In Vietnam,
reorganization of an enterprise means the division, separation, consolidation,
merger or transformation of an enterprise. In particular, when separating
enterprises, in addition to legal issues related to enterprise separation
procedures, registration for newly formed enterprises, the introduction of a
plan for the employees of the separated company is also a matter of concern.
The transferor company and the transferee company need to allocate and use the
existing labor force accordingly. It is important to ensure the interests of
workers. Specifically, in case of continuing to employ employees, when
separating an enterprise, the next employer is responsible for continuing to
use up the existing workforce and proceeding with the labor contract amendment
and supplement. All of this might lead to potential disputes which lawyers
would be involved to provide legal advice from the early stage.
If the enterprise does
not use up all the employees or the labor demand of the company does not run
out of the existing number of employees, the enterprise must develop a suitable
plan to use employees in accordance with the law. Specifically, an employment
plan must contain the following main contents: The list and the number of
employees to be continued to be used, the employee sent for retraining to
continue using; List and number of employees to retire; The list and number of
employees who are transferred to part-time work; the employee must terminate
the labor contract; Measures and financial resources to ensure implementation
of the plan. Enterprises should note that when developing plans for the
employment of employees, there must be the participation of organizations
representing labor collectives at the grassroots level.
In case it is imperative
that the employees quit their job, the enterprise must pay the employee a job
loss allowance so that the interests of the employee will still be guaranteed
when separating the enterprise. The Labor Code has specified as follows: An
employer shall pay a job-loss allowance to an employee who loses his/her job
and has worked regularly for the employer for 12 months or longer. The job-loss
allowance is equal to 1 month’s wage for each working year, but must not be
lower than 2 months’ wage. The working period used for the calculation of
job-loss allowance is the total time during which the employee actually works
for the employer minus the time during which the employee benefits from
unemployment insurance in accordance with the Law of Social Insurance and the
working period for which the employer has paid a severance allowance to the
employee. The wage used for the calculation of job-loss allowance is the
average wage in accordance with the labor contract during 6 months preceding
the time the employee loses his/her job.
It is important to have
proper and proactive discussion with impacted employee and avoid disputes
impacting the company’s reputation. Dispute lawyers in Vietnam could be
of help for advice and preparation.
ANT Lawyers is a Labour Dispute Law Firm in Vietnam, recognized by
Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the
global law firm network covering more than 150 jurisdictions. The firm provides
a range of legal services to multinational and domestic clients.
Source ANTLawyers: https://antlawyers.vn/library/what-are-potential-disputes-over-the-settlement-method-for-employees-when-separating-enterprises.html
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