Employee & Social Insurance Checklist When an Enterprise Goes Bankrupt (2025 Law)

When an enterprise goes bankrupt, employees are the most vulnerable group — but the law ranks them high in the payment order. The catch: priority rights only matter when employees know and execute the necessary steps. This is a dual checklist — for employees and for the enterprise/HR — under the 2025 Law on Recovery and Bankruptcy (142/2025/QH15, effective 01/3/2026).

1. What rights do employees have?
2. Salaries, insurance, severance — how each is handled
3. Checklist for employees
4. Checklist for the enterprise / HR
5. Common traps

1. What rights do employees have?

The 2025 Law gives employees three main groups of rights:

Right to initiate proceedings (Article 38): employees and their representative organisations may file for bankruptcy when the enterprise owes salaries for 06 months or more. No need to wait for other creditors.

Payment priority (Article 46): in asset distribution, employee claims occupy three consecutive ranks right after bankruptcy costs:

Rank 2: salary arrears;
Rank 3: compulsory social insurance, unemployment insurance, health insurance, occupational accident–disease insurance;
Rank 4: severance allowances and other benefits under collective labour agreements and labour contracts.

Inference: employees rank ahead of State tax claims (rank 6) and unsecured creditors (rank 7) — a clear social-security policy choice by the legislator.

Procedural participation rights: employees are creditors — entitled to file debt claims, attend the creditors' meeting, and vote on recovery plans.

2. Salaries, insurance, severance — how each is handled

Salary arrears (rank 2): all unpaid wages up to the opening of proceedings. Note: distinguish due salaries from bonuses/allowances not yet due under agreements — only accrued obligations count as debt.

Social, health, unemployment insurance (rank 3): compulsory insurance amounts deducted from employees (or payable by the enterprise) but never remitted. Often large, as many enterprises owe years of social insurance. Practical consequence: insurance arrears can affect benefit entitlements (book closure, unemployment benefits) — work with the insurance authority to preserve rights.

Severance (rank 4): when labour contracts end due to bankruptcy, employees receive severance under the Labour Code (half a month's salary per working year for periods not covered by unemployment insurance… — check current rules as calculation is conditional). Other collective-agreement benefits (if any) sit at this rank too.

3. Checklist for employees

[ ] Keep every document: labour contracts, payslips, salary bank statements, promotion decisions, collective agreements.
[ ] Quantify what's owed: how many months' salary, exact amounts; how many months of social insurance are missing (check via the VssID app or the insurance authority).
[ ] Coordinate through the union/collectively: a collective petition carries more weight than individual ones — and shares legal costs.
[ ] File for proceedings (once 06 months' salary is owed) or send the debt-claim paper within 15 days of the opening decision (Article 55).
[ ] Attend the creditors' meeting: don't let others decide your entitlements for you.
[ ] Track social-insurance book closure: work with the insurance authority so contribution records are recognised for future benefits.
[ ] Register for unemployment benefits (if eligible) — an independent right that provides income while waiting.

4. Checklist for the enterprise / HR

Distressed employers must:

[ ] List all employees and debts in full: salaries, insurance, severance — accurate per person, per month.
[ ] No discrimination: quietly paying key staff while owing the majority is preferential treatment that may be revisited.
[ ] Coordinate with the union in informing employees — transparency reduces collective-dispute risk.
[ ] Complete insurance procedures: close books, reconcile with the insurance authority — don't let employees lose benefits to unfinished paperwork.
[ ] Pay in the Article 46 order: salaries and insurance first; no paying other creditors while employees are owed (except rank-1 bankruptcy costs).
[ ] Archive complete labour dossiers for handover to the asset manager — missing records make salary-debt verification hard, and employees suffer most.

5. Common traps

"The company promises to pay later": verbal promises are worthless once insolvent — put every commitment in writing while preparing legal options.
Signing "voluntary" pay cuts or resignations without severance: under pressure, many employees sign disadvantageous papers. Read everything — and when the enterprise is distressed, consult a lawyer/union before signing anything.
Ignoring social insurance: chasing salaries but forgetting insurance — while years of insurance arrears may exceed salary debts and directly affect benefit rights.
Skipping the creditors' meeting: "I'll be paid anyway" is wrong — priority only works when you're present to defend your claim against challenges and haircuts.
"Ghost" enterprises: owners flee and nobody files — employees must proactively petition under Article 38 instead of waiting.

Are you an employee owed salaries, or an enterprise preparing for the worst? Employee priority only turns into cash when executed properly. Contact FLAT Law Firm — hotline 0988424851 — for step-by-step guidance.

6. Case study: 200 workers of Garment Company G

Hypothetical scenario.

Garment Company G (FDI capital) owes 200 workers four months' salary (VND 9.6 billion total) and 14 months of social insurance (VND 11 billion). The owner has left the country; the factory is closed. Workers panic: "If no one acts, is our money gone?"

What the workers did right (per the checklist):

Week 1: the grassroots union executive board (still functioning) compiled the 200-person list, collecting labour contracts and payslips.
Week 2: checked social-insurance records via the VssID app — quantifying each person's missing months in a consolidated table.
Month 6 (06 months' salary owed): the union filed a collective petition for bankruptcy under Article 38 — one petition for 200 people: low cost, heavy weight.
After opening: 200 debt-claim papers filed within the 15-day limit (Article 55); union representatives attended the creditors' meeting.
In parallel: each worker registered for unemployment benefits — income immediately while awaiting asset distribution.

Outcome: salary arrears (9.6 billion) at rank 2 and insurance arrears (11 billion) at rank 3 were paid in full from factory auction proceeds; rank-4 severance was paid 70% pro rata. No worker lost everything.

Lesson: workers' strength lies in collective organisation — 200 scattered individuals are easy to ignore; one collective union petition is not.

7. Quick answers to common questions

"The company owes salaries but still operates — should we petition for bankruptcy?" — A bankruptcy petition is a strong measure, usually the last step. First: send a formal salary-demand letter; complain to the labour authority; sue for salaries at the labour court. Only consider a bankruptcy petition when the enterprise is clearly insolvent.

"With insurance arrears, can I still get maternity/sickness benefits?" — Unpaid periods don't count toward benefits. That's exactly why insurance arrears must be addressed early — benefit rights attach directly to contribution records.

"The owner fled — who do we claim against?" — Against the enterprise (the legal entity still exists) through bankruptcy proceedings; company assets remain for liquidation. Fleeing doesn't erase the representative's personal liability as prescribed.

"Should I accept 'support money' to withdraw my claim?" — Think carefully: a one-off "support" payment may be far less than total entitlements (salary + insurance + severance + unemployment). Don't trade long-term rights for short-term cash without calculating.

Advice for grassroots union officers

You stand between the enterprise and the workforce — your crisis role is pivotal: (1) keep employee rosters and payroll records current while the enterprise is still healthy; (2) at the first sign of salary arrears, hold information meetings early — destructive rumours harm almost as much as the arrears themselves; (3) act as the focal point for collective petitions and creditors'-meeting participation. A well-functioning grassroots union is a "collective shield" no lawyer can replace. Document everything the union does in writing — meeting minutes, demand letters, filing receipts — because the union's paper trail becomes the workers' evidence if disputes arise later over who was owed what.

References

Law on Recovery and Bankruptcy No. 142/2025/QH15 (effective 01/3/2026) — Article 38 (employees' filing right), Article 46 (ranks 2, 3, 4), Article 55 (debt claims)
Labour Code 2019 — severance, labour-contract termination