Damage-compensation-vietnam

Regulations on Damage Compensation Obligation of Employees

damage compensation

Labor who cause damages to property of enterprises shall have to compensate for the consequences according to current law. Understanding these regulations on damage compensation obligation helps businesses manage and prevent damages as well as handle unexpected cases. The provisions on compensation levels, cases and form of compensation are updated as follows:

1. Employee’s compensation obligation shall be performed in the following case:

  • An employee who causes damage, loss to tools and equipment or the assets of the employer shall pay compensation in accordance with law:
    An employee who is dismissed according to the Labor code due to an act of theft or acts which cause serious damage or threaten to cause serious damage to the assets of the employer may be required simultaneously to pay compensation to the employer.
  • The Exceptions:
    In case the damage is caused by a natural disaster, conflagration, enemy-inflictes destruction, epidemic diseases, calamity or other objective events which are unforeseeable and irremediable and every necessary measure has been taken to full ability, no compensation is required.

 2. Level of damage compensation:

Consideration and decision on the levels of compensation must be based on the fault, the actual level of damage, the actual family conditions, personal records and property of the employee concerned.
The levels of compensation according to the regulations as followings:

  • The employee shall pay compensation of no more than 3 months’ wage in case due to negligence an employee causes a minor damage valued at no more than 10 months’ regional minimum wage applied at the employee’s workplace.
  • The employee must pay compensation for damage in whole or in part in accordance with the market price in one of the following cases:
    + Due to negligence, causes damage to tools and equipment valued at no more than 10 months’ regional minimum wage applied at the employee’s workplace.
    + An employee causes loss of tools, equipment or assets of the employer or other assets provided by the employer.
    + An employee consumes materials in excess of the permitted level defined by the employer
  • The employee must pay compensation for damage according to the liability contract: If the employee causes any damage as above and has been bound by the liability contract with the employer, such employee must compensate according to the liability contract.

3. Method of compensation :

  • Form of wage deduction
    + Employee’s compensation shall be deducted monthly from his/her wage.
    + Monthly deductions must not exceed 30% of the monthly wage of an employee after having paid compulsory social insurance, health insurance and unemployment insurance premiums and income tax.
    + An employee is entitled to know the reasons for his/her wage deductions.
  • Other Forms
    Based on the specific agreement between employees and employers in written :
    + Labor contract
    + Internal labor regulations,
    + Collective labor agreement

For practical cases, the employers must prepare, issue, register and promulgate the labor regulations and collective labor agreement properly and strictly.

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