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Severance Pay in Vietnam (2026): Eligibility, Formula and Examples

By Nguyễn Quốc Trung — Deputy General Director · Updated 2026-10-12

Severance pay in Vietnam (trợ cấp thôi việc) is the allowance an employer must pay when an employment contract ends lawfully to an employee who has worked regularly for it for at least 12 months: half a month's salary for each year worked, based on the average salary of the 6 months before leaving, under Article 46 of the 2019 Labour Code. The point many employers get wrong is that any period covered by unemployment insurance is deducted, so an employee whose unemployment insurance was paid in full often has little or no time left to count. This article is for business owners, HR and finance teams employing staff in Vietnam; it reflects the rules in force as of 12 October 2026.

What is severance pay in Vietnam and who is entitled to it?

Severance pay is the amount an employer pays an employee when the employment contract ends under paragraphs 1, 2, 3, 4, 6, 7, 9 or 10 of Article 34 of the 2019 Labour Code, provided the employee has worked regularly for that employer for at least 12 months; each year worked earns half a month's salary (Article 46(1)). The most common qualifying terminations are:

• The fixed-term contract expires, or the work under the contract is completed.
• Both parties agree to end the contract.
• The employee lawfully terminates the contract under Article 35, giving the required notice.
• The employer lawfully terminates the contract under Article 36, except where the employee abandoned work for 5 or more consecutive working days without a valid reason.

The employer pays this from its own funds, unlike unemployment benefit, which is paid by the unemployment insurance fund.

How is severance pay calculated in Vietnam in 2026?

Severance pay = years of service counted for severance × 1/2 × average contractual salary of the 6 months immediately before leaving. The service counted is the total time actually worked for the employer, minus the time covered by unemployment insurance and any time for which severance or job-loss allowance has already been paid (Article 46(2) and (3)):

• Time actually worked includes probation, employer-sponsored training, sick leave, maternity leave and other paid leave, under Article 8 of Decree 145/2020/ND-CP.
• Rounding odd months: from 1 month to under 6 months counts as half a year; 6 months or more counts as a full year.
• Average salary is the salary stated in the employment contract for the 6 months before leaving, including the base wage, wage allowances and other supplements under Article 90(1).

Unemployment insurance began on 1 January 2009, so for employees who joined after that date and were covered continuously, the time left to count for severance is usually very short.

What is a worked example of severance pay for someone employed before 2009?

An employee who worked continuously from 1 July 2006 to 30 June 2026, covered by unemployment insurance from 1 January 2009, with an average salary over the last 6 months of VND 12,000,000 a month, receives severance pay of VND 18,000,000. The calculation:

• Total time actually worked: 1 July 2006 – 30 June 2026 = 20 years.
• Time covered by unemployment insurance: 1 January 2009 – 30 June 2026 = 17 years 6 months.
• Time counted for severance: 20 years − 17 years 6 months = 2 years 6 months; the 6 odd months round up to 1 year, so 3 years are counted.
• Severance pay: 3 × 1/2 × 12,000,000 = VND 18,000,000.

If the same employee had no pre-2009 period and was covered by unemployment insurance throughout, the time counted would be zero and no severance pay would be due.

Do employees covered by unemployment insurance still get severance pay?

An employee whose unemployment insurance was paid for the whole period of employment has no time left to count for severance, because all of it is deducted under Article 46(2); severance is only due for periods of work not covered by unemployment insurance. The periods most often overlooked are:

• Probation under a separate probation agreement, before unemployment insurance started.
• Work before 1 January 2009.
• Periods when the employer should have paid unemployment insurance but did not — the employer must still count these for severance.

Example: an employee on a separate 2-month probation agreement then signs an employment contract and is covered by unemployment insurance for 4 years, with an average salary over the last 6 months of VND 12,000,000. The uncovered period is 2 months, rounded to half a year, so severance pay is 1/2 × 1/2 × 12,000,000 = VND 3,000,000.

Does an employee who resigns get severance pay in Vietnam?

An employee who resigns still receives severance pay if the resignation is lawful — a unilateral termination under Article 35 of the 2019 Labour Code with the full notice period — and the employee has worked regularly for at least 12 months. The notice periods under Article 35(1) are:

• At least 45 days for an indefinite-term contract.
• At least 30 days for a fixed-term contract of 12 to 36 months.
• At least 3 working days for a fixed-term contract of less than 12 months.

An employee who walks out without the full notice, outside the cases where no notice is required, has terminated the contract unlawfully: they receive no severance pay and must pay the employer half a month's salary plus salary for the days of notice not given (Article 40).

When is severance pay not payable?

Severance pay is not payable when the employee qualifies for a retirement pension, when the employer terminates the contract because the employee abandoned work for 5 or more consecutive working days without a valid reason (Article 36(1)(e)), or when the contract ends for a reason outside the qualifying paragraphs of Article 34. Common cases:

• Dismissal as a disciplinary measure (Article 34(8)).
• Unlawful unilateral termination by the employee (Article 40).
• Less than 12 months worked for the employer.
• The whole period of work already covered by unemployment insurance or already compensated.

Employees let go because of structural or technological change, for economic reasons, or because of a division, merger or consolidation of the business (Article 34(11)) receive job-loss allowance instead of severance pay, at a higher rate.

How do severance pay, job-loss allowance and unemployment benefit differ?

Severance pay and job-loss allowance are both paid by the employer, but they apply to different reasons for termination and at different rates; unemployment benefit is paid by the unemployment insurance fund, not by the employer:

One person can receive severance pay for an uncovered period and unemployment benefit for the covered period; the two do not exclude each other.

When must severance pay be paid, and what is the penalty for paying late?

The employer must pay severance pay and other final entitlements within 14 working days of the end of the employment contract; in certain special cases this can be extended, but not beyond 30 days (Article 48(1) of the 2019 Labour Code). Not paying, or paying less than due, is fined under Article 18(2) of Decree 283/2026/ND-CP, in force from 10 September 2026 and replacing Decree 12/2022/ND-CP:

• VND 1–2 million for violations affecting 1–10 employees.
• VND 2–5 million for 11–50 employees; VND 5–10 million for 51–100 employees.
• VND 10–15 million for 101–300 employees; VND 15–20 million for 301 employees or more.

These are the rates for individuals; a business, as an organisation, is fined double under Article 7(1). The business must also pay the full allowance plus interest at the highest non-term deposit rate published by state-owned commercial banks at the time of the penalty (Article 18(4)(a)).

How does Nhan Kiet calculate and pay severance for clients?

Nhan Kiet — Nhan Kiet Manpower Supply Co., Ltd, in operation since 2009 and holding labour sub-leasing Licence No. 15/2019/SHCM — signs employment contracts directly with employees, so it is responsible for calculating and paying severance in full, confirming insurance contribution periods and returning documents within 14 working days when a contract ends.

For each employee, Nhan Kiet checks three sources: the contract and annexes for the 6-month average salary, the unemployment insurance record to deduct the right period, and probation records so that no uncovered period is missed. Foreign companies without a Vietnamese entity can hand all of this over through an Employer of Record in Vietnam, and businesses with their own entity through payroll outsourcing in Vietnam.

See also: Annual Leave in Vietnam 2026: Days & Unused Payout · Vietnam Minimum Wage 2026: Regional Rates, Hourly Rates and 2027

Sources

• 2019 Labour Code (No. 45/2019/QH14) — Article 34 (grounds for termination), Articles 35 and 36 (unilateral termination), Article 40 (unlawful termination), Article 46 (severance pay), Article 47 (job-loss allowance), Article 48 (payment deadline), Article 90 (wages); in force from 1 January 2021
• Decree 145/2020/ND-CP guiding the Labour Code on working conditions and labour relations — Article 8 (service time and salary for severance and job-loss allowance)
• Decree 283/2026/ND-CP — Article 18(2) and (4)(a) (failure to pay severance), Article 7(1) (organisations fined double); in force 10 September 2026

This article summarises the rules for orientation; specific situations need individual advice.

Contact us

Businesses that need to calculate severance or job-loss allowance, or check employees' unemployment insurance records before ending contracts, can contact:

• Nguyen Quoc Trung — Deputy General Director
• Phone: 0908 636 108 — [email protected]
• Switchboard: 028 3505 4224
• Head office: Room 202, Building 57, 57 Le Thi Hong Gam, Ben Thanh Ward, Ho Chi Minh City

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