Over years of providing legal services to FDI enterprises in Vietnam, DEDICA Law Firm has received countless questions from both companies and foreign employees, such as: “As a foreigner working legally in Vietnam, am I entitled to severance pay when I leave my job?” Let's explore the answer with DEDICA!

Legal Basis for Severance Pay for Foreign Employees

Are foreign employees governed by Vietnam’s Labor Code?
Yes.

According to the 2019 Labor Code, foreigners working in Vietnam under a labor contract are entitled to almost the same rights and obligations as Vietnamese workers—including the right to severance pay.

A key point is that foreign employees are not subject to unemployment insurance, meaning their entire working period is used to calculate severance pay.

Who is eligible for severance pay?

You are entitled to severance pay if:

You work legally under a labor contract;
You have worked continuously for at least 12 months;
You terminate your employment lawfully (i.e., not dismissed or quit without notice).

If these conditions are met, you are almost always entitled to severance pay—regardless of the reason for leaving.

Severance Pay Calculation and Common Mistakes

In reality, many companies are unaware of or overlook their obligation to pay severance to foreign employees, especially when the separation is amicable. Therefore, knowing how the severance is calculated is key to protecting your rights.

How is severance pay calculated?

Simple formula:

Severance pay = ½ monthly average salary × number of working years

Average salary: calculated from the 6 most recent months before resignation.
Working period:
- Less than 6 months: not counted;
- 6 months or more: rounded up to 1 full year.

Example:
A Japanese expert works for an IT company from August 2021 to July 2024. His average salary over the last 6 months is VND 50 million.
→ Severance = ½ × 3 years × 50 million = VND 75 million

This amount must be paid separately and cannot be replaced with bonuses or other benefits unless there is a clear agreement in place.

Who is not eligible?

Foreign employees will not receive severance pay if they:

Worked for less than 12 months;
Were lawfully dismissed due to serious misconduct;
Left the job without notice for 5 or more consecutive working days.

In all other cases—contract expiration, personal resignation, mutual agreement—foreigners are entitled to severance pay.

What Should Companies Keep in Mind?

Severance pay is mandatory, regardless of whether it's stated in the contract. Failing to comply can result in complaints or lawsuits.

Timing and Method of Payment

According to Article 48 of the Labor Code:

Payment must be made within 14 days of the official termination date;
If there are special circumstances, the deadline may be extended but not beyond 30 days.

Payments should be clear, made via bank transfer, and accompanied by written notification to avoid disputes.

Legal Consequences of Non-Compliance

If severance pay is not provided or delayed:

Employees can file a complaint with the Department of Labor, War Invalids, and Social Affairs;
Or initiate a lawsuit at the District People’s Court.

The company may be subject to penalties and compensation for delays, along with damage to its reputation among international employees.

Severance pay is not a confrontation—it's a protected legal right. Foreign employees should know their rights and act accordingly. For businesses, compliance builds professionalism and trust—crucial assets in today’s competitive talent market.

Are you a foreign employee preparing to leave your job in Vietnam?
Are you an FDI company unsure of your legal obligations when terminating a foreign expert?

Let DEDICA Law Firm be your trusted partner.

📞 Hotline: (+84) 39 969 0012 (Support via WhatsApp, WeChat & Zalo)
🏢 Head Office: 144 Vo Van Tan St., Vo Thi Sau Ward, District 3, Ho Chi Minh City
🕒 Working Hours: Monday to Friday (8:30 AM – 6:00 PM)

Contact us now for a free first consultation from our expert legal team!