When a company is dissolved, what are the responsibilities towards employees?

Not only the company owner but also the employees (employees) will also be affected if the company is dissolved. So, according to the provisions of the Labor Code 2019 (Labour Code 2019) when the Company is dissolved, what are the responsibilities to employees?

1. When is a company forced to dissolve?

There are numerous reasons contributing to the dissolution of a company. One prevalent scenario in today’s business landscape is the forced dissolution of the company. In particular, instances where the company is dissolved are often attributed to various factors:

– When the term of operation stated in the company’s charter has expired, do not extend the operation further.

– Not having enough minimum number of members as prescribed by Labor Code 2019 for 06 consecutive months.

– When the company’s certificate of business registration is revoked.

– The content declared in the business registration dossier is forged

– The subject of company establishment in Clause 2, Article 17 of the Enterprise Law 2020.

– When the company stops doing business for 12 months without any notice to the Business Registration Authority as well as the tax administration agency.

– The enterprise fails to send a report to the business registration agency within 06 months as prescribed by the Law on Enterprises from the deadline for submitting the report or has a written request.

– In addition, the company is forced to dissolve according to the decision of the Court.

2. Responsibilities of the company upon dissolution to employ

According to the provisions of Clause 2, Article 48 of the Labor Code, salary, social insurance, health insurance, unemployment insurance, severance allowance and other benefits will be prioritized for payment.

Accordingly, enterprises are obliged to settle benefits for employees, including: First, salary according to the labor contract and severance allowance. Secondly is the social insurance; Health Insurance and Unemployment insurance. Lastly, other benefits according to the collective labor agreement and labor contract.

When the company is dissolved, the employee, in addition to receiving the salary owed by the company, and social insurance, also receives severance allowance and other benefits paid by the employer according to Clause 1, Article 48. Labor Code 2019.

In addition, the Labor Code 2019 does not stipulate that enterprises must notify employees of the dissolution.

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