2018 06 August

Cambodia Legal Update July 2018

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CORPORATE & COMMERCIAL

EMPLOYMENT SECTOR

Law on Amendments of Article 87 (K), Articles 89, 90, 91, 94, 110,120 and 122 of the Cambodian Labour Law dated 13 March 1997, dated 26 June 2018 (“Amendment Law”)

The Amendment Law has introduced significant changes to the 1997 Labour Law, in particular to provisions relating to termination and compensation. These include:

(1) New Article 87: Under this new provision, requirements on “damages” and “compensation in lieu of notice” are not applicable in the case of enterprise closure, which must be undertaken in accordance with the conditions to be determined by a forthcoming Prakas from the Ministry of Labour and Vocational Training (“MLVT”).

Under the old Article 87, the closure of an enterprise, except for reasons of force majeure, does not release an employer from its obligations under Section III of the 1997 Labour Law including, among others, prior notice of termination. It is not crystal clear whether the new Article 87 will entirely remove the requirement to provide prior notice to employees about termination due to closure of an enterprise; and

(2) New Article 89: Indemnity for dismissal is amended as “seniority compensation”. The amount of seniority compensation is 15 days per year to be paid every six months to employees.

In the event that the employment contract is terminated by an employer in accordance with the Labour Law, the employee is entitled to the remaining seniority compensation from one month up to six months of seniority compensation, which will be equal to seven days of wages and fringe benefits. If an employee commits serious misconduct, he or she will not be entitled to seniority compensation.

Under the old Article 89, an indemnity for dismissal is capped at six months of wages and fringe benefits and is not payable to an employee in the case of resignation and termination due to an employee’s serious misconduct.

We cannot confirm as of yet whether there is a cap on the level of seniority compensation, or an exception in the case of resignation or serious misconduct by an employee.

The scope and procedures to implement seniority compensation will be determined by a Prakas of the MLVT. To date, there has been no official announcement from the MLVT as to when the new Prakas will be circulated.

We will keep you updated on any new developments from the MLVT with respect to the Amendment Law.

 

INDUSTRIAL RELATIONS SECTOR

Prakas No. 300 on Procedures for Payment of Union Contribution Fee and Service Agency Fee, dated 2 July 2018, issued by the Ministry of Labour and Vocational Training

Employers must deduct a union contribution fee from employees’ wages on the condition that there is consent from the relevant employees. The union contribution fees must then be transferred to the relevant union duly registered with the MLVT.

Of note, employers are prohibited from paying union contribution fees on behalf of the employees.

As a procedure, unions must inform employers about the amount of union contribution fees at least ten days beforehand, and enclosed with written agreements from the employees concerned.

Employees have the right to reject the deduction from their wages of union contribution fees and must file a rejection letter at least 15 days before payday. After receiving the rejection letter, the union must provide a copy of the same to the employers at least five days before payday.

Employers are required to retain certain information with respect to deductions from employees’ wages for union contribution fees: (1) dates of employee agreements; (2) dates and amount of deductions and (3) transfer dates of the union contribution fees to the unions.

If you are unsure as to your enterprise’s obligations in regard to union contribution fees, please do not hesitate to contact us at labor.kh@dfdl.com.

 

Prakas No. 302 on the Shop Steward in Enterprises, dated 2 July 2018, issued by the Ministry of Labour and Vocational Training

Enterprises with a minimum of eight employees must have a shop steward and assistant shop steward, each with a term of two years. The election of the shop steward and assistant shop steward is considered valid when the number of voters is at least equal to half of the employees registered for the vote. In the event that the turnout rate of voters is less than half of those registered to vote, the employer must arrange a new election within 15 days after the first election.

Enterprises with branch offices must organize a separate election for shop stewards at branch offices with eight or more employees.

Of note, Prakas 302 permits employees to remove a shop steward before the expiry of his/her term if the shop steward fails to fulfill his/her duties. The removal must be undertaken via an election in the same manner as the election of the shop stewards. Prakas 302 does not specify whether employers must also be responsible for organizing an election to remove a shop steward in the same manner as the employer is responsible for the election of shop stewards.

Finally, following the issuance of Prakas 302, Prakas 286 dated 5 November 2011 on Shop Stewards is hereby nullified.

 

ENERGY

Prakas No. 0141 on the Procedure for Management of Technical Safety for Petroleum, Gas and Joint Petroleum-Gas Station dated 16 May 2018, issued by the Ministry of Mines and Energy (“MME”)

Prakas 0141 aims to set out specific procedures for the issuance of technical safety certificates and operation certificates for the operation of petroleum, gas and join petroleum-gas stations.

Prakas 0141 made several changes to the former regulations including the definition, maximum storage capacity of oil and gas, the application processes and documentary requirements. In particular, the definition of petroleum gas has been redefined as a mixture of hydrocarbons, which is gaseous in normal conditions and includes LPG, LNG, and CNG. With respect to storage capacity, while the former regulations did not limit the maximum storage amount, Prakas 0141 sets the maximum storage amount at 100,000 liters for a gas station, and 201 to 150,000 liters for a petroleum station.

Furthermore, when applying for an operation certificate for petroleum, gas, or joint petroleum-gas stations, applicants are no longer required to submit a location permit from local authorities and the fire prevention and extinguishing certificate from the firefighting department. The location to lodge applications has also been changed from the one-window service of the MME to the provincial/municipal Department of the MME where the station is located.

Interestingly, owners of petroleum and gas stations are required to ensure that their stations comply with the newly adopted Circular No. 0140 dated 16 May 2018 on Safety Management for the Preparation of Petroleum, Gas and Joint Petroleum-Gas Stations by 25 November 2019 for petroleum stations, and by 17 November 2020 for gas stations.

Prakas 0141 nullifies three regulations issued by the MME including Prakas No. 0092 dated 16 February 2015 on the Procedures for Management of Technical Safety of Petroleum Stations and its amendment Prakas No. 106 dated 16 February 2015, and Prakas No. 105 dated 28 March 2016 on the Procedure for Management of Technical Safety of Gas Stations and Joint Petroleum-Gas Stations.

 

BANKING & FINANCE

ANNOUNCEMENT ON THE PROHIBITION OF ACCEPTING ID CARDS OR FAMILY BOOKS AND RESIDENCY BOOKS FOR SECURING LOANS, № B7-018-008 PRO KOR POR MOR, DATED 17 JULY 2018

This Announcement is to remind banking and financial institutions and rural credit operators (“Institutions”) to duly and fully comply with the Announcement № B7-016-210 Sor.Chor.Nor, dated 11 March 2016, under which such Institutions are prohibited from accepting identification cards or family books and residency books in order to secure loans.

Failure to comply with this Announcement will be subject to serious disciplinary sanctions leading to license revocation in accordance with the Law on Banking and Financial Institutions currently in force.

 


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 situation.

For further inquiries, please contact cambodia@dfdl.com.


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