Severance Pay in Vietnam: What Employers Owe in 2026

Severance pay in Vietnam surprises foreign employers both ways: small for most local staff, large in restructuring and for some foreign staff. Here are the rules and worked numbers for anyone budgeting an exit or comparing EOR Vietnam providers.

Quick answer: Under Vietnam's Labour Code 2019 (Art. 46), an employee with 12+ months of regular work receives severance of half a month's salary per year worked, excluding years covered by unemployment insurance. If the job is lost through restructuring (Art. 47), the job-loss allowance is one month per year, minimum two months. Both are due within 14 working days.

What is severance pay in Vietnam and who qualifies?

Severance pay in Vietnam (trợ cấp thôi việc) is a lump sum owed when a contract ends lawfully and the employee has worked regularly for the employer for at least 12 months. The rule sits in Article 46 of the Labour Code 2019 (Law 45/2019/QH14, effective 1 January 2021), detailed by Article 8 of Decree 145/2020/ND-CP.

Qualifying endings include contract expiry, mutual agreement and lawful unilateral termination (LuatVietnam summary of Art. 46). Three situations do not qualify:

• the employee is already eligible for a pension;
• the employee is dismissed as a disciplinary measure, or is terminated for abandoning work for 5 or more consecutive days without a legitimate reason;
• the employee terminates the contract unlawfully (Labour Code Art. 40).

How is severance pay calculated?

Severance pay in Vietnam equals ½ × counted years × average monthly salary:

• Counted years = total working time (probation included) minus time covered by unemployment insurance (UI) and time already paid out. A remainder of 6 months or less counts as half a year; more than 6 months counts as a full year.
• Average monthly salary = the average contractual salary of the 6 consecutive months before termination.

Unemployment insurance (UI) is the state scheme that pays benefits to people who lose their job. Because UI years are excluded, a local employee on UI for the whole job usually receives little or no statutory severance; the UI fund takes over that role.

What is the job-loss allowance, and how is it different?

The job-loss allowance (trợ cấp mất việc làm) under Article 47 of the Labour Code 2019 applies when the employer ends the contract because of restructuring, technology change, economic reasons, or a merger, division or sale of the business. It pays one month's salary per counted year, with a floor of two months' salary, using the same counting and salary rules as severance.

An employee cannot receive both payments for the same period. The two-month floor is what makes restructuring exits expensive, even for short-tenure staff.

Worked examples: how much does an exit cost?

The examples below were checked with a script. They show why the termination reason matters more than tenure.

Scenario	Counted time	Payment	Amount (VND)	Legal basis
Local employee, 6 years 8 months, first 2 months on probation without UI, leaves by mutual agreement, salary 30,000,000	2 months → 0.5 year	Severance: ½ × 0.5 × 30,000,000	7,500,000	Labour Code 2019 Art. 46; Decree 145/2020/ND-CP Art. 8 (eff. 1 Feb 2021)
Same employee, role eliminated in a restructuring	0.5 year	Job-loss: 1 × 0.5 = 0.5 month → floor of 2 months	60,000,000	Labour Code 2019 Art. 47 (eff. 1 Jan 2021)
Foreign employee, 3 years 4 months, no UI and no UI-equivalent paid, salary 50,000,000, contract expires	3 years 4 months → 3.5 years	Severance: ½ × 3.5 × 50,000,000	87,500,000	Labour Code 2019 Arts. 46, 168(3)

Foreign employees do not join Vietnam's UI scheme, so the Ministry of Home Affairs confirms they can claim severance, except for periods where the employer paid a UI-equivalent amount with salary (LS Vietnam, April 2026).

When must severance be paid, and what happens if it is late?

Severance and job-loss allowance must be paid within 14 working days from the termination date under Article 48 of the Labour Code 2019. It can extend to 30 days only in listed cases, such as closure, economic restructuring, mergers or natural disasters. Late or missing payments are penalised under Decree 283/2026/ND-CP, effective 10 September 2026, which replaced Decree 12/2022/ND-CP; organisations are fined at twice the individual level and must also pay what is owed.

Is severance pay taxed, and what does the employee get from UI?

Severance and job-loss allowance paid in line with the Labour Code are not taxable personal income under the Personal Income Tax Law 109/2025/QH15 and Decree 253/2026/ND-CP. Enhanced amounts are also excluded if set out in internal rules, the contract or a collective agreement (Thuế Hải quan journal).

From 1 January 2026, the Employment Law 74/2025/QH15 sets the monthly unemployment benefit at 60% of the average UI salary of the last 6 months, capped at 5 times the regional minimum wage (LuatVietnam English). For a 30,000,000 VND salary in Region I, that is 18,000,000 VND per month (cap: 26,550,000 VND). Correct monthly UI, covered in our guide to social insurance for employers in Vietnam, keeps your severance bill low.

How does an EOR handle severance in Vietnam?

An Employer of Record (EOR) is a licensed local company that legally employs your team member in Vietnam and runs payroll, insurance and compliance for you. The EOR holds the contract, UI history and exit paperwork, and passes statutory severance through at cost. When you compare EOR cost in Vietnam, ask whether offboarding is billed as an extra fee. Our overview of Employer of Record in Vietnam explains the full model.

Key takeaways

• Severance in Vietnam is ½ month's salary per counted year for employees with 12+ months of regular work (Labour Code 2019, Art. 46).
• Years covered by unemployment insurance are excluded, so most local staff receive little statutory severance.
• Restructuring exits trigger the job-loss allowance: 1 month per year, minimum 2 months' salary (Art. 47).
• Payment is due within 14 working days, extendable to 30 days only in listed cases (Art. 48).

Frequently asked questions

How much is severance pay in Vietnam in 2026?

Severance pay in Vietnam in 2026 is half a month's average salary for each counted year of work, under Article 46 of the Labour Code 2019. The salary is the average of the last 6 months. Counted years exclude time covered by unemployment insurance and time already paid out, so a local employee fully covered by UI may receive little or nothing.

Do foreign employees in Vietnam get severance pay?

Yes, foreign employees can receive severance in Vietnam if they meet the 12-month condition under Article 46 of the Labour Code 2019. Because foreign staff do not join the unemployment insurance scheme, more of their tenure usually counts. The Ministry of Home Affairs has said periods where the employer paid a UI-equivalent amount with salary are excluded.

Does an EOR Vietnam provider charge extra for severance?

Statutory severance under the Labour Code 2019 is a legal cost, not a service fee, so an EOR Vietnam provider should pass it through at cost. Some providers add a separate offboarding fee. HR4U charges no setup or offboarding fee and passes statutory costs through at cost, so the exit cost equals what the law requires.

What is the deadline to pay severance in Vietnam?

The deadline to pay severance in Vietnam is 14 working days from the termination date, under Article 48 of the Labour Code 2019. It can be extended to a maximum of 30 days only in listed cases, such as closure, economic restructuring, mergers, or natural disasters and epidemics. Late payment can be fined under Decree 283/2026/ND-CP.

Planning an exit, or a first hire, in Vietnam?

HR4U JSC is a licensed Employer of Record in Vietnam (licence 24/2023/SBD). We keep UI correct from day one, calculate exits by the book, and charge no setup or offboarding fee. EOR fees start from USD 109 per employee per month, depending on role and team size. Honest numbers before you sign is how we work. View EOR in Vietnam or talk to us.

Last updated: 2 November 2026

This article is for general information and reflects rules in effect as of November 2026. It is not legal or tax advice.