THE SEVERANCE ALLOWANCE AND UNEMPLOYMENT ALLOWANCE

If you have left a job and have not found a new job, you need to know about the allowances.

There are two important allowances which are “Severance Allowance” and “Unemployment Allowance”.

These are two completely different. We would like to share with you the “differences” between severance allowance and unemployment allowance.

There are 4 differences as follows:

The first difference: The payer

The employer will pay severance allowance. The social insurance agency will pay unemployment allowance.

The second difference: Conditions

Severance Allowance

The employee who has work on a regular basis for at least 12 months and falls into one of the following cases:

• The labor contract expires; or, the two parties agree to terminate the labor contract.
• The employee is to prison, death or is prohibited from doing the job specified in the labor contract under the sentence or the employee dies or is declared missing by the court or loss of capacity for civil acts .
• The enterprise terminates its operation or the employee or the enterprise unilaterally terminates the legal labor contract.

Unemployment Allowance

+ The labor contract has been terminated in accordance with regulations.

+ Having paid unemployment insurance for full 12 months or more.

+ Have submitted an application for unemployment allowance within 3 months since the date of termination of the labor contract, and have not found a job after 15 days since the date of submitting the application for unemployment allowance.

The third difference: Time and rate of allowance

Severance Allowance:

The time for severance allowance is equal to the total actual working time minus the time for unemployment allowance.

Therefore, employees will not be entitled to severance allowance since employees participate in unemployment insurance. According to regulations dated January 1, 2009 almost employees participate in unemployment insurance.

The rate of severance allowance is equal to one-half multiplied by the time for calculating the allowance in years of working multiplied by the average salary of the 6 consecutive months according to the labor contract before leaving the job. (and no limit on the amount received).

Unemployment Allowance:

Based on the number of months participating in unemployment insurance of employees, from 12 months to 36 months, they will be entitled to 3 months of unemployment allowance. After the above period, for every additional 12 months of paying unemployment insurance premiums, they will be entitled to 1 more month of unemployment allowance, but the total period must not exceed 12 months.

The rate of unemployment allowance is equal to 60% multiplied by the average salary of the last 6 consecutive months of salary with which unemployment insurance premiums are paid before leaving the job. (and must not exceed 5 times the base salary or the regional minimum wage.)

The fourth difference: Time of paying

For severance allowance, the enterprise has to pay within 7 days since the employee leave the job.

For unemployment allowance, the insurance agency will pay since the 16th date from the date the employee submits a complete document to the agency dealing with the unemployment insurance regime.

In conclusion, both severance allowance and unemployment allowance bring benefit to employees after leaving the job. The employees should properly understand to enjoy your rights.