In Vietnam, reorganization of an enterprise means the division,
separation, consolidation, merger or transformation of an enterprise. In
particular, when separating enterprises, in addition to legal issues related to
enterprise separation procedures, registration for newly formed enterprises,
the introduction of a plan for the employees of the separated company is also a
matter of concern. The transferor company and the transferee company need to
allocate and use the existing labor force accordingly. It is important to
ensure the interests of workers. Specifically, in case of continuing to employ
employees, when separating an enterprise, the next employer is responsible for
continuing to use up the existing workforce and proceeding with the labor
contract amendment and supplement. All of this might lead to potential disputes
which lawyers would be involved to provide legal advice from the early stage.
Dispute settlement method for
employee when separating enterprises in Vietnam
If the enterprise does not use up all the employees or the labor
demand of the company does not run out of the existing number of employees, the
enterprise must develop a suitable plan to use employees in accordance with the
law. Specifically, an employment plan must contain the following main contents:
The list and the number of employees to be continued to be used, the employee
sent for retraining to continue using; List and number of employees to retire;
The list and number of employees who are transferred to part-time work; the
employee must terminate the labor contract; Measures and financial resources to
ensure implementation of the plan. Enterprises should note that when developing
plans for the employment of employees, there must be the participation of
organizations representing labor collectives at the grassroots level.
In case it is imperative that the employees quit their job, the
enterprise must pay the employee a job loss allowance so that the interests of
the employee will still be guaranteed when separating the enterprise. The Labor
Code has specified as follows: An employer shall pay a job-loss allowance to an
employee who loses his/her job and has worked regularly for the employer for 12
months or longer. The job-loss allowance is equal to 1 month’s wage for each
working year, but must not be lower than 2 months’ wage. The working period
used for the calculation of job-loss allowance is the total time during which
the employee actually works for the employer minus the time during which the
employee benefits from unemployment insurance in accordance with the Law of
Social Insurance and the working period for which the employer has paid a
severance allowance to the employee. The wage used for the calculation of
job-loss allowance is the average wage in accordance with the labor contract
during 6 months preceding the time the employee loses his/her job.
It is important to have proper and proactive discussion with
impacted employee and avoid disputes impacting the company’s reputation. Dispute lawyers in Vietnam could
be of help for advice and preparation.
ANT Lawyers is a Labour Dispute Law Firm in Vietnam, recognized by Legal500,
IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm
network covering more than 150 jurisdictions. The firm provides a range of
legal services to multinational and domestic clients.
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