Job-Loss Allowances Upon Dissolution in Vietnam: Detailed Calculations. FLAT regularly handles this issue when foreign investors deal with job-loss allowance on closure: computing it correctly under Article 47 in Vietnam: one wrong step can trigger administrative fines, loss of asset rights or prolonged disputes. This article follows a lawyer’s review sequence: the legal basis in force as of October 2026, how it applies to a concrete file, the procedure to follow and the risks to settle before signing anything.
Core legal basis — job-loss allowance on closure: computing it correctly under Article 47
Where employees lose their jobs through structural or technological change, economic reasons, division, consolidation, merger, sale, lease, enterprise conversion, transfer of ownership or asset-use rights — and where the enterprise is dissolved or bankrupt — Article 47 of the Labour Code 45/2019/QH14 applies the job-loss allowance. The rate is one month’s wage per year of service, with a floor of two months’ wages. This is a different regime from severance under Article 46 (half a month per year), and confusing the two is the most common budgeting error in closures.
Applying the rules to your situation
The two variables that corrupt results most are countable service time and the wage base. Service counted for the allowance equals total actual service with the employer, minus periods already covered by unemployment insurance and periods already paid a job-loss or severance allowance. The wage base is the average contractual wage of the six consecutive months immediately before the job loss. In factories with ownership changes or long-serving staff predating full compulsory unemployment insurance, the non-insurance-counted period can be very long and must be computed person by person.
Procedure and documents to prepare
- Step 1: classify each employee’s correct regime: job-loss allowance under Article 47 where the termination falls in the Article 42 cases or dissolution and bankruptcy; severance under Article 46 for the rest — never one regime for the whole list.
- Step 2: compute each person’s countable service: total actual service minus unemployment-insurance periods and previously allowance-paid periods.
- Step 3: compute the wage base as the six-consecutive-month average before job loss, multiply by countable years, and apply the two-month floor.
- Step 4: pay within the statutory window after termination, with an itemised calculation sheet per employee and correct personal income tax handling, under which the statutory-level allowance is excluded from taxable income.
Risks to anticipate
The first risk is applying Article 46 severance to a closure that belongs under Article 47, underpaying half the obligation and creating grounds for collective complaints. The second is the reverse error on time: counting unemployment-insurance periods into countable service, inflating the allowance budget unlawfully. The third is using the final month’s wage instead of the six-month consecutive average that Article 47 prescribes.
Answers to client questions
How is the job-loss allowance on closure calculated?
Under Article 47 of the Labour Code 45/2019/QH14: countable years of service multiplied by one month’s wage, with a minimum of two months’ wages. Countable service equals total actual service minus periods covered by unemployment insurance and periods already paid allowances. The wage base is the average contractual wage of the six consecutive months before the job loss.
How does the job-loss allowance differ from severance?
In both conditions and rate: the Article 47 job-loss allowance applies to job losses in the Article 42 Labour Code cases and to dissolution or bankruptcy, at one month per countable year with a two-month minimum. Article 46 severance applies to ordinary qualifying terminations at half a month per year. For the same employee and the same service, the two regimes produce amounts differing by a factor of two.
Does service covered by unemployment insurance count toward the allowance?
No. Countable service for the job-loss allowance excludes periods during which the employee participated in unemployment insurance, because that regime is what protects them on job loss for those periods. The employer must reconcile each person’s social insurance record to fix the countable remainder, especially for staff who worked before compulsory unemployment insurance fully operated.
Is the job-loss allowance subject to personal income tax?
The part paid at the statutory Article 47 level is excluded from the employee’s taxable income. If the employer tops up beyond the statutory level, the excess must be assessed under the personal income tax rules at the time of payment — currently the framework of the Personal Income Tax Law 109/2025/QH15 replacing Law 04/2007/QH12 — with corresponding withholding and declaration where the excess is taxable.
Action conclusion
Build a per-person allowance table with three verification columns: applicable regime, service after the unemployment-insurance deduction, and the six-month average wage. The table belongs inside the Article 44 workforce plan and must be reconciled with social insurance data before employees are notified.
This article has been quality-reviewed by the FLAW AI Legal Council