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The employee makes serious mistake cause a damage to the company, how much they have to compensate to the company?

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Question: In case the employee makes serious mistake cause a damage to the company, base on current Law and regulations how much they have to compensate to the company?

Answer: Regarding your question about the compensation rates that the employee must be paid in case the employee causes severe damage to the employer, here are our suggestions:

At first, it is vital to determine whether the employee’s damage-causing act is considered an act causing severe damage to the employer in accordance with the law.

Pursuant to Article 129 of the Labor Law, The act of causing serious damage to the employer will be based on the value of the damage caused, in particular, namely equal to or exceeding 10 (ten) months of the regional minimum wage announced by the Government applied in the place where the employee work; or lose tools, equipment, property of the employer or other property assigned by the employer, or consume materials beyond the allowable limit.

The minimum wage will be compared with regulations that are stated in Clause 1, Article 3 of Decree No.90/2019 on the regional minimum wage. As follow: 

“1. Region-based minimum wages:

  1. a) For enterprises located in region I: VND 4,420,000/month.
  2. b) For enterprises located in region II: VND 3,920,000/month.
  3. c) For enterprises located in region III: VND 3,430,000/month.
  4. d) For enterprises located in region IV: VND 3,070,000/month.”

The company’s headquarters – the employees’ workplace, is located in Quy Nhon, Binh Dinh. Pursuant to Section 1 of the List of localities to apply the regional minimum wage from January 1, 2020, together with the Government’s Decree No. 90/2019/ND-CP dated November 15, 2019, Quy Nhon City is area III with a minimum wage of 3,430,000 VND. So:

In cases:

Acts of the employee causing damage under VND 34.300.000:

Then the action will be considered as the act of causing non-serious damage. The employee must be compensated at most 03 months’ salary, and the monthly deduction from the salary must not exceed 30% of the employee’s actual monthly wage after deduction of compulsory social insurance, social insurance, health insurance, unemployment insurance, and personal income tax.

Acts of the employee causing damage from 34.300.000 VND or more:

Then the action will be considered as the act of causing serious damage. The employee must compensate for partial or total damage value according to market prices or labor regulations

Steps to identify the employee’s fault and take disciplinary action:

Step 1: Confirm the violation

The employer collects evidence to prove the employee’s fault. Compare the value of the damage caused by the employee in units of Vietnam Dong. Then compare the compared value with the abovementioned regulations to determine whether the action has serious damage to the company or not. This step, especially the assessment of damage, should be recorded in minutes and under the supervision of the employee in order to avoid undesirable consequences.

Step 2: Organize a meeting to handle labor discipline.

The organization of a meeting to handle labor discipline must take place within the statute of limitations specified in Article 123 of the Labor Code 2019: 06 months from the date of occurrence of the violation or 12 months for direct violations related to financial, property, which can be extended for no more than 60 days in some cases. The employer will be the one to conduct the labor discipline meeting

Before completing the disciplinary meeting:

Notify at least 05 days in advance of the content, time, and location of the meeting to handle the labor discipline, the full name of the person being held, and violations to the following people:

– The representative organization of employees at the establishment of which the violating employee is a member;

– The employee violates labor discipline.

Conduct a meeting to handle labor discipline:

Note: the content of the meeting to handle labor discipline must be recorded in minutes, approved before the end of the session, and must be signed by the attendees: If someone does not sign the minutes, please specify their full name, the reason for not signing (if any) in the content of the minutes.

Step 3: Issue a decision on disciplinary action.

Please see more:

Employment and Labor

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