Decree No. 110/2007/NĐ-CP On policies for surplus workers due to restructuring state-owned enterprises

 

DECREE

REGARDING POLICIES FOR SURPLUS WORKERS DUE TO REORGANIZATION OF STATE ENTERPRISES

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;
Pursuant to the Labor Code on June 23, 1994, and the Law Amending and Supplementing Certain Provisions of the Labor Code on April 2, 2002;
Pursuant to the State Enterprise Law on November 26, 2003;
Pursuant to the Enterprise Law dated November 29, 2005;
Pursuant to the Social Insurance Law dated June 29, 2006;
Considering the proposal of the Minister of Labor, Invalids, and Social Affairs,

DECREE:

Chapter 1:
GENERAL PROVISIONS

Article 1. Scope of application

1. State enterprises, enterprises under political organizations and political-social organizations established and operating according to the State Enterprise Law (hereinafter referred to collectively as state enterprises) shall implement reorganization in accordance with the plan approved by the competent authority, including:

a) Shareholding, transfer, sale;

b) Conversion into a limited liability company;

c) Dissolution, bankruptcy.

2. State-owned farms shall implement reorganization and restructuring in accordance with Decree No. 170/2004/NĐ-CP dated September 22, 2004 of the Government on reorganization, renovation, and development of state-owned farms; state-owned forestry farms shall implement reorganization and restructuring in accordance with Decree No. 200/2004/NĐ-CP dated December 3, 2004 of the Government on reorganization, renovation, and development of state-owned forestry farms.

Article 2. The subjects applying this policy are surplus workers who are currently performing indefinite-term or fixed-term contracts from 12 to 36 months, including:

1. Workers hired last by the enterprises specified in points a and b of Clause 1, Article 1 of this Decree before April 21, 1998 (the date when Directive No. 20/1998/CT-TTg of the Prime Minister on accelerating the reorganization and renovation of state-owned enterprises took effect), including:

a) Workers who are still working, during the reorganization process, the state enterprise has taken all measures to create jobs but cannot arrange employment;

b) Workers whose names are on the regular list of the state enterprise but have no job (waiting for work), at the time of reorganization, the enterprise still cannot arrange employment.

2. Workers hired last by the enterprises specified in point c of Clause 1, Article 1 of this Decree before April 26, 2002 (the effective date of Decree No. 41/2002/NĐ-CP of the Government on policies for surplus workers due to reorganization of state-owned enterprises).

3. Workers whose names are on the regular list of state-owned farms and forestry farms specified in Clause 2, Article 1 of this Decree, hired last by the farm or forestry farm before April 21, 1998 (except for workers of state-owned farms and forestry farms undergoing dissolution, the last hiring date is determined according to Clause 2 of this Article), at the time of reorganization, the farm or forestry farm has taken all measures to create jobs but cannot arrange employment and does not implement the land and forest allocation system of the farm or forestry farm.

Chapter 2:
POLICIES FOR SURPLUS WORKERS

Article 3. Surplus workers currently performing indefinite-term contracts:

1. At the time the competent authority approves the labor reorganization plan or the court decides to initiate bankruptcy proceedings, male workers aged 55 or older and female workers aged 50 or older with at least 20 years of social insurance contributions shall be entitled to retirement benefits as stipulated in Clause 1, Article 50 of the Social Insurance Law;

2. Surplus workers as stipulated in Clause 1 of this Article, aged between 55 and under 60 for males and between 50 and under 55 for females, shall be entitled to additional allowances as follows:

a) Three months' salary and wage supplements (if applicable) for each year (full 12 months, excluding fractional months) retired earlier than the age specified in point a, Clause 1, Article 50 of the Social Insurance Law;

b) Five months' salary and wage supplements (if applicable) for the first 20 years of work with social insurance contributions. For each year beyond the 20th year, an additional half month's salary and wage supplement (if applicable) will be provided.

3. If they meet the retirement age requirement as specified in point a, Clause 1, Article 50 of the Social Insurance Law but are short of up to six months of social insurance contributions to qualify for retirement benefits, the State will make a one-time payment for the remaining months at the total monthly contribution rate of both the worker and the employer based on the worker's salary or wage prior to retirement into the pension and death benefit fund to settle the retirement benefits.

4. Other subjects shall terminate their labor contracts and be entitled to the following benefits:

a) A one-month allowance of salary and wage supplements (if applicable) for each year (full 12 months, fractional months carried over to the next period) of actual work (with attendance recorded in the payroll) in the public sector (100% state-owned enterprises; administrative agencies of the state, state-run institutions, armed forces receiving salaries from the state budget; state-owned farms and forestry farms), excluding the time the worker has already received severance pay or unemployment benefits, but not less than two months' salary and wage supplements (if applicable);

b) Additional support of one month's salary and wage supplements (if applicable) for each year (full 12 months, fractional months carried over to the next period) of actual work in the public sector;

c) Entitlement to six months' salary and wage supplements (if applicable) to seek new employment;

d) Workers willing to undergo vocational training may receive up to six months of training at vocational training centers as announced by the state management agency on labor in provinces and centrally-administered cities.

Article 4. Surplus workers currently performing fixed-term contracts from 12 to 36 months shall terminate their labor contracts and be entitled to the following benefits:

1. A one-month allowance of salary and wage supplements (if applicable) for each year of actual work in the public sector, excluding the time the worker has already received severance pay or unemployment benefits.

2. An allowance of 70% of the salary and wage supplements (if applicable) recorded in the labor contract for the remaining months of the unfulfilled contract, but not exceeding 12 months; if this allowance is lower than the minimum wage at the time of termination, it shall be calculated based on the minimum wage.

Article 5. An employee who has received assistance benefits as provided for in Clause 4, Article 3 of this Decree if re-employed at the company, farm, or forest enterprise that previously terminated their employment must return the entire amount received.

In cases where they are re-employed at another company, farm, forest enterprise, or state agency within the public sector, or when a farm or forest enterprise allocates land or forests to them, they must return the amount of assistance benefits as stipulated in Point b, Clause 4, Article 3 of this Decree.

Companies, farms, forest enterprises, or state agencies that re-employ surplus employees or farms, forest enterprises that allocate land or forests have the responsibility to collect the aforementioned amount from the employees and remit it to the Enterprise Restructuring Support Fund.

Article 6. Wages and wage allowances (if any) serve as the basis for calculating various entitlements:

1. Wages and wage allowances (if any) serving as the basis for calculating entitlements as prescribed in Clause 2, Article 3 of this Decree shall be calculated based on the average wages and wage allowances (if any) of the last five years before retirement. If there are fewer than five years, it will be calculated based on the average wages and wage allowances (if any) of the years worked in the state sector.

The wage coefficient and wage allowance coefficient prior to October 1, 2004, shall be calculated according to the wage coefficient and wage allowance coefficient stipulated in Decree No. 25/CP dated May 23, 1993, of the Government temporarily regulating new wage systems for civil servants, administrative officials, and armed forces personnel, and Decree No. 26/CP dated May 23, 1993, of the Government temporarily regulating new wage systems in enterprises; from October 1, 2004, onwards, it shall be calculated according to the wage coefficient and wage allowance coefficient stipulated in Decree No. 204/2004/NĐ-CP dated December 14, 2004, of the Government on wage systems for cadres, civil servants, administrative officials, and armed forces personnel, and Decree No. 205/2004/NĐ-CP dated December 14, 2004, of the Government on the wage scale system and wage allowance systems in state-owned companies.

2. Wages and wage allowances (if any) serving as the basis for calculating entitlements as prescribed in Points a and b, Clause 4, Article 3; Clause 1, Article 4 of this Decree are wages and wage allowances (if any) according to the state wage scale, calculated for each phase of wage adjustment.

The wage coefficient for calculating entitlements for the period before October 1, 2004, is the average coefficient of the six consecutive months immediately preceding September 30, 2004, according to Decree No. 25/CP and Decree No. 26/CP dated May 23, 1993, of the Government mentioned above; for the period from October 1, 2004, onwards, it is the average coefficient of the six consecutive months immediately preceding the date of retirement according to Decree No. 204/2004/NĐ-CP and Decree No. 205/2004/NĐ-CP dated December 14, 2004, of the Government mentioned above.

3. The minimum wage for calculating entitlements for the period before January 1, 2003, is VND 210,000; for the period from January 1, 2003, to September 30, 2005, is VND 290,000; for the period from October 1, 2005, to September 30, 2006, is VND 350,000; for the period from October 1, 2006, to the point of the next minimum wage adjustment is VND 450,000.

The minimum wage determined by the Government for subsequent periods shall be applied to calculate entitlements for surplus employees corresponding to each adjustment period.

4. Wages and wage allowances (if any) serving as the basis for calculating entitlements as prescribed in Point c, Clause 4, Article 3 and Clause 2, Article 4 of this Decree are wages according to the state wage scale, calculated at the time of retirement.

Chapter 3:
SOURCES OF FUNDS FOR SUPPORTING REDUNDANT WORKERS

Article 7. Sources of funds for supporting redundant workers from the restructuring of state-owned enterprises and state-owned forestry and farm enterprises.

1. For state-owned enterprises implementing shareholding, selling businesses, the funds to address policies for redundant workers shall be sourced from the proceeds of the initial public offering of shares and the sale of businesses. In cases where this is insufficient, it will be supplemented from:

- The Enterprise Restructuring Support Fund at the State Capital Corporation for companies under ministries, agencies equivalent to ministries, government agencies, provincial People's Committees, centrally-administered municipalities; entire holding corporations, entire groups, parent companies.

- The Enterprise Restructuring Support Fund at economic groups, state-owned holding corporations, parent companies for companies under economic groups, state-owned holding corporations, parent companies. In cases where this is insufficient, it will be supplemented from the Enterprise Restructuring Support Fund at the State Capital Corporation.

2. For state-owned enterprises implementing dissolution, bankruptcy, conversion into limited liability companies; state-owned forestry and farm enterprises as specified in Clause 2, Article 1 of this Decree, the sources of funds are:

- The Enterprise Restructuring Support Fund at the State Capital Corporation disburses for companies under ministries, agencies equivalent to ministries, government agencies, provincial People's Committees, centrally-administered municipalities; entire holding corporations, entire groups, parent companies;

- The Enterprise Restructuring Support Fund of economic groups, state-owned holding corporations disburses for enterprises under economic groups, state-owned holding corporations.

Article 8. Responsibilities for paying benefits to redundant workers

1. State-owned enterprises; state-owned forestry and farm enterprises are responsible for addressing the policies stipulated in Point a, Clause 4, Article 3; Clause 1, Article 4 of this Decree; other subjects not covered by this Decree through the Unemployment Benefit Reserve Fund. In cases where this is insufficient, they will be supported from the Enterprise Restructuring Support Fund according to the provisions of Clause 1, Article 7 of this Decree.

2. The Social Insurance Fund is responsible for addressing social insurance benefits according to the provisions of the Social Insurance Law and this Decree.

3. The Enterprise Restructuring Support Fund at the level specified in Article 7 of this Decree is responsible for paying:

a) Benefits as prescribed in Clause 2, Clause 3, Points b, c, and d, Clause 4, Article 3 and Clause 2, Article 4 of this Decree.

b) The amount that the Enterprise Restructuring Support Fund supports according to the provisions of Clause 1 of this Article (if applicable).

Chapter 4:
IMPLEMENTING PROVISIONS

Article 9. Responsibilities of state-owned enterprises; state-owned forestry and farm enterprises:

1. Develop labor utilization plans, determine the number of necessary workers based on production and business requirements, and plans for resolving redundant workers.

2. Coordinate with trade unions at state-owned enterprises; state-owned forestry and farm enterprises to promote and disseminate Party and State policies, implement democratic regulations within the enterprise, forestry, and farm enterprises; publicly disclose labor restructuring plans and lists of redundant workers.

3. Address policies and benefits for redundant workers according to this Decree; implement payments and settle expenses for benefits paid to redundant workers according to the law.

4. Address benefits for redundant workers hired by the company, forestry, and farm enterprises who do not fall under the application scope of this Decree using the company's own funds.

Article 10. Responsibilities of agencies and organizations

1. Ministry of Labor, Invalids and Social Affairs:

- Guide and inspect the implementation of policies and benefits for redundant workers according to this Decree;

- Participate with relevant agencies in labor restructuring plans for the restructuring, reform, development, and improved efficiency of state-owned enterprises; state-owned forestry and farm enterprises;

- Regularly compile and report to the Prime Minister the implementation status of this Decree.

2. Ministry of Finance:

- Plan capital sources and submit to the Prime Minister measures to ensure capital for addressing policies for redundant workers;

- Supervise and inspect the payment execution of the Enterprise Restructuring Support Fund for addressing policies for redundant workers;

- Regularly compile and report to the Prime Minister the management and use of the Enterprise Restructuring Support Fund.

3. State Capital Corporation, economic groups, state-owned holding corporations, parent companies.

- Appraise and implement fund disbursements for state-owned enterprises; state-owned forestry and farm enterprises and units under the responsibility of the Enterprise Restructuring Support Fund for addressing policies for redundant workers;

- Monitor and inspect the payment of allowances, settlement of allowance payment expenses of units under the responsibility of the Enterprise Restructuring Support Fund;

- Regularly settle accounts and report to the Ministry of Finance the management and use of the Enterprise Restructuring Support Fund.

4. Vietnam Social Security:

- Guide the collection of social insurance according to this Decree;

- Address social insurance policies and benefits for workers according to this Decree and guidelines from the Ministry of Labor, Invalids, and Social Affairs.

5. Ministries, agencies equivalent to ministries, government agencies, provincial People's Committees, centrally-administered municipalities, political organizations, socio-political organizations, Management Boards of economic groups, state-owned holding corporations established by the Prime Minister's decision:

- Direct companies, forestry and farm enterprises under their management to develop labor restructuring plans and implement policies and benefits for redundant workers;

- Approve labor redundancy resolution plans according to the principle of once-off implementation for each enterprise, forestry, and farm enterprise as specified in Article 1 of this Decree;

- Establish organizations to address policies for redundant workers in companies undergoing dissolution and bankruptcy and forestry and farm enterprises undergoing dissolution;

- Regularly report to the Government through the Ministry of Labor, Invalids, and Social Affairs the situation of addressing policies for redundant workers.

Article 11. Request General Confederation of Labor Vietnam

1. Participate with state agencies in guiding the implementation of policies for redundant workers.

2. Direct the trade unions at all levels to cooperate with the heads of units in disseminating and explaining to workers the policies and guidelines of the Party and the State regarding the implementation of regulations for surplus workers as stipulated by law.

3. Issue a supervision mechanism by the trade union organization from the central level to the grassroots level in organizing the implementation of regulations for surplus workers.

Article 12. Implementation Provisions

1. This Decree shall take effect fifteen days from the date of publication in the Official Gazette and shall be applied until June 30, 2010.

2. State-owned companies; state-owned forestry and logging farms that have been approved by competent authorities on plans to resolve surplus labor from January 1, 2007 to before this Decree takes effect shall implement according to Resolution No. 07/2007/NQ-CP dated February 6, 2007 of the Government's regular meeting in January 2007.

The positions of members of the Board of Directors, General Director, Deputy General Director, Director, Deputy Director, Chief Accountant, members of the Supervisory Board in enterprises undergoing restructuring but not continuing to work in those enterprises or in the public sector shall be implemented according to Point 2 of Resolution No. 07/2007/NQ-CP dated February 6, 2007 of the Government's regular meeting in January 2007 until new regulations by the Government are issued.

Article 13. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of People's Committees of provinces and centrally governed cities, Boards of Directors of economic groups and state-owned corporations established by the Prime Minister shall be responsible for implementing this Decree./.