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5 Severance Packages Employees May Receive Upon Leaving a Company

Introducing: Unraveling the 5 Financial Benefits for Employees Post-Resignation: A Comprehensive Guide! This insightful article delves into the often-overlooked financial perks that employees are entitled to even after they've bid farewell to their current role. From unused vacation days to extended healthcare coverage, we'll unravel the monetary bonuses that can provide a much-needed safety net during transitional periods. So, get ready to explore these hidden treasures and ensure you're not missing out on any financial benefits when moving on to your next adventure!

Administrator

11 July, 2024

Leaving a job is inevitable during one’s working life. To protect and ensure their rights, employees should be aware of the five financial entitlements they may receive after their employment ends. Let’s explore these together!

1 Unpaid Wages for Work Completed

Unpaid Wages for Work Completed

This is money that all employees are entitled to upon termination of their employment contract.

According to Article 48 of the 2019 Labor Code, within 14 working days from the date of termination of the labor contract, the employer is obliged to fully pay all amounts related to the employee’s entitlements (including wages).

This payment period may be extended but shall not exceed 30 days in the following cases:

The employer is not an individual ceasing operations;
The employer changes its structure, technology, or for economic reasons;
Implementation of division, separation, consolidation, or merger; sale, lease, or conversion of business type; transfer of ownership or right to use the enterprise’s assets, cooperative;
Due to natural disasters, fires, calamities, or dangerous epidemics.

2 Annual Leave Entitlement

Annual Leave Entitlement

According to Article 113 of the 2019 Labor Code, depending on the type of work and working conditions, employees who have worked continuously for 12 months are entitled to annual leave ranging from 12 to 16 days.

Article 113, Clause 3 of the 2019 Labor Code states that, “In case the labor contract is terminated or the employee loses his/her job while still having annual leave days unused, the employer shall have to pay wages for the corresponding number of unused leave days.”

Therefore, in addition to receiving wages, employees are also entitled to annual leave pay if their employment contract ends or they lose their job.

3 Severance Pay

Severance Pay

According to Article 46 of the 2019 Labor Code, to be eligible for severance pay, employees must meet the following two conditions:

Termination of the labor contract under the conditions specified in Articles 34, Clauses 1, 2, 3, 4, 6, 7, 9, and 10 of the 2019 Labor Code.
Have worked regularly for the employer for 12 months or more.

When both conditions are met, the employee will be entitled to severance pay for each year of service. This severance pay is equal to half a month’s salary, unless the employee is eligible for a pension under social insurance law or voluntarily leaves without just cause for five consecutive working days or more.

The calculation of severance pay is as follows:

Severance Pay = 1/2 x Severance Pay Wage x Service Period.

Where:

The severance pay wage is the average wage of the last 06 consecutive months under the labor contract before the employee loses his/her job.
The service period for severance pay calculation is the total period of actual work for the employer minus the period of unemployment insurance participation as prescribed by unemployment insurance regulations and the period of work for which the employer has paid severance pay.

4 Redundancy Pay

Redundancy Pay

According to Article 47 of the 2019 Labor Code, employees are entitled to redundancy pay if they meet the following two conditions:

Termination of the labor contract under Article 34, Clause 11 of the 2019 Labor Code.
Have worked regularly for the employer for 12 months or more.

If both conditions are met, the employee will receive redundancy pay from the employer. The amount of this payment will be based on the accumulated service period and the wage before redundancy.

Specifically, the redundancy pay will be calculated as follows:

Redundancy Pay = Service Period x Wage before Redundancy.

Where:

The service period for redundancy pay calculation is the total period of actual work for the employer minus the period of unemployment insurance participation as prescribed by unemployment insurance regulations and the period of work for which the employer has paid severance pay.
The wage for redundancy pay calculation is the average wage of the last 06 consecutive months under the labor contract before the employee loses his/her job.

5 Unemployment Benefits

Unemployment Benefits

Unemployment benefits are financial support from the Social Insurance Fund and are not paid by the employer. However, to be eligible for this benefit, employees must meet the following conditions:

Have terminated their labor or work contract.
Have contributed to unemployment insurance for at least 12 months within the last 24 months before the termination of the labor contract.
Have registered their unemployment status and submitted the application for unemployment benefits at the job service center.
Have not found a new job after 15 days from the date of submitting the application for unemployment benefits.

According to Article 50 of the 2013 Employment Law, eligible employees will receive unemployment benefits calculated as follows:

Monthly benefit amount = Average monthly wage contributed to unemployment insurance in the last 06 months before unemployment x 60%.
In addition to the above five amounts, employees may also be entitled to other amounts after leaving their job, depending on the content of the labor contract or agreements made with the employer.

Source: Law Library

The above are the five financial entitlements that employees may receive after leaving their job. However, there may be other benefits and entitlements that employees can claim after their period of employment. Understanding these regulations not only helps employees protect their rights but also prepares them for their future after leaving their job.

Frequently asked questions

A severance package is a collection of benefits and compensation provided to an employee upon their departure from a company. It is typically offered to employees who are laid off or terminated, but it can also be given to those who voluntarily leave.

There are several types of severance packages, including cash payments, continued health insurance benefits, outplacement services, and equity or stock options.

The specifics of a severance package can vary depending on the company, the employee’s position, and the reason for their departure. Factors that may influence the package include the employee’s length of service, their performance and contribution to the company, and the company’s financial situation.

Severance packages are typically negotiated during the employee’s exit process. This can involve discussions between the employee and the company’s human resources department or legal team.

Employees should carefully review the terms and conditions of the severance package, paying close attention to the amount and form of compensation, the duration of benefits, and any restrictions or obligations imposed by the package.