Regional Legal Update on Labor and Employment Law Issues
DFDL’s Employment Practice Group is dedicated to advising clients on employment and labor issues, and preparing human resources documentation compliant with local law. Our employment team’s in-depth knowledge of the law and practices in the countries in which we operate allows us to provide specialized, practical advice on issues that arise in employment relationships. The head of our regional Employment Practice Group is Danyel Thomson, who has been with DFDL for over nine years and has worked in our Laos, Thailand, and now Myanmar offices. This legal update serves to advise you on important legislation and employment issues in the region.
BANGLADESH LABOR RULES AND DRAFT EPZ LABOUR ACT
The Bangladesh Labor Rules 2015 (“BLR”) introduced several improvements into Bangladeshi labor law. The BLR also set out several requirements and procedural guidelines to be followed in relation to the following issues: conditions of employment and service, adolescent workers, maternity benefits, health and hygiene, safety, welfare measures, working hour and leave, wages and payment, compensation for injury, trade unions and industrial relations, dispute resolution and court procedures, workers participation in company profit, provident fund, offence and penalty procedures, administration and inspection, and other ancillary matters in relation to workers.
Regarding legislation, which may become effective in 2017, the government is in the process of enacting a new labor law for export processing zones (“EPZ”) in Bangladesh. A draft version of the Bangladesh EPZ Labor Act 2016 has been submitted to the parliament in the form of a ‘bill’ for parliament’s approval. At present, there is no specific labor law designated for EPZs and all labor matters are currently governed by certain instructions. Once enacted, foreign investors will have to abide by the terms of the new law. The draft act does not significantly deviate or differ from the existing Bangladesh Labor Act 2006 (as amended in 2013) (“BLA”) or BLR; however, there are certain conditions that should be noted regarding: (i) forming a permanent wage board for EPZ workers; (ii) an increase in the compensation amount in case of death or permanent disability of EPZ workers; and (iii) unlike the BLA there is no requirement for a ‘profit participation fund’ for employees in EPZs. The Draft Act allows workers to form a ‘Workers’ Welfare Association’ (“WWA”), a body similar to trade unions under the BLA. With regard to industrial disputes including strikes and lockouts, the Draft Act elaborates on the procedure for settlement of such disputes. The Draft Act also includes provisions for separate EPZ Labor Courts and EPZ Labor Appellate Tribunals for dealing with any offenses falling within its provisions.
LAUNCH OF WORKFORCE DATA MANAGEMENT ONLINE
Prakas № 352 of the Ministry of Labor and Vocational Training (“MLVT”), dated 17 August 2016.
The MLVT has introduced, in Prakas 352, the Foreign Workers Centralized Management System to manage the employment of foreign employees in Cambodia through an online system. The online system can be found on the website (www.fwcms.mlvt.gov.kh) and was launched on 1 September 2016.
Employers are required to complete the formalities to request an approval of a foreign employee quota through the new online system from 1 September 2016. Likewise, any foreigner who seeks to work in Cambodia is also required to complete the necessary formalities to apply for an employment card and work permit through the new online system from 1 September 2016. In some cases, the MLVT or Department of Labor and Vocational Training (“DLVT”) may request that an applicant is to be present in person at the MLVT or DLVT or to provide other necessary documents. With the new online system, an applicant is required to pay an online fee of USD 30 per application in addition to the official filing fee.
Under Prakas 352, a foreigner may now use his/her valid personal health certificate to apply for a foreign employment card and work permit. This health certificate must be certified by the Labor Medical Department of the MLVT (with an official fee of USD 5).
REGULATION No. 6 OF 2016 ON RELIGIOUS HOLIDAYS ALLOWANCE
In April 2016, the Ministry of Manpower (“MOM”) enacted the MOM Regulation No. 6 of 2016 on Religious Holiday Allowance for Employee (“MOM 6/2016”). Holiday allowance (known as THR in Indonesia) is a mandatory component of an employee’s salary in Indonesia. Previously, the obligation to provide THR only applied to workers with more than three months of service. After the issuance of MOM 6/2016, all employers are now required to provide THR to employees with at least one month of service, regardless of whether the worker is employed on a permanent or temporary basis. THR is payable once a year on a religious holiday, that is chosen by an employee. For example, a Moslem employee will obtain THR on Idul Fitri Day and a Christian employee will receive THR on Christmas Day and so on.
The amount of THR is as follows:
- For employees with a minimum 12 months of service, THR is equal to a minimum of one month’s salary (basic salary plus any fixed cash monthly allowances); or
- Pro rata basis for employees with more than one month but less than 12 months of service.
LAW No. 8 of 2016 ON PERSONS WITH DISABILITIES
The government also enacted Law No. 8 of 2016 on Persons with Disabilities, which provides protection, and a guarantee of non-discrimination in the workplace for people with disabilities. Article 53 of Law No. 8 requires private sector companies to meet a 1% disability employment quota. Employers must provide accommodation and facilities to enable access by employees with disabilities. Employers who fail to provide proper accommodation and facilities are subject to administrative sanctions in the form of the following: a) written warning; b) cessation of operations; c) business license suspension; and d) revocation of business license.
SOCIAL SECURITY – MAXIMUM SALARY INCREASE
Local as well as foreign employees are required to contribute to the Social Security Fund (the “SS Fund”) pursuant to the current Social Security Law (No. 34/NA, 26 July 2013) (“Social Security Law”) and Implementing Guidelines (No. 2751/MLSW, 24 July 2015) (“Implementing Guidelines”). Under the Social Security Law and Implementing Guidelines, 6% of the employee’s salary must be contributed to the SS Fund by the employer and an additional 5.5% (of the employee’s salary) must be withheld from the employee’s salary and contributed to the SS Fund. The maximum base salary to be used in the calculation of social security benefits is LAK 4,500,000 per month (which has increased from LAK 2,000,000 as of 1 January 2017). Therefore, the maximum contribution payable by the employer for employees earning LAK 4,500,000 or more is LAK 270,000 per month per employee and the maximum contribution to be deducted from the employee’s salary for employees earning LAK 4,500,000 or more is LAK 247,500 per month per employee.
Furthermore, labor-related legislation currently being prepared and considered includes a draft Decree on Organization and Activities of the National Labor Committee; and a draft Decision on Undertaking Occupations that Risk Labor Accidents and Occupational Diseases. These drafts are under consultation with the relevant sectors, and are not yet scheduled to be submitted for approval.
TEMPLATE EMPLOYMENT CONTRACT AND LEGISLATIVE REFORM
An employment relationship in Myanmar generally requires a written employment contract to be constituted within 30 days of the offer being accepted. In August 2015, the Ministry of Labor issued Notification No. 1/2015, which requires all employers in Myanmar to use the Standard Employment Contract (“SEC”) as the employment contract with their employees. Once signed, the SEC must be taken to the relevant Township Labor Office for approval and registration. Due to the approval and registration requirements, it is advisable for employers to observe the stipulations contained in the SEC, together with the provisions under local labor legislations with regard to terms and conditions of employment to ensure that employment contracts are not rejected by the Township Labor Office. Employers with less than five employees are not required to submit the contracts for registration; however, they technically should still use the standard template to be in strict compliance with local law.
Beginning in late 2016, various pieces of labor-related legislation are being revised through reform efforts coordinated by the International Labor Organization with the Union of Myanmar Federation of Chambers of Commerce and Industry. Reform objectives are to revise the following laws: Employment and Skills Development Law; Labor Organization Law; and Settlement of Labor Disputes Law. The longer-term goal is to then consolidate the labor legislation into a ‘labor standards act’. The requirement to use the government-mandated template employment contract is also being discussed, and a modification of this requirement may come in 2017.
EMPLOYMENT OF FOREIGN UNSKILLED LABOUR PERMITTED IN BUSINESSES WITH INVESTMENT PROMOTION
In recent years, the Thai government and other relevant government agencies imposed strict restrictions on the employment of unskilled foreign workers. In turn, this led to foreign investors investing in neighboring countries where they could benefit from the cheap labor supply. On 6 June 2016, the Thai government granted businesses with investment promotion permission to employ unskilled foreign workers until 31 December 2018; however, making it necessary for such workers to enter only through MOUs after 31 December 2018.
CHILD LABOR PROTECTION – INCREASE OF PENALTY (NEW LAW 2017)
The Labor Protection Act (“LPA”) was enacted in 1998. The LPA imposed a penalty of imprisonment of not exceeding one year or a fine not exceeding THB 200,000 or both. The penalties under the LPA seemed to be too lenient and change was enacted following the announcement of a new amendment on 24 January 2017. The amendment increased a fine to between THB 400,000 and THB 800,000 for each child employee or a term of imprisonment not exceeding one year or both. The rationale behind the introduction of the new regulation is to effectively combat the use of child labor.
FOREIGN EMPLOYMENT LEGAL UPDATE IN VIETNAM
A foreign construction contractor may, via its operations office in Vietnam, recruit foreign employees to work for projects in Vietnam, which the foreign construction contractor is permitted to implement under a construction operation license. However, the law states that foreign contractors are only permitted to hire foreign specialists, managers, and highly skilled laborers where Vietnamese citizens are not ready to compete and are not adequately qualified (Article 74.2(d) of Decree 59/2015/ND-CP, dated 18 June 2015). Under Decree 11/2016/ND-CP, dated 3 February 2016 and Circular 40/2016/TT-BLDTBXH, dated 25 October 2016, a foreign contractor is required to send a request for recruitment of employees to the Department of Labor, Invalids and Social Affairs (“DOLISA”) where the operations office is located. If after one month from the date the foreign contractor submits the recruitment request, the DOLISA and the authorized labor supply organization cannot source Vietnamese citizens who meet all the necessary requirements, DOLISA will issue to the foreign contractor a letter approving the need for recruiting foreigners. The letter will specify the number of expatriates, positions, and qualifications, which the foreign contractor may recruit. The foreign contractor will be allowed to hire expatriates in accordance with the approval letter. Further, a foreign contractor will need to obtain work permits and working visas for any foreign employees to lawfully reside and work in Vietnam.
If you seek further information on employment and labor issues in your jurisdiction please contact the head of our regional Employment Practice Group, Danyel Thomson.