Compensation For Employment Contract Termination
We are pleased to inform that Ministry of Labor and Vocational Training has issued Notification on the Compensation for Employment Contract Termination dated 21 March 2024 (“Notification"). This Notification outlines compensation packages for the termination of employment contract as follows:
1. In Case the Employment Contract Is Terminated by the Employer
1.1. Employment contract terminated by the employer without valid reasons and the worker/employee does not commit serious misconduct as stipulated in Article 83 of the Labor Law and serious misconduct as stipulated in the internal work rules of the enterprise
A. For Fixed Duration Contract (FDC), workers/employees are entitled to:
1. In Case the Employment Contract Is Terminated by the Employer
1.1. Employment contract terminated by the employer without valid reasons and the worker/employee does not commit serious misconduct as stipulated in Article 83 of the Labor Law and serious misconduct as stipulated in the internal work rules of the enterprise
A. For Fixed Duration Contract (FDC), workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
- severance pay of at least 5% of the wages that the worker/employee has received during the employment contract (Article 73)
- damages at least equal to the wages that the worker/employee would have received until the end of the employment contract (Article 73).
B. For Undetermined Duration Contract (UDC), workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
- payment instead of prior notice if the employer fails to give prior notice in accordance with the Labor Law (Articles 75 and 77)
- seniority indemnity in the semester that the worker/employee is terminated and the remaining back pay seniority indemnity in the event the employer has not paid it to the worker/employee (new Article 89)
- for damages, the worker/employee can claim a lump sum equal to seniority indemnity received and entitled to during the period of employment contract (new Article 91)
1.2. Employment contract terminated by the employer when the worker/employee commits serious misconduct as stipulated in Article 83 of the Labor Law and serious misconduct as stipulated in the internal regulations of the enterprise
A. For FDC, workers/employees are entitled to:
A. For FDC, workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
B. For UDC, workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
2. In Case of Bankruptcy
A. For FDC, workers/employees are entitled to:
A. For FDC, workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
- severance pay of at least 5% of the wages that the worker/employee has received during the employment contract (Article 73)
B. For UDC, workers/employees are entitled to:
- last wage (Article 116)
- payment in lieu of unused annual leave (Articles 166 and 167)
- payment instead of prior notice if the employer fails to give prior notice in accordance with the Labor Law (Articles 75 and 77)
- seniority indemnity in the semester that the worker/employee is terminated and remaining back pay of seniority indemnity in the event the employer has not paid for the worker/employee (new Article 89)
For further details, please refer to a copy of Notification with the unofficial English translation version prepared by Sok Xing & Hwang, which can be downloaded from this link. Should you have any queries, please contact us at info@sxhlaw.com.