Since 2023, we’ve been flooded with news about retrenchment and layoffs from multiple companies, and there seem to be no signs of this stopping anytime soon. Whether you’re an employer or an employee in Vietnam, having a clear understanding of how retrenchment should be conducted and the benefits retrenched workers are entitled to under Vietnam’s Labour Code 2019 will help ensure both parties are treated fairly.
So, who’s covered under the Labour Code 2019?
“All employees working under a labour contract in Vietnam — whether Vietnamese nationals or foreign workers — are covered under the Labour Code 2019 (effective 1 January 2021).”
This includes full-time, part-time, seasonal, and fixed-term contract workers. Employees with indefinite-term contracts, definite-term contracts of 12 months or more, and even certain seasonal contracts are protected.
Under the Labour Code 2019, an employer may unilaterally terminate a labour contract in the event of structural or technological changes, economic reasons, or enterprise merger/division, provided the employer has exhausted alternatives such as retraining and redeployment. The employer must develop a labour utilisation plan and consult with the representative organisation of employees at the grassroots level (trade union) before proceeding.
As the employer, you must notify the Provincial/City Department of Labour, War Invalids and Social Affairs (Sở Lao động – Thương binh và Xã hội, DOLISA) at least 30 days prior to the retrenchment for structural/technological change or economic reasons.
How do I manage a retrenchment in Vietnam?
“Employers must notify the Provincial/City DOLISA at least 30 days before the retrenchment takes effect, and must develop a written labour utilisation plan.”
The labour utilisation plan must include:
- Number of employees to be retained and retrained
- Number and list of employees to be retrenched
- Timeline and method of retrenchment
- Source of severance payments
Employers must prioritise retaining employees with higher seniority, employees with more dependants, employees who are the sole wage-earners in their family, and trade union officials. Only after these criteria have been considered may the employer proceed with the retrenchment.
How are retrenched employees compensated under the Labour Code 2019?
“Employees who have worked for at least 12 months under a labour contract are entitled to a job-loss allowance.”
Under the Labour Code 2019, for periods of employment covered by unemployment insurance contributions, the employee is entitled to unemployment benefits administered by Vietnam Social Security (Bảo hiểm Xã hội Việt Nam, BHXH/VSS). For periods not covered by unemployment insurance, the employer must pay a severance allowance of half a month’s salary per year of service.
Notice periods before retrenchment:
- Indefinite-term contract: at least 45 days’ written notice
- Definite-term contract of 12–36 months: at least 30 days’ written notice
- Definite-term contract of less than 12 months: at least 3 working days’ written notice
Retrenched employees may also register for unemployment benefits at the Employment Service Centre (Trung tâm Dịch vụ việc làm) under the provincial DOLISA, provided they have paid into unemployment insurance for at least 12 months within the past 24 months.
How can I get help if I think I’ve been unfairly retrenched?
Try raising the issue with your employer first through internal resolution. If you believe your retrenchment was conducted unlawfully — for example, if proper notice was not given, the labour utilisation plan was not followed, or you were retrenched in violation of the priority-retention criteria — you can:
- File a complaint with the Provincial/City Department of Labour, War Invalids and Social Affairs (DOLISA)
- Bring a labour dispute to the Labour Arbitration Council (Hội đồng trọng tài lao động) or the People’s Court (Tòa án Nhân dân) for adjudication
- Contact the Vietnam General Confederation of Labour (Tổng Liên đoàn Lao động Việt Nam) if you are a union member, for support and representation
Most of your retrenchment rights are determined by your labour contract and by the Labour Code 2019. Ensure all agreed terms are documented clearly before signing. If you’ve been retrenched and are looking for your next role, our experienced consultants at People Profilers Vietnam are ready to help you find the right opportunity.
