On 1 June 2020, the Ministry of Labor and Social Welfare (“MLSW”) issued Notification 1559/MLSW (“Notice”) addressed to the provincial and Vientiane Capital Labor and Social Welfare Divisions as well as production and service businesses nationwide.
The Notice affirms the MLSW’s position that any changes to an employee’s remuneration package or leave entitlements, which by their nature constitute amendments to that employee’s employment terms, will require the consent of the employee. Additionally, if the employer has been impacted by the COVID-19 outbreak, the Notice provides that the MLSW only allows an employer to adjust the employment terms of employees (whether individually or collectively) after it has consulted and negotiated with the employee/s through compromise in terms of the procedure set out in Article 12 of the Decree on Labor Conflict Resolution (№ 76/GO, 28 February 2018) (“Labor Conflict Decree”). If the parties fail to reach a compromise, the collective bargaining procedure in Articles 13 and 14 of the Labor Conflict Decree should be followed. If collective bargaining fails, either party has the right to approach the Labour Conflict Resolution Committee for resolution.
Importantly, the compromise and collective bargaining procedure under Articles 12 to 14 of the Labor Conflict Decree also applies to (i) the employer’s utilization of the temporary suspension provisions of Article 111 of the Labor Law and (ii) implementing redundancies or downsizing of operations under Article 82 of the Labor Law, whether such suspension or redundancy applies to one or more employees.
The Notice is clear that it only applies to COVID-19 related business reasons for downsizing, redundancies or suspensions. Nevertheless, it may be difficult for an employer implementing redundancies in the ordinary course per Article 82 of the Labor Law to delink such redundancies from the COVID-19 outbreak and the related economic downturn, leaving them vulnerable to dispute for non-compliance with the directives in the Notice.
If you have any questions regarding the Notice or workforce restructuring in the current environment please do reach out to Standré Bezuidenhout, Senior Associate (firstname.lastname@example.org), and Bounyasith Daopasith, Legal Adviser (email@example.com).
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.