The contract termination takes effect on August 5. For the 45 days from the layoff date, the workers do not have to come to work, but will be entitled to their salary.
The company has decided on a severance pay of a month’s salary for each year an employee has worked. Many of the laid-off workers have 17-18 years of experience with the company and could receive severance pay of VND150 million to 180 million (US$6,450-7,740), while those working for over 20 years could get up to VND250 million (US$10,740).
New orders have been dwindling since March, said Cu Phat Nghiep, trade union chairman at Pouyuen Vietnam, which is based in Ho Chi Minh City’s Binh Tan District and is the city’s largest employer with a worker strength of over 65,000.
New orders for June have fallen 50% year-on-year, and while this has gradually increased for July, August and September, the company has nothing for the fourth quarter yet, Nghiep said.
Earlier, the company had planned to let go of around 6,000 employees, but decided to halve this number upon reconsideration.
Do Dinh Thien, vice chairman of Binh Tan District's people's committee, said by June 20 morning, after talks with the company's management, the majority of workers agreed to sign the contract termination agreements. "The severance pay is higher than that regulated by the government, so many workers are happy."
However, a number of workers asked for an exemption of 10% personal income tax on the severance pay. Binh Tan District has reported their proposal to HCMC's People's Committee and the municipal department, Thien added.
Phan Van Men, director of the HCMC Social Insurance Agency, said Pouyuen Vietnam is abiding by the country's regulations on social insurance and does not owe debts related to social insurance, medical insurance and unemployment insurance.
More than five million Vietnamese workers have either lost their jobs, worked fewer hours or had their incomes reduced because of the novel coronavirus outbreak in the first five months of 2020, the Ministry of Labor, Invalids and Social Affairs, said.
A survey conducted by the ministry found nearly 86% of Vietnamese enterprises affected by the pandemic, especially those in manufacturing and processing, wholesale, retail, logistics, catering and hospitality.
Vietnam recorded a first-quarter GDP growth of 3.82%, the lowest in a decade. As many as 18,600 companies temporarily suspended business during this period, up 26% year-on-year.
Last year, the nation grew 7.02%, the second highest rate in a decade. The government had revised its GDP growth target to 4.5-5.4% for this year, but the parliament last week agreed that the country will keep its original annual target of 6.8%.
The Asian Development Bank (ADB) last week said it forecasts the highest 2020 GDP growth rate in Southeast Asia for Vietnam at 4.1%.