Vietnam: Seniority as the basis for distribution of the remaining of unused reward fund and welfare fund upon equitization of enterprises

According to Circular No. 07/2018/TT-BLDTBXH of the Ministry of Labor, War Invalids and Social Affairs of Vietnam, the seniority as the basis for distribution of the remaining of unused reward fund and welfare fund shall be determined as follows:

- The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is the total length of time that a person eligible for distributions has worked for an equitized enterprise from the date of final recruitment into the equitized enterprise (with respect to the employee) or from the date on which such person is appointed to work in the equitized enterprise (with respect to the manager or controller who is working in the enterprise) to the date of equitized enterprise valuation.

- The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund includes the length of time that a person eligible for distributions has worked in an enterprise before it is merged with or consolidated into an equitized enterprise or fully divided or partially divided into an equitized enterprise.

- Notably, the seniority as the basis for distribution of the remaining of unused reward fund and welfare fund excludes the length of time that an employment contract has been suspended and unpaid leave has been taken;

- The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund shall be expressed as months. If a partial month has fewer than 14 days shall be rounded down to 0; a partial month that has 14 days or more shall be rounded up to 01 month.

Circular No. 07/2018/TT-BLDTBXH provides 02 specific examples as follows:

- Example 1: The employee’s seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is determined according to Appendix 3 hereof.

- Example 2: The manager’s seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is determined according to Appendix 3 hereof.

Examples can be found in Appendix 3 attached to Circular No. 07/2018/TT-BLDTBXH of the Ministry of Labor, War Invalids and Social Affairs of Vietnam, which takes effect from September 15, 2018.

-Thao Uyen-

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