Circular No. 17/2009/TT-BLDTBXH of May 26, 2009, amending, supplementing a number of points of Circular No.21/2003/TT-BLDTBXH dated September 22, 2003 guiding the implementation of a number of articles of Decree No.44/2003/ND-CP dated May 09, 2003 of the Government on labour contracts

CIRCULAR

AMENDING, SUPPLEMENTING A NUMBER OF POINTS OF CIRCULAR NO.21/2003/TT-BLDTBXH DATED SEPTEMBER 22, 2003 GUIDING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF DECREE NO.44/2003/ND-CP DATED MAY 09, 2003 OF THE GOVERNMENT ON LABOUR CONTRACTS

Pursuant to the Decree No.44/2003/ND-CP dated May 09, 2003 of the Government detailing the implementation of a number of Articles of the Labour Code on labour contracts;

Pursuant to the Decree No.127/2008/ND-CP dated December 12, 2008 of the Government detailing and guiding the implementation of a number of Articles of the Social Insurance Law concerning unemployment insurance;

Pursuant to the Decree No.152/2006/ND-CP dated December 22, 2006 of the Government guiding a number of Articles of the Law on Social Insurance regarding compulsory social insurance;

Pursuant to the Decree No.186/2007/ND-CP dated December 25, 2007 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Labor, Invalids and Social Affairs;

Ministry of Labor, Invalids and Social Affairs amends, supplements a number of points of Circular No. 21/2003/TT-BLDTBXH dated September 22, 2003 guiding the implementation of a number of Articles of Decree No.44/2003/ ND-CP dated May 09, 2003 on labour contracts (hereinafter referred to as Circular No.21/2003/TT-BLDTBXH) as follows:

Article 1. Amending clause 2, Item II, Circular No.21/2003/TT-BLDTBXH as follows:

“2. Labor contracts signed with retirees enjoying monthly pension and those who work with a less than 03 month term, apart from salaries by jobs, the employees is also paid by the employers the amounts by percentage (%) compared with salary under the labor contract, including:

a) Social insurance: from the effective date of this Circular to December 2009 is 15%; from January 2010 to December 2011 is 16%; from January 2012 to December 2013 is 17%; from January 2014 onwards is 18%.

b) Health insurance: 2%. When the Government stipulates the increase of level to pay health insurance for employers, the government’s provisions shall be complied with.

c) Annual vacation: 4%.

d) Travel expenses when on leave due to mutual agreement in the labor contract.

Article 2. Amending clause 3, Item III, Circular No.21/2003/TT-BLDTBXH as follows:

“3. The method of calculation and payment of termination allowances as follows:

a) Formula for calculating the termination allowance in each enterprise:

In which:

- Total time working in the enterprise to calculate termination allowance (per year) is determined under clause 3, Article 14 of Decree No.44/2003/ND-CP May 9, 2003 of the Government, except for the time of paying unemployment insurance as stipulated in Decree No.127/2008/ND-CP dated December 12, 2008 by the Government. In case the total time worked at the enterprise to calculate termination allowance with odd months (including cases where the employee has worked at the enterprise for full 12 months or more but the total time worked in enterprise to calculate the termination allowance under 12 months) shall be rounded as follows:

From full 01 month to less than 06 months is rounded up to 1/2 year.

From full 06 months to less than 12 months is rounded up to 01 year.

- The salary used as a basis for calculating termination allowances is salary or wages under the employment contract, calculated as an average of six months preceding the termination of labor contracts, including wages or salary of ranks, positions and regional allowance, position allowances (if any).

b) Some specific cases:

- The laborers made a lot of labor contracts in an enterprise that upon termination of labor contract, they had not been paid the termination allowance, and the enterprise shall add the working time under the labor contracts to calculate the termination allowances for them. In case, if there is a labor contract that the laborers unilaterally terminate it unlawfully, the working time under such labor contract shall not included for the termination allowance.

The salary used as a basis for calculating termination allowances is the salary or wages under the labor contract calculated the average of six months preceding the termination of the last labor contracts.

Example 1: Mr. Nguyen Van A worked continuously under three labor contracts at Company X: The first labor contract is with a term of 12 months, made from 01/01/2005 until 31/12/2005; the second labor contract is with a term of 36 months, conducted from 01/01/2006 to 31/12/2008; the third labor contract is the indefinite-term contract , performed from 01/01/2009 to 31/12/2010, then Mr. A has terminated all, the average salary of the six months preceding the termination of the third labor contract is 2.5 million dong. From 01/01/2009 to 31/12/2010, Mr A continuously has paid unemployment insurance as prescribed (two years). Company X has not paid termination allowance upon termination of each labor contract, thus the total working time calculated termination allowance of Mr. A is 4 years (six years of working subtracting two years of paying unemployment insurance). The salary used as a basis for calculating the termination allowance is 2,500,000 VND. A termination allowance of Mr. A is 5,000,000 VND (2,500,000 x 4 years x 1/2).

- Laborers who work for state-owned companies but had time to work according to the staff regime and also with working time under labor contract, then the enterprise shall add both stages to calculate the termination allowance.

The salary used as a basis for calculating termination allowances is the salary or wages under the labor contract calculated the average of six months preceding the termination of the last labor contracts.

Example 2: Ms. Tran Thi B, worked at Company Y from 01/4/1991 until 31/01/1994 under the staff regime and from 01/02/1994, she transferred to work under labor contract regime. On 31/10/2009, Ms. B terminated her labor contract. Total working time of Ms. B in the company Y is 223 months. From 01/01/2009 to 31/10/2009, Ms. B continuously has paid unemployment insurance. Salary calculated the average of the six months preceding the termination of labor contract is 2,800,000 VND. Thus, working time calculated termination allowance of Ms. B is 213 months, rounded up to 18 years (223 months subtracting 10 months of paying unemployment insurance) and the termination allowance is 25.2 million VND (18 years x 2,800,000 VND x 1/2).

- The laborers worked in many state-owned companies due to transfer of work before the date of January 01, 1995; the termination allowance is calculated by working time in each state-owned company. The salary used as a basis for calculating termination allowances for employees at each enterprise is the salary or wages under the labor contract calculated the average of six months preceding the termination of labor contract in the last state-owned company. The last state-owned company shall pay the entire amount of termination allowance to laborers, including the termination allowance is under the responsibility of the state-owned companies that the laborers have worked before being transferred before January 01, 1995, then send a notice upon Form 3 attached to this Circular to request to refund the amount that the companies have been paid as substitute. Where state-owned companies that have been paid as substitute have terminated their operations, the state budget shall reimburse the termination allowance which was paid as substitute under the guidance of the Ministry of Finance.

Example 3: Mr. Le Viet C, work under the staff regime at company P from 01/9/1990 until 31/08/1992 (2) years, from 01/9/1992 to 31/8/1994 transferred to work under the staff regime at company Q (2) years, from 01/9/1994 transferred to work under labor contract in the Company S until the termination of labor contract on 31/08/2009 (15 years). Average wage of 6 months preceding the termination of labor contract in the Company S is 2,500,000 VND. Mr. C has paid unemployment insurance continuously from 01/01/2009 until 31/08/2009 (8 months). Termination allowance of Mr. C is calculated in each company as follows:

At Company P, it is 2,500,000 VND (VND 2,500,000 x 2years x 1/2).

At Company Q, it is 2,500,000 VND (VND 2,500,000 x 2 years x 1/2).

At Company S, it is 18,125,000 VND (14.5 years x 2,500,000 x 1/2).

Company S is responsible for full payment of termination allowance as 23,125,000 VND to Mr. C, and then Company S shall notify Company P and Company Q for refunding the amount paid as substitute.

- If, after the merger, consolidation, division of enterprise, transfer of ownership or management rights or rights to use enterprise assets for which the laborers terminate their labor contracts, then the next employer is responsible for adding all period that the employees have worked for the enterprise and for the preceding employer to calculate to pay termination allowance to the employees. The salary used as a basis for calculating termination allowances is the salary or wages under the labor contract calculated the average of six months preceding the termination of the last labor contract.

For the state-owned companies implementing the restructuring plans or change of ownership (transformed into a member limited liability company, equitization, assignment, and sale) shall apply the provisions of the State for these cases.

Example 4: Ms. Vu Van D worked for the state-owned company N under the labor contract from 01/6/1994 until 01/6/2005, then the State-owned Company N equitized and become the shareholding company N' (her working time in the state-owned company N is 11 years) and Ms. D continued to work at the shareholding company N' until 01/6/2009, she terminated the labor contract (her time working at the shareholding company N' is 4 years). Average wage of 6 months preceding the termination of labor contract at the shareholding company N' is 2,400,000 VND. Ms. D has paid unemployment insurance continuously from 01/01/2009 to end on 31/05/2009 (5 months). Thus, termination allowance that the shareholding company N' required to pay is 18 million dong (VND 2,400,000 x 15 years x 1/2), which includes the payment for the period that she worked for the State-owned company N (11 years) and the payment for the period that she worked for the shareholding company N’ (3 years 7 months rounded up to 4 years)

Article 3. Implementation provisions:

1. This Circular takes effect 45 days after its signing date. Annulling clause 2, Item II and clause 3 Item III, Circular No.21/2003/TT-BLDTBXH dated September 22, 2003 The Ministry of Labour, Invalids and Social Affairs.

2. Method of calculating termination allowance provided in Article 2 of this Circular is applied from January 01, 2009 (the date that Decree No.127/2008/ND-CP dated December 12, 2008 of the Government took effect).

3. Not to apply the method of calculating termination allowance provided in this Circular to calculate the termination allowance for the cases of termination of labor contract prior to January 01, 2009.

In the course of implementation, should any problems arise, reflect to the Ministry of Labour - Invalids and Social Affairs for timely guidance and supplementation.