Severance Pay in Vietnam 2026: The Two Payments Explained

Most explanations of Vietnamese severance quote the rule and stop: half a month of salary for every year of service. The part that decides whether you actually receive anything comes next, and it is the reason many employees leaving a Vietnamese employer get no severance pay at all.

Article 46 of the Labour Code says the qualifying period is your total actual service minus every year you participated in unemployment insurance. Unemployment insurance has been compulsory for most employees since 2009. If your career began after that, the subtraction usually leaves nothing, and the money you are owed comes from the state instead of your employer.

Severance rate

Half a month

per qualifying year, Article 46

Years that qualify

Service minus UI

unemployment insurance since 2009

State unemployment benefit

60%

of the last six months' average

Why the employer usually owes nothing

The design is deliberate. Vietnam shifted the cost of job loss from individual employers to a pooled insurance scheme, so the employer contributes 1% of payroll to unemployment insurance during employment instead of paying a large lump sum at the end of it. The severance rule was left in place for service that predates the scheme.

So the practical question at termination is not how to calculate half a month per year. It is whether any of your service sits outside unemployment insurance coverage. For a software engineer who started in 2015, the answer is almost always no, and the correct next step is registering a benefit claim rather than negotiating with the employer.

Partial years still round in the usual way: up to six months counts as half a year, more than six months counts as a full year, and you need at least 12 months of regular service before any entitlement arises.

Register your claim, and get your social insurance book back

Because the benefit comes from the state, the deadline that matters is the registration window at the employment service centre after your last working day, not anything in your contract. You will need the social insurance book your employer holds during employment, and the employer is obliged to return it as part of settling your final payment. Chase it immediately: a delayed book is the most common reason a Vietnamese unemployment claim is filed late.

Job loss allowance is the more generous cousin

If the termination follows restructuring, a technological change, a merger or a similar organisational reason, Article 47 applies instead. Job loss allowance is a full month of salary per qualifying year, with a floor of two months rather than the severance minimum. The same unemployment insurance subtraction applies to the qualifying period, so the floor is often what actually does the work.

Which article applies is a question about the employer's reason for the termination, so it is worth establishing that in writing before agreeing any figure.

Work out what your salary is worth first

Severance, job loss allowance and unemployment benefit are all calculated from your recent average salary, so start from an accurate net and gross picture of your current pay.

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Frequently asked questions

How much severance pay will I actually receive in Vietnam?

For most people who started work after 2009, nothing from the employer. Severance allowance under Article 46 of the Labour Code is half a month's salary per qualifying year, but the qualifying period excludes every year in which you participated in unemployment insurance. Unemployment insurance became compulsory for most employees in 2009, so a career that began after then usually leaves no qualifying years at all. What replaces it is the unemployment benefit paid by the state.

So who does still get severance allowance from the employer?

Mainly people with service predating 2009, and people in roles that sat outside compulsory unemployment insurance for some period. In those cases the employer pays half a month per qualifying year, based on the average salary of the six months before termination. You also need at least 12 months of regular service to qualify at all.

What does the state pay instead?

Unemployment benefit is 60% of the average monthly salary of the last six contributing months, subject to statutory caps, paid for three months if you have contributed for 12 to 36 months and rising with longer contribution history. You have to register with the employment service centre within the statutory window after termination, which is the step people most often miss.

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

Job loss allowance under Article 47 applies when the termination follows restructuring, technological change, a merger or similar organisational reasons rather than an ordinary termination. It is one month's salary per qualifying year with a minimum of two months, so it is more generous than severance allowance, and the same unemployment insurance deduction applies to the qualifying period.

How much notice is required?

For an indefinite-term contract the standard is 45 days, for a fixed-term contract of 12 to 36 months it is 30 days, and for a contract under 12 months it is three working days. The obligation runs both ways, so an employee resigning owes the same notice. Certain specialised roles carry longer periods set by government regulation.

Is severance pay taxed?

Statutory severance and job loss allowance paid at the legal rate are not treated as taxable employment income. Anything an employer pays above the statutory entitlement, for example a negotiated exit package, is taxable in the normal way. That distinction is worth getting right in the settlement paperwork.

What should be in my final payment?

Unpaid salary to the last working day, payment for any untaken annual leave, any statutory severance or job loss allowance that applies, and the return of your social insurance book so you can claim unemployment benefit. Vietnamese law requires settlement within 14 working days of termination in most cases, extendable to 30 days in defined situations.