“How many months’ salary do I get when I leave?” — the familiar question whose answer depends on whether the employee resigns or is made redundant: two different regimes with different conditions, rates and legal bases (Articles 46 and 47 of the Labor Code 45/2019/QH14). Confusing the two is the source of most disputes at employment termination. This article draws the line clearly and shows how to compute each payment.
1. Severance pay (Article 46): half a month’s salary per year of service
When an employment contract terminates as prescribed by law, the employer pays severance to an employee who has worked regularly for 12 months or more: half a month’s salary for each year of service. This covers “ordinary” terminations — contract expiry, mutual termination agreement, lawful unilateral termination by the employee, and so on.
Two cases are excluded from severance: employees meeting pension conditions under social insurance law, and employees who abandon the job without legitimate reason for 5 consecutive working days or more (Article 36(1)(e)). In practice, many employers forget the second exception and pay anyway — overpaying breaks no law, but in a dispute the employer cannot easily claw back a mistakenly paid sum.
2. Redundancy pay (Article 47): one month per year, minimum two months
The heavier regime covers employees who lose their jobs for employer-side reasons listed in Article 34(11): structural or technological change; economic reasons; division, separation, consolidation or merger; sale, lease or conversion of the enterprise form; transfer of ownership or use rights over enterprise or cooperative assets. The rate: one month’s salary per year of service, but no less than two months’ salary — even someone with just 12 months of service gets the two-month floor.
The core distinction: severance is an entitlement when employment ends normally; redundancy pay compensates for a job lost to the employer’s decision — hence double the rate and a minimum floor. Disguising a restructuring-driven mass layoff as “mutual termination agreements” to pay only severance is high legal risk: on complaint, labor authorities look at substance, not at what the paperwork is called.
3. Computing service time: subtract insured unemployment periods
Both regimes share one time formula (Article 46(2) and Article 47(2)): the total actual time the employee worked for the employer, minus (i) periods the employee participated in unemployment insurance, and (ii) service time already paid for with severance or redundancy pay.
The logic: insured periods are covered by unemployment benefits from the insurance fund — no double counting. Example: Mr A worked 10 years, 8 of them insured, the first 2 uninsured (the employer had not yet joined) — severance time counts only 2 years, i.e. one month’s salary. This surprises employees most, and employers must explain it clearly at payout to avoid complaints.
4. The salary base: average of the last six months
The salary for both payments is the average salary of the 6 consecutive months under the employment contract immediately before termination (Article 46(3), Article 47(3)). Three details matter: one, it is salary under the contract — base salary, salary allowances and contractual supplements, not total take-home pay (Tet bonuses or off-contract overtime fall outside unless written into the contract); two, it is the 6 consecutive months right before termination, not the six highest-paid months; three, fractional time converts under the Government’s detailed rules.
5. Payment deadline: 14 working days, 30 days maximum
Article 48 of the Labor Code requires: within 14 working days of contract termination, both sides must fully settle all amounts related to each party’s interests — including severance/redundancy pay, unpaid wage days and social insurance book closure. Special cases (employer ceasing operations; structural, technological or economic change; division or merger; natural disasters, fire, epidemics and more) may extend the deadline but not beyond 30 days.
Late payment breeds disputes and can draw administrative labor penalties. The wise practice: prepare the computation sheet and reconcile it with the employee before the termination date, so the last day is just signature and bank transfer.
Frequently asked questions
How much severance for 5 years of service?
With 5 full regular years and no unemployment insurance participation in that time: 5 years × half a month = 2.5 months’ salary (averaged over the 6 consecutive months before termination). If 3 of those years were insured, subtract them — 2 years × half = 1 month’s salary.
What is the minimum redundancy payment?
No less than two months’ salary, even for just 12 months of service. The formula: one month’s salary per year of service, floored at two months (Article 47, 2019 Labor Code).
Does job abandonment for 5 days qualify for severance?
No. Article 36(1)(e) excludes employees who abandon work without legitimate reason for 5 consecutive working days or more from the severance regime.
What if the employer pays late?
Payment is due within 14 working days of termination (30 days maximum in special cases under Article 48). Late payment can trigger administrative penalties, and the employee may complain or sue for the entitlement.
This article has been quality-reviewed by the FLAW AI Legal Council