2019 06 May

ASEAN Employment Legal Update

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DFDL’s Employment Practice Group is dedicated to advising clients on employment and labor issues and preparing human resources documentation that is compliant with local laws.  Our employment team’s in-depth knowledge of the law and practices in the countries where we operate allows us to provide specialized, tailored, and practical advice on issues that arise in employment relationships. Our Head of the Regional Employment Practice Group is Marion Carles-Salmon, who is based in Bangkok. This legal update is to advise you on important legislation and employment issues in the region.

Bangladesh

The Bangladesh Labour Act 2006 (the “BLA”) sets out the rights and obligations of employers, workers, trade unions, functions and the powers of the labour courts for private entities in Bangladesh.  In 2018, a number of amendments were made to the BLA through the Bangladesh Labour (Amendment) Act 2018 (the “Amendment”).  The Amendment provides for the following:

  • Prior to the Amendment, children who reached 12 years of age were allowed to work according to certain conditions in exceptional circumstances. The revised BLA has raised this threshold to 14 years old, prohibiting child labour below this age. 
  • If a female worker gives birth before informing her employer, she may be entitled to 8 weeks of maternity leave within 3 days of informing her employer.
  • Employers with 25 employees or more must arrange a sufficient number of rest rooms and a suitable lunch room with drinking water. Prior to the Amendment, only companies with more than 50 workers were requested to arrange such requirements.
  • Where it is not possible to pay all dues (including wages) to an employee because of his or her death or his or her whereabouts being unknown, the employer may either (i) make the payment to a nominated person or the employee’s heirs, or (ii) if no successor or nominee is found within 12 months, deposit the money into the so-called ‘Workers Welfare Foundation Fund’. In such a case, the deposited money will be considered as fund money if no person claims the amount within the next 10 years. Prior to the Amendment, the money was to be lodged to the Labour Court.
  • The required percentage of workers’ participation in relation to forming a trade union is reduced to 20% from the existing requirement of 30%. The registration process for forming the trade union must now be completed within 55 days (instead of 60 days).
  • 51% of all employees’ consent is now required for a strike or a lock-out. Prior to the Amendment, the threshold was set at two-thirds of the headcount.
  • The BLA now provides that where the Labour Court cannot render its decision within 60 days following the filing date of the claim, then the Court must notify the parties with the reasons of the delay in writing, following which the time limit can be extended by an additional 90 days. Prior to the Amendment, the BLA only provided for the court’s decision to be rendered within 60 days, unless otherwise agreed in writing between the parties to extend the time limit.

In Bangladesh, a separate entity called the ‘Minimum Wages Board’ is in charge of fixing the rate of minimum wages for employees in different sectors. After almost 6 years in January 2019, a new government gazette was published to increase the minimum wages of garments workers. For example, the minimum wages for a grade 7 worker were increased from BDT 5,300 to BDT 8,000 and for a grade 1 worker these have been increased from BDT 13,000 to BDT 18,257.

Furthermore, a separate set of labour legislation was published for the workers of Export Processing Zones (EPZs) in Bangladesh. The EPZ workers can now form Workers’ Welfare Associations if 20% of the workers participate (previously, the requirement was set at 30%). The service rules of the establishment must be approved by the Additional Chief Inspector who is appointed by the Government for the specific zone.

Cambodia

Further to the Prakas 443 on Seniority Payments (“Prakas 443”) issued by the Ministry of Labour and Vocational Training (the “MLVT”), the MLVT issued Guideline 042/19 on Payment of Back Pay of Seniority Pay prior to 2019 (the “Back Pay”) for companies outside of the Garment, Textile and Footwear Manufacturing Sectors on 22 March 2019.

The obligation on companies outside of the garment, textile and footwear manufacturing sectors to issue Back Pay has been pushed back to December 2021 and the number of days of Back Pay has been reduced from 15 days to 6 days per year, being 3 days in June and 3 days in December. During this period, if an employee is terminated for any reason other than serious misconduct, retirement or death, the employer is required to provide the entire amount of Back Pay. By contrast, an employee who resigns or is terminated due to serious misconduct is not entitled to Back Pay.

Certain issues regarding the calculation of Back Pay remain unsettled by the Guideline 042/19, such as the calculation of average daily actual wages prior to 2019, the inclusion of the probationary period in the calculation and the application of seniority payments to employees who shift from a fixed duration contract to an unfixed duration contract.

Notwithstanding the postponement of the obligation to provide Back Pay, there is no change to the payment regime of new seniority pay from 1 January 2019. Accordingly, employers outside of the garment, textile and footwear manufacturing sectors must comply with Prakas 443, meaning that the 7.5 days of new seniority pay must be paid in each of June and December (a total of 15 days per year).

The Lao PDR

1. List of Labor Related Occupational Diseases in the Lao PDR

The Minister of Labour and Social Welfare issued the Decision on Occupational Diseases (№ 3002/MLSW, 16 August 2018) which details a list of approved occupational diseases which serves as a guideline for employers and the Social Security Fund in the treatment and payment of allowances to injured employees under the Lao PDR labor laws.

Prior to issuing this Decision, the labor management authority applied the ASEAN list of occupational diseases in cases where employees instituted claims against their employer or the Social Security Fund.

The 2018 Decision applies to both the public and private sectors in the Lao PDR.

2. Draft Instruction on the Implementation of the Social Security Law

The Social Security Law (Nº 54/NA, 27 June 2018) (the “Social Security Law”) came into force on 9 January 2019, but certain provisions lacked clarity, one being the calculation of benefits. 

The Ministry of Labor and Social Welfare is in the process of drafting an instruction to provide explanations and examples relating to the calculation of benefits listed in the Social Security Law, being:

  1. Health care benefits;
  2. Labor accident or occupational disease benefits;
  3. Maternity allowances;
  4. Sickness benefits;
  5. Loss of working capacity benefits;
  6. Pensions;
  7. Death benefits;
  8. Family member benefits; and
  9. Unemployment benefits.

As currently drafted, the instruction fails to adequately address the uncertainty surrounding the calculation for retirement benefits and the allocation of insurance points to an insured person. The current position is that the calculation will be dependent on the number of insured persons in the Lao PDR and the percentage of benefit allocated to an insured person will still be based on the periodic internal calculations and methodologies of the Social Security Fund. However, further details are not provided in the draft instruction.

The draft instruction is still under revision and comments have been requested from stakeholders. A finalised instruction is expected to be published during 2019.

Myanmar

On 15 March 2019, the Parliament issued the Occupational Health and Safety Law 2019 (the “OHSL”) which aims to prevent occupational health, decease and injuries by promoting health and safety in the workplace. Although passed, actual implementation of the OHSL is not expected to occur until later this year.

The OHSL notably applies to private sector companies and JV businesses involved in (or doing business in the field of) manufacturing, industrial and construction activities, mining and oil and gas, port businesses, educational services, health care, transportation and communication activities.

 1. New obligations for employers

Companies carrying on the activities covered under the OHSL must register with the Factory and General Labour Laws Inspection Department (the “Department”) for occupational health and safety purposes. The OHSL also provides for the appointment by the employer of an “in-charge employee” to supervise the health and safety of workers at the workplace (the “Occupational Safety and Health Officer”). Finally, the employer must notify the Department in the event of serious workplace injuries, dangerous incidents and serious occupational accidents (as defined by the OHSL).

In accordance with the OHSL, the employer must undertake a threat assessment of the machinery and equipment used in the workplace, arrange medical check-ups of its employees to ensure that they do not suffer from occupational diseases, provide personal protective equipment and ensure that the company provides appropriate medical assistance and services to its employees (a registered doctor and nurses must be appointed when the number of employees exceeds a specific threshold).

The OHSL provides for protective measures in favor of employees, such as protection against dismissal during the period of leave (as certified by a doctor’s medical report following an injury sustained in the workplace or an occupational disease) and prohibition from work that, due to its nature, does not fit with the recommendations of the certified doctor. The employer must also take all necessary measures to prevent any negative effects on the health of pregnant and breastfeeding employees in the workplace. Finally, the OHSL provides the right for employers to limit or restrict the work of employees who are incapacitated due to their health condition.

 2. Employees’ duties and responsibilities in the workplace

The OHSL lays down employees’ duties and responsibilities in the workplace, such as the obligation to promptly inform their employer or the Occupational Safety and Health Officer when they discover any condition, cause or event likely to affect health and safety in the workplace.

Thailand

The Thai National Legislative Assembly approved a resolution to amend the existing Labor Protection Act (the “LPA”) on 13 December 2018. This amendment has been published in the Government Gazette on 5 April 2019 and has come into effect on 6 May 2019. It provides for the following changes: 

  • The employee’s consent is now required in the case of a merger between companies, and in any event when the employment contracts are transferred following a business transfer or a change in the person of the employer. Prior to the amendment, such consent was not required in the event of a merger.
  • Maternity leave entitlements for pregnant employees are now set at 98 days per pregnancy (instead of 90 days) and is extended to leave taken for pre-natal care, such as to attend medical appointments. Full paid maternity leave remains capped at 45 working days however.
  • In the event of a workplace relocation (whether to a new or another existing location), the employer is required to post a notice at the current workplace for a consecutive period of at least 30 days prior to the relocation. Such a notice must be conspicuous, clearly stating the timing for relocation, and the location details of the expected workplace. If the relocation materially affects the ordinary course of living of an employee, the employee may refuse to relocate by providing written notice to the employer within 30 days of the relocation notification date. Following this notice, the employment contract will be deemed to be terminated on the date of relocation and the employee will receive special severance pay (which is equal to the statutory severance pay) within 7 days of the termination date.
  • Employees are now statutorily entitled to personal business leave of 3 working days per year. Prior to the amendment, personal business leave were granted to employees in accordance with their employment agreements or the company work rules.
  • Employees who have worked for an uninterrupted period of 20 years or more are entitled to statutory severance pay equal to 400 days of the employee’s last wage (approximately 13.3 months).  Prior to this amendment, the statutory severance pay for employees with 10 years of seniority or more in the company was capped at 300 days of pay.
  • The LPA now provides that where an employer wishes to terminate an indefinite term employment contract with immediate effect and without giving statutory notice (i.e. for other reasons than a “permitted cause” under the LPA or the Civil and Commercial Code), payment in lieu of notice must be made on the effective date of termination. Prior to the amendment, the LPA did not require employers to pay the payment in lieu of notice on any specific date.
  • In the case of termination, all forms of remuneration (including pro-rata bonuses, premiums and other benefits) and other statutory payments (including, in our reasonable interpretation, severance pay) must be paid within 3 days following the effective date of termination. Prior to the amendment, this timing requirement for payment applied to wages, holiday pay, overtime pay, and holiday overtime pay, but not to other types of remuneration or other statutory payments such as severance.

Vietnam

 1. Basic monthly wage increase

The basic monthly wage is currently VND 1,390,000 (approximately USD 60.50). From 1 July 2019, it will increase to VND 1,490,000 (approximately USD 64) in accordance with Resolution No. 70/2018/QH14 issued by the National Assembly on State budget estimates in 2019. The basic monthly wage increase will impact employees in private entities, as well as their pensions, health insurance, social insurance allowances, monthly allowances, lump-sum allowances upon childbirth, and funeral allowances which will be adjusted in line with the basic monthly wage increase (for instance, Vietnamese law provides that the contributions of social insurance or health insurance per month for employees to the social insurance fund must not exceed 20 times the basic monthly wage).

 2. Guiding implementation for expatriates on social insurance contributions

The Ministry of Labor, Invalids and Social Affairs recently issued Official Letter No. 1064/LDTBXH-BHXH dated 18 March 2019  (the “Official Letter No. 1064“) to clarify the scope of application of compulsory social insurance schemes for foreign employees working in Vietnam (the “Expatriates”) as formerly mentioned in Decree 143/2018/ND-CP of the Government of Vietnam dated 15 October 2018.

Accordingly, the Official Letter No. 1064 clearly distinguishes when Expatriates are subject to the social insurance scheme (“SI”) and when they are not:

Expatriates who satisfy all of the below requirements  will be subject to SI: Expatriates that will not be subject to SI:
  • Expatriates who have indefinite-term labor contracts, or definite-term labor contracts of at least one year with employers based in Vietnam;
  • Expatriates who hold either a work permit, practicing certificate, or practicing license, granted by the competent state authority of Vietnam;
  • Expatriates who have not yet reached 60 years of age for males and 55 years of age for females; and
  • Expatriates who do not fill the requirements mentioned in the right column and who transfer from the parent company to a Vietnamese-based subsidiary or branch.
  • Foreign nationals who internally transfer within an enterprise for a limited period of time. This refers to managers, executive directors, experts or technicians of a foreign enterprise that has established an entity’s commercial presence in Vietnam who temporarily transfer internally to the Vietnamese entity and who were recruited by the foreign enterprise at least twelve (12) months prior to the transfer.

 

If you would like further information or would like to discuss these issues, please contact marion.carlessalmon@dfdl.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.


DFDL Contact

Marion Carles Salmon

Regional Legal Adviser

marion.carlessalmon@dfdl.com


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