2017 28 September

ASEAN Employment Legal Update 2017 #Q3

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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. Our Regional Employment Practice Group is Danyel Thomson, who now based in Bangkok, has been with DFDL for ten years and has worked in our Laos and Myanmar offices. This legal update serves to advise you on important legislation and employment issues in the region.

Bangladesh

Amendments on trade union formation

Certain amendments have been effected concerning the formation of a trade union under the Bangladesh Labor Act 2006 (“BLA”).

Under the BLA, trade unions could only be formed for a group of ‘specified establishments’ in a ‘specified area’. Previously there had been no suitable definition of what constituted a ‘specified area’. This year however, the Bangladeshi government, by way of its official gazette notification on 16 January 2017, finally defined ‘specified areas’ applicable to relevant establishments in Bangladesh. Additionally, through another gazette notification on 21 January 2017, the government outlined a list of certain establishments, to be included along with those in the previous list, that are permitted to form a trade union.

The previous list included 20 categories of establishments, including the following industries, e.g. tea, tannery, printing press, cinema and theater, construction, agricultural, hotels or motels, ship building, ship recycling, rice mills, and certain transport sectors.  With the gazette notification, 24 new categories of establishments were added, including those in the services sector, e.g.,  photographers, beauty parlors and salons, decorators; and various other industries, including automobile workshops, petrol pump and CNG filing stations, grocery shops, furniture workers, saw mills, brick manufacturing, poultry, fishermen, and electrical manufacturing. Workers in all the listed industries are legally entitled to form trade unions.   

Cambodia

The National Social Security Fund

Amendment to Article 7 of Sub-Decree № 01

6 January 2016 on the Health Care Scheme

Sub-Decree № 140, 26 August 2017, issued by the Prime Minister of Cambodia

Sub-Decree 140 will amend the contribution requirement under Sub-Decree 01 dated 6 January 2016 whereby employers and employees are required to make shared contributions into the health care scheme run by the National Social Security Fund (“NSSF”).

Under Sub-Decree 140, from 1 January 2018 onwards, employee health care insurance scheme contributions (as regulated by the Cambodian Labor Law) are to be paid in solely by employers. As it currently stands, the monthly contributions range between USD 0.65 to 3.25, paid equally by employers and employees.

The NSSF has yet to issue any written notification or guidance as to what rates employers will have to pay these health care contributions at from 1 January 2018. The current rates range between USD 1.30 to 6.50 per employee.

Indonesia

Social Security for Indonesian employees working overseas

Regulation of Ministry of Manpower Number 7 of 2017

This law obliges all Indonesian workers working abroad to enroll in the Indonesian social security program, known as BPJS.

The Indonesia Ministry of Manpower (MOM) recently issued a new law regarding social security for Indonesian employees working abroad (Regulation of the Ministry of Manpower Number 7 of 2017 or MOM 7). Under MOM 7, all such Indonesian workers must enroll in the Indonesian social security program (or BPJS). The program includes national health insurance, work accident insurance, death insurance, and a pension plan. Previously, this insurance program had been managed by three large consortiums of Indonesia insurance providers. Under MOM 7, companies that place their Indonesian workers overseas must enroll them in accident insurance and death insurance schemes, while the pension program remains optional.

Lao PDR

Retirement Benefits – Employer Obligations 

In order to qualify for retirement benefits under the Law on Labor (No. 06/NA, 27 December 2006) (the “Labor Law”) and the Social Security Law (No. 34/NA, 26 July 2013) (“Social Security Law”), an employee working in the Lao PDR must have:

  • reached retirement age, 60 years for male employees and 55 years for female employees (not undertaking hazardous work);
  • worked for a period of at least 15 years; and
  • contribute to the social security fund during that entire time.

The benefits should be covered by the National Social Security Fund (“NSSF”), although in the event that the employee is not a member of the Social Security Organization (“SSO”) or not qualified to receive payments from the SSO, the employer is liable to pay the retirement benefit. The retiree is entitled to a lump sum allowance “equal to the amount of one and half months of the average insured earning for the last six months multiplied by the total years worked”. We understand, through several informal discussions with the authorities, that the retirement benefit is based on the determination by the NSSF as to the average income in the Lao PDR over the past six months (not the specific employee’s average income over the past six months) multiplied by the total number of years the employee has worked.

While the retirement age and conditions set out above qualify an employee for the retirement benefits under the law, it is not a compulsory retirement age. An employee may elect to continue working and receiving his or her salary as normal past retirement age, if agreed to among the parties. In this scenario, the employee would only be entitled to his or her retirement benefits upon actual retirement.

Myanmar

New Standard Employment Contract

The Ministry of Labor, Immigration and Population releases new template contract.

As mentioned in our Quarter 2 update, modifications to the requirement on using the Standard Employment Contract issued in 2015 (“SEC 2015”) have been anticipated in recent months. On 28 August 2017, the Ministry issued Notification 140/2017 together with a revised Standard Employment Contract (“SEC 2017”) which repeals and replaces the SEC 2015.  Entities with more than five employees must use the SEC 2017 and register the executed contracts with the Labor Office in the relevant township. Employment agreements executed prior to the new Notification 140/2017 will remain valid until their expiry.

The SEC 2017 is in many respects similar to the SEC 2015, however, the new template features a number of notable provisions.  

Of particular importance is Clause 5(d) which provides that the employer shall calculate the employee’s term of service as inclusive of all consecutive terms of service of the employee commencing from the date of the employee joining the entity.  As the law did not previously state that an employee’s term of service included all consecutively renewed fixed-term contracts, this is a major revision.  This revised calculation of service term would mean that severance pay, if applicable in an employment termination matter, would be based on the total term, and not solely on the term of the most recent fixed-term contract.

Of further note, Clause 21(b) indicates that internal rules and regulations of the workplace, if in accordance with Myanmar law, are considered as part of the agreement.  This provision severely limits an employer’s ability to amend internal policies and regulations as needed without first obtaining employee consent. This consequently creates issues of efficiency and may prevent necessary modifications to human resources documentation. 

Clause 21(c) allows for the parties to agree on amendments to the template if more than 50% of the employees consent. The SEC 2017 does not elaborate on any process or method to secure such consent, nor a mechanism to maintain the required level of consent during continued hiring of staff by an entity. 

In addition to the above, the SEC 2017, like its predecessor, is largely prescriptive with respect to provisions on termination and dismissal with no reference to or basis in legislation. Terms and conditions which do indeed have statutory basis reflect legislative provisions rather than being revised as properly drafted contractual clauses with individual employees. 

Additionally, employers must include the terms and conditions which they expect employees to abide by in annexes, including the various levels of action to be taken in the event of misconduct i.e.: Annex (A): minor offences and employer’s responsive action; and Annex (B): serious offences and employer’s responsive action.

Through discussions with the Township Labor Offices, we are working to better understand those terms of the SEC 2017 which have changed, and determine the extent to which employers will be able to amend the SEC 2017. For the time being, adherence to the government template when contracting with employees remains the most sensible course of action.

Thailand

Last month saw highly important changes to Thai employment law, particularly through amendments to the Labor Protection Act. The amendments concern the age of retirement and submission of work rules. The provisions regarding retirement now set a compulsory retirement age for the first time. .

Labor Protection Act (No.6) B.E. 2560 (A.D. 2017) – Retirement

Background

  • On 31 August 2017, the Labor Protection Act (No.6) B.E. 2560 (A.D. 2017) (“the Act”) was published in the Royal Gazette and came into force on 1 September 2017.
  • The Act has been amended to combat the obstacles that retirees encountered when attempting to receive severance pay.
  • For the first time in Thai employment law, the Act lays down a compulsory retirement age that must be adhered to by employers. The Act also deals with the granting of severance pay to retirees.
  • In past years, had an employer failed to identify the age of retirement (whether in an employment agreement, work rules, or HR policy), the employee was expected to carry on working until he/she was unfit to do so. This had the effect of causing such employees to resign voluntarily, with the result that they were then unable to claim severance pay under Thai law.

Amendments

  • The amendments to the Labor Protection Act have been made to cement the court’s rulings that retirement is considered to be a termination of employment.
  • If an employee reaches the retirement age of 60 years, and the employer has not set a retirement age, or the age set is over 60 years of age, then the employee will be able to retire by duly informing the employer of the intention to cease working.
  • After a 30-day period, the retirement will become effective with the employee being entitled to full severance pay in line with the provisions of the Act.

Failure to adhere to the Amendments

If an employer fails to pay severance pay to a retiring employee, the employer may be fined a maximum of THB 100,000, or imprisoned for a term of six months, or both.

Work rules

  • This amendment to the Labor Protection Act also confirms the cancellation of the requirement to submit a company’s work rules to the authority as previously announced by the Order of the National Council for Peace and Order No. 21/2560 re: Law Revision for the Ease of Doing Business on 4 April 2017.

  • Employees must be able to easily reference or access the work rules, and electronic publication is acceptable.

Minimum wage

  • The National Wage Committee will set out minimum wages depending on the type of businesses or occupations in each area.

Vietnam

Introduction of the Vietnam Jobs Public Service Website

Circular 23 formalizes the online application process for the following procedures under Vietnamese law:

  1. approval of the demand for employment of foreign workers;
  2. issuance or re-issuance of work permits for foreign workers; and
  3. work permit exemption certification of certain foreign workers.

Online applications for the above procedures can now be performed at http://dvc.vieclamvietnam.gov.vn, a website managed by the MOLISA (Vietnam Jobs Public Service Website). While Circular 23 officially takes effect on 2 October 2017, the Vietnam Jobs Public Service Website became operational in April of 2016 and the MOLISA has been encouraging its use by employers or authorized representatives of employers since then.

The Vietnam Jobs Public Service Website allows employers or their authorized representatives to upload application dossiers for the approval of a demand for the employment of a foreign worker within 20 days prior to a foreign employee commencing work. The application dossier will then be assessed by the relevant Department of Labor, Invalids and Social Affairs (DOLISA) of the province where the foreign employee will work. The online application must be followed by submitting the hard-copy application dossier to the DOLISA in person or by courier. Upon receiving this, the DOLISA will send an email response to the employer or its authorized representative confirming receipt of a complete application dossier, or requesting further supporting documentation.

If an application dossier is deemed complete with no further supporting documents required, the DOLISA will process the employer’s request within eight working hours. The DOLISA’s decision on approving (or declining) the demand for employment of a foreign worker will then be available for collection by the employer or the employer’s authorized representative at the relevant DOLISA.

The same procedures also apply to the issuing or re-issuing of work permits for foreign workers, and the certification of foreign workers who are exempt from local work permit requirements. An application dossier to obtain a work permit for a foreign employee must be uploaded to the Vietnam Jobs Public Service Website within seven working days before the foreign employee commences work. An application dossier for the re-issuing of a foreign employee’s work permit must be uploaded to the Vietnam Jobs Public Service Website at least five days but no longer than 45 days prior to the expiration of the existing work permit. 

An application dossier to obtain a certification of work permit exemption must be uploaded onto the Vietnam Jobs Public Service Website within five working days before the foreign employee commences work. This process applies only to certain foreign workers who are exempt from the work permit requirement, and this exemption must be certified by the relevant DOLISA. Examples of exempted individuals include: a capital contributing member or owner of a limited liability company in Vietnam, the member of a board of management of a shareholding company in Vietnam, or the head of a representative office. This also includes a head of a non-governmental organization in Vietnam, or exempted person in accordance with the provisions of an international treaty to which Vietnam is a signatory.

An easier process for employers?

By introducing an electronic record-keeping system for foreign workers, Circular 23 allows the MOLISA to better maintain and share information on the permit status of foreign workers through the Vietnam Jobs Public Service Website. Circular 23 also introduces online communication between the relevant DOLISA and employers of foreign workers or their authorized representatives. This will allow for employers or their representatives to be more quickly informed as to whether their application submissions have been successful or not, or whether further supporting documents are still needed. 

Unfortunately, the processes introduced by Circular 23 are not entirely electronic and still require an employer to submit hard-copy application dossiers following any online application. Indeed, the approvals, work permits and certificates that are ultimately issued under Circular 23 must still be retrieved in hard copy by employers or their authorized representatives at the relevant DOLISA (few employers opt for original permits to be sent to them by post, although this option is available under Circular 23). A further downside is that the Vietnam Jobs Public Service Website is only available in Vietnamese. Thus, while the website is easy to use, foreign invested companies and other organizations operating in Vietnam must rely on local staff or a locally-based representative to upload application documents and manage electronic communications with the labor authorities.


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.