’s labor market, ensure the accuracy and compliance of severance compensation calculations, build a good employer reputation, and attract and retain top talent.

Summary

The reasonable calculation of severance compensation and the establishment of a complete human resources management system are two key links in a company’s operations in Vietnam. They are not only related to legal compliance, but also directly affect the company’s reputation and long-term development.

The importance of accurately calculating severance compensation cannot be ignored. This is not only a legal requirement, but also a reflection of corporate integrity and responsibility. Proper compensation calculations can avoid potential labor disputes and protect companies from legal risks and financial losses. At the same time, it is also an important means to safeguard the rights and interests of employees and helps establish a fair and transparent corporate culture. In an environment like Vietnam, where labor regulations are complex and frequently changing, accurate calculation of compensation reflects a company’s professionalism and respect for the law. In addition, a reasonable compensation policy can also enhance employees’ sense of belonging and loyalty, and maintain good relationships even when they leave, which has a positive impact on the company’s long-term reputation and talent attraction.

Establishing a sound human resources management system is crucial to the sustainable development of an enterprise. This system not only includes the calculation of severance compensation, but also covers various aspects such as recruitment, training, performance management, salary and benefits, etc. A sound human resources management system can ensure that the company’s policies and practices comply with legal requirements, while also improving the efficiency and consistency of human resources management. For example, by establishing standardized processes and using advanced human resources management software, human errors can be greatly reduced and data accuracy and traceability can be improved. In addition, a complete system can help companies better plan human resource strategies and predict and respond to changes in the labor market.

In practice, these two aspects complement each other. Reasonable calculation of severance compensation is an important part of improving the human resources management system, and a sound management system can provide necessary support and guarantee for accurate calculation of compensation. Enterprises should regard the two as a whole and continue to optimize and improve them in daily operations. For example, regular training can be organized to familiarize the human resources team with the latest laws, regulations and best practices; an internal audit mechanism can be established to regularly check the accuracy of compensation calculations; technical means, such as human resources management software, can be used to improve overall management efficiency.

Finally, corporate leadership should recognize the strategic importance of human resource management and give it sufficient attention and resource support. In a market like Vietnam that is developing rapidly but has a complex legal environment, only by establishing a standardized and efficient human resources management system can companies take advantage of the fierce competition for talents and achieve long-term sustainable development. By correctly handling sensitive issues such as severance compensation, companies can establish an image as a responsible employer, which not only helps attract and retain talents, but also enhances the company’s local reputation and influence, laying a solid foundation for future development.