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Can enterpries owe employee wage due to COVID-19?

Due to the impact of complicated epidemic, many enterpries are struggling to maintain, some were even closed. Although many enterpries do not have to dismiss employee, they have to owe employee wage because of the decrease of revenue.

Can enterpries owe employee wage in accordance with law? T2H Lawyers shall help you answer this question through this writting below.

Firstly, about principles of wage payment.

 Pursuant to Article 96 of Labor Code 2012:

“An employee must be paid with a full wage in a direct and timely manner.

In special cases in which an employer cannot pay a wage on time to an employee, the employer may not postpone the payment for more than 1 month and shall pay the employee with an additional amount at least equal to the deposit interest rate announced by the State Bank of Vietnam at the time of wage payment.”

Specifically, Article 24 Decree No. 05/2015/ND-CP explains that:

“In special cases where due to a natural disaster, fire or force majeure circumstance an employer cannot pay wage on time to an employee as agreed upon in their labor contract despite his/her efforts to find a remedial measure, the employer may not delay the payment for more than 1 month.”

Moreover, an additional amount that must be paid by the employer to the employee to compensate for late wage payment is provided as follows:

a/ If wage is paid late for under 15 days, the employer is not required to pay any additional amount;

b/ If wage is paid late for 15 days or more, the employer shall pay to the employee an additional amount at least equal to the late paid amount multiplied by the ceiling interest rate for one-month time deposits announced by the State Bank of Vietnam at the time of wage payment. If the State Bank of Vietnam does not provide the ceiling interest rate, such additional amount shall be calculated at the interest rate for one-month time deposits announced by the commercial bank at which the enterprise or agency opens the transaction account at the time of wage payment.

Thus, in some special cases, enterpries could owe employee wage but not more than 01 months.

Secondly, COVID-19 would be considered as a force majeure.

According to Clause 1 Article 156 of The Civil Law 2015:

“A force majeure event means an event which occurs objectively and unpredictably and cannot be overcome although all necessary measures have been applied and all the permitted capability has been used.”

Article 12 of Decree No. 05/2015/ND-CP pescribes Unilateral termination of labor contracts by employers lists some force majeure circumstances:

“a/ Enemy sabotage, epidemic;

b/ Relocation or narrowing of the production or business establishment upon request of a competent state agency.”

Hence, COVID-19 would be considered as a force majeure. If enterpries are affected by COVID-19, have difficulties that cannot be overcome despite using all necessary measures leading to late employee wage, they can delay the payment but not for more than 1 month; and have to pay an additional amount if wage is paid late for 15 days or more.

Please contact us for detailed advice.

T2H Law Liability limited company

Head office: G4-4A, Dormitory 708, Lien Ninh, Thanh Tri, Hanoi

Branch office: 20N7A Nguyen Thi Thap, Nhan Chinh Ward, Thanh Xuan District, Hanoi.

Phone: 0242 242 9900 – 0989 656 682

Website: https://t2h.vn

Email: contact.t2h@t2h.vn – huong.le@t2h.vn

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