Our Publicaons on www.bun-associates.com Newsletter Compliance, Labor & Tax COMPLIANCE LABOR & TAX N° 07 July 2015 Editor: Bun & Associates III. Recent Cases Labor Law 53 A1507-001 54 A1507-002 54 A1507-003 54 A1507-004 55 A1507-005 55 A1507-006 56 A1507-007 56 A1507-008 57 A1507-009 57 A1507-010 57 A1507-011 58 A1507-012 58 A1507-013 59 A1507-014 60 A1507-015 60 A1507-016 60 A1507-017 60 A1507-018 61 A1507-019 I. Arcles 27 Employers’ Rights to Modify Employment Contract and Work- ing Conditions (Part 2): Employers’ Rights to Modify the Em- ployment Contract - 1/2 By Mr. ANTOINE FONTAINE, Head of the Labor Practice Group, Bun & Associates II. Recent Regulaons 14 Prakas No. PRK-MEF-855 on Suspension of Prepayment of Tax on Profit for Listed Companies, Dated July 24, 2015 14 Notification No. SchN-GDT-4621 on Collection of Tax on Means of Transportation and Vehicles for Year 2015, Dated July 03, 2015 14 Prakas No. 303 KB/BrK on Modification to the Composition of the Members of the Labor Advisory Committee for 8 th Mandate, Dated July 17, 2015 Volume 2 .
I. Articles 27 Employers’ Rights to Modify Employment Contract and Work-
ing Conditions (Part 2): Employers’ Rights to Modify the Em-ployment Contract - 1/2
By Mr. ANTOINE FONTAINE, Head of the Labor Practice Group, Bun & Associates
II. Recent Regulations
14 Prakas No. PRK-MEF-855 on Suspension of Prepayment of Tax on Profit for Listed Companies, Dated July 24, 2015 14 Notification No. SchN-GDT-4621 on Collection of Tax on Means of Transportation and Vehicles for Year 2015, Dated July 03, 2015 14 Prakas No. 303 KB/BrK on Modification to the Composition of the Members of the Labor Advisory Committee for 8th Mandate, Dated July 17, 2015
Volume 2
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I. Articles 01-01 Volume 2 Number 07 July 2015
Introduction
We have seen in our previous article the employer’s rights to supervise and manage its enterprise and therefore, the employment conditions, as far as the employer acts lawfully and reasonably.
However the Arbitration Council, based on contract common law1 together with the regulation on em-ployment contract itself, has brought additional restrictions2.
2. Modification of the Employment Contract
In compliance with the Civil Code3, the Arbitration Council should prohibit any unilateral modification of the employment contract. However, to ensure the employer can adapt its enterprise to its opera-tion productivity needs and to meet production tar-gets, the Arbitration Council allows such unilateral decision, should they be legal and reasonable, but continues to prohibit unilateral modifications when the changes pertain to the substantial considera-tions of the contract. They are of two kinds of sub-stantial considerations: objective (also identified by an award as the “employees’ personal rights”) (2.1) and subjective (2.2). We will see the consequences for the employer if an employee challenges the em-ployer’s unilateral decisions, looking at whether the changes are related to substantial or unsubstantial considerations (2.3).
2.1 Substantial Objective Considerations
A “substantial objective consideration” is so im-portant that it is not required to be specially men-tioned in the employment contract. For example,
the Arbitration Council finds that an employment contract is not required to have a written provision for the “tasks to be performed." It considers that the work employees have habitually undertaken since they started working, created a “condition” of an implied term in the contract which forms a part of their contract4.
The Arbitration Council, very early on, has defined the substantial objective considerations which re-quire mutual consent to be modified. In its famous cases 17/03 (&18/03)-Ho Hing, the Arbitration Council listed only four cases: reduction of wages (2.1.1); change of workplace (2.1.2) change of shift (2.1.3) and change of work (2.1.4).
2.1.1 Reduction of wage
According to the Arbitration Council, a reduction of wage is prohibited without employee’s consent. However, we can challenge this assertion.
We consider that “the amount of wages” is one of the substantial considerations for the contract and therefore cannot be modified without common agreement, not only in case of decrease but also in case of increase. Of course, we do not see, in prac-tice, why an employee would not accept an in-crease, but legally speaking he/she should agree to this prior to the increase. The Arbitration Council could find that, since the employer provided more advantages, there is a tacit agreement of the em-ployee, but we consider that it would be wrong as-serting that an increase of salary can be decided, even against the consent of an employee.
Regarding reduction of wages, an employer may decide to reduce wages collectively, for instance to maintain its competitiveness or to avoid dismissal, or individually, when a particular employee under-performs.
1. Article 22 of this Decree-Law stated: “A contract can be adjusted if there is agreement of the parties” replaced by Article 311 of Civil Code.
2. ACA 63/06 issue 5.
3. Article 414-2 of Civil Code.
4. ACA 14/07 issue 3.
B&A NL, compl. vol.2-I, p. 27
EMPLOYERS’ RIGHTS TO MODIFY EM-PLOYMENT CONTRACT AND WORK-ING CONDITIONS (PART 2): EMPLOY-ERS’ RIGHTS TO MODIFY THE EM-PLOYMENT CONTRACT—1/2 #D1507-001
BY MR. ANTOINE FONTAINE
I. Articles 01-01 Volume 2 Number 07 July 2015
In case of a collective reduction of wages, the em-ployer would be wise to reach a prior agreement with the employees’ representatives; otherwise it would eventually lead to a collective dispute, and finally to a strike. Although either the employer reaches an agreement, or does not reach an agree-ment but does not face a collective dispute, we con-sider that an employee may individually not accept the decision.
The case of an individual reduction of wages should always be considered as a sanction on the employ-ee’s professional underperformance. Of course the employee may refuse the reduction. We will look at the consequences later in this article.
However, it should be noted that reduction of wages cannot be a disciplinary sanction (financial sanctions are forbidden), and of course cannot lead to an amount of salary below the mandatory minimum salary.5
We consider that the term "wages" should be under-stood according to the definition as stated in the la-bor law6. Therefore it includes fringes benefits and other advantages. However, a too broad interpreta-tion may prohibit the employer to unilaterally de-nounce a bonus policy.
2.1.2 Changing of working place far from origin- nal working place
The Arbitration Council also finds that the location is an important condition in the contract between the employer and the employee.7 However a change of location may be acceptable without employees’ con-sents depending on the following considerations:
a) distance from the old location to the new location and the difficulties to travel from the old place to the new one. Changing of the work place for a reasonable distance is within the right of the employer to supervise and direct and it is not a changing of the con- tract which demands an agreement from the employee8;
b) situation around the new location. The Arbi-
tration Council takes into consideration the environment surrounding the factory, such as: difficulties to find food, clothes, house- hold appliances, and accommodation;
c) adaptation of the employees to the new lo- cation; the employer must give the employ- ees time to adapt to the new location;
d) seniority of work;
e) the benefits the employer gains from being able to keep experienced employees by moving them to the new location;
f) practice of other factories in case of similar changes. For instance, the Arbitration Coun- cil noted that when there is a change of fac- tory location, the employer often provides transportation or money upon the agree- ment between the employer and the em- ployees;
g) transportation costs to be borne by the em- ployer, however, transportation costs should be affordable for the employer;
h) change of the location due to economic rea- sons.
In its award 29/04 issue 2, the Arbitration Council explains how these considerations should be count-ed:
a) it considers that the distance from the old location to the new location of about 13 kilo- meters may make it difficult for the employ- ees to travel from the old place to the new one, especially the employees who live near the old location or do not live between the old and the new location.
b) the situation around the new location can be more difficult because there is no nearby m a r k e t w h e r e e m p l o y e e s c a n b u y food, clothes and household appliances, it is far from the city, and there is a problem with accommodation.
5. Article 28 of Labor Law and ACA85/08 issue 1. 6. Articles 102 and 103 of Labor Law. 7. ACA 29/04; ACA 65/04. 8. ACA 63/06 issue 5.
B&A NL, compl. vol.2-I, p. 28
I. Articles 01-01 Volume 2 Number 07 July 2015
c) the adaptation of the employees to the new location. It finds that it is necessary to give the employees time to adapt to the new location, so it is reasonable if the employer facilitates their living for a specified dura- tion.
d) the seniority of work. It finds that 3-4 years of seniority is long enough for the employ- ees to demand transportation.
e) the benefit of the employer from keeping the experienced employees. It finds that the employer will get a lot of benefits from keeping the experienced employees, and it is better than selecting new, unskilled em- ployees and training them.
f) the practice of other factories. It finds that when there is a change of factory location, the employer often provides transportation or money upon the agreement between the employer and the employees. For example, two companies agreed to transport their employees from its old location to the new one for employees working under an unspecified duration contract; another one agreed to provide every employee five dol- lars per month for the ones working under an unspecified duration contract instead of transportation.
g) the transportation costs burden. It finds that transportation costs should be afforda- ble for the employer, and be a balance *of considerations like the cost of+ work in the new location. 3 years and a half of payment of transportation is not reasonable for the employer, but 6 month is.
h) the right of the employer to change the lo- cation due to economic reasons is the right of each employer. Economic reasons must be taken into consideration in deciding the measures that an employer is required to take while changing of location.
Practically, the considerations above are not neces-sarily cumulative. For instance:
- the Arbitration Council recognizes that a uni-lateral modification of the work place is pos-sible regardless of the consent of the em-ployees if the employer provides transporta-tion or if he/she provides some money in order to keep the skillful employees in the factory for the first 6 months following the location change9 (considerations b) and f)).
- A 100 meters change requiring 30 minute time difference does not affect individual rights of the employees and therefore does not require common consent.10 (consideration a)); change from Building D to Building A and B11.
It is to be noted that, in addition to the considera-tions above, the employer’s decision must comply with the requirements as stated in our previous arti-cle: be reasonable and in accordance with the law.12
These changes must not be accompanied with other requirements which require employees’ consent such as: reduction of wages; change of working time from day shift to night shift or vice versa; large change in skills.13
2.1.3 Changing of working shift
Beside wages and working place, the working shift is also one of the substantial considerations for the employment contract which cannot be modified without the employee’s consent.
Although the Arbitration Council has decided and repeated that changing the shift from night to day shift and from day to night shift is too important to be decided unilaterally, it does not provide many decisions dealing with change of shift.14
And when it happens, the Arbitration Council al-lowed the employer to reschedule the shift in the company from two into three shifts, in order to guarantee the production needs of the company.15
We found another award which dealt with staff ro-tation, not in terms of shift but in terms of work.16 We think that this award could apply to change of shift as well.
In that case, the company, used to assign employ-ees, working on quality control of clothes, to go to work in quality control of ironed clothes on a rota-tional basis. Afterwards, the company changed the rotational basis to a definitive transfer of 20 em-ployees amongst the 126 to the control of ironed clothes. Practically, the employer’s decision made sense. However, the Arbitration Council has consid-ered that this new rule violated the employees’ rights, breaching equity amongst them. It would have been different should the employees have ac-cepted this assignment. It would even have been accepted should the employees have enjoyed the same level of comfort (in the new work station they do not have chairs to sit on but stand to work from 8 to 10 hours). Finally, the Arbitration Council has suspected a kind of borderline discrimination, and would have even accepted this definitive assign-ment should the employer have arranged a selec-tion through a lucky draw.
2.1.4 Change of Work
The Arbitration Council considers that the change of work is also subject to the employee’s consent. However, although it is normal that the employer can reasonably modify the employees’ work to fit with his/her needs, the work cannot be totally different.
Therefore, the Arbitration Council found that change which affects the specific professional skills of the employee requires his/her consent, i.e. when it does not involve the use of similar (and not com-plex) skills by the employee.
However, it would be possible if the employer trains his/her staff beforehand on the new skill so that the staff can perform the new job.17
Understanding the employer’s need for more flexi-bility, the Arbitration Council recognized the em-ployer’s right to transfer employees from one sec-tion to another section, for the sake of maintaining the flow of the production assembly line since this transfer is temporary and does not affect wages and positions.18
The Arbitration Council also considers that, alt-hough a transfer of employees from the finishing section to the sewing section with the company is fine, especially when the employer provides training and other benefits to the employees, it is subject to the following restrictions. The employer should not:
- select the employees on a discretionary ba-sis;
- select mature-aged employees with poor vision or arthritis to work in a skilled area (e.g. sewing section ).19
Sometimes, the Arbitration Council is required to
interpret the role of one staff member. In one case,
the employer demanded that the electricians clean
fans, a role challenged by these staff members. The
council decided that the cleaning of electronic appli-
In addition, for the other substantial considerations for the employment contract, the Arbitration Coun-cil checks whether such a change has an impact on other main working conditions. In its award 90/07, the Arbitration Council considered that the em-ployer has sufficient rights to transfer one employ-ee from one unit (dry unit) to another (laundry unit) because it did not affect wages, work loca-tion, did not require a different skill and did not affect the working shift, although it is not sufficient.
In another award, the employer transferred em-ployees, who worked on connecting electricity, welding metal, welding tables and chairs and sometimes mending the roof works, to sole-gluing work. Although this transfer did not affect wages, working hours or shifts, the fact that it requires that they give up their former skills and receive training for a new skill in gluing shoes which is a completely different work, seriously affects their employment skills.21
2.1.5 Conclusion
Since the above list appears to be limited, it im-plies, on the contrary, that employees’ consent is not required for any other changes which are only subject to the double restrictions of being reasona-ble and in compliance with the law.
However, we regret that the Arbitration Council did not try to determine a general principle than a list for handling these issues. The principle would have been that employee’s consent is requested for the most important / substantial changes and would have defined what “most important / sub-stantial changes” really means. For instance, the Arbitration Council could have decided to consider as a most important change any one which would have led the employee to decline to execute the original agreement should that modification have been a condition for the execution of the employ-ment contract.
Finally and additionally, it is important to remem-ber that the transfer of an employee may also re-sult from a Court or Arbitration Council order.
There is no legal ground for this, but the Arbitra-tion Council considers that it is likely to happen “if an employee were a dangerous type of person pos-ing a health and safety risk to other employees”. It is nevertheless to be noted that, despite many re-petitive awards22, it has very rarely been ordered. For instance, the use of improper language is inap-propriate behavior which can cause bad feelings in the workplace, but the employer is not required to dismiss the employee using improper language, only to take appropriate measures to stop these actions and create a peaceful environment in the workplace.23 However, it ordered to dismiss an em-ployee who hit employees’ heads, especially since the head is traditionally considered as an im-portant part of the human body which needs spe-cial protection against hitting or beating.24
23. ACA29/08 issue 2. 24. ACA 116/07 issue 3; see also ACA 54/08 issue 5.
B&A NL, compl. vol.2-I, p. 31
II. Recent Regulations and Awards Volume 2 Number 07 July 2015
Summary of the Updates Contained in this Newsletter Labor Law Updates
Interest Disputes – the Council reaffirmed its position that it cannot make a ruling on an interest dispute if the
union does not possess the most representative legal status.
No Attendance – Claimant – the Council will close the case when the claimant is not present during a hearing without adequate reason. Res Judicata – the Council ruled that it would not reconsider a case featuring identical parties whose dispute had been previously been ruled on by the Council. Strikes during the Arbitration Process – collective dispute orders will not be processed if a party goes on strike. Collective Disputes – the Council will bring an award only for collective disputes. Reinstatement of a Protected Employee – prior permission from a labor inspector is an important element in dismissing a protected employee from work. Economic Difficulties vs. Employees’ Wages – the Council order the employer to provide full wages and bene-fits to the employees during the suspension of their employment contracts due to economic difficulties faced by the employer as the suspensions violated the law.
Wages and Other Benefits during a Strike – an employer is not required to pay wages or bonuses to employ-ees while they are on strike, but the employer must also not recruit replacements for those who are on strike.
Payment for Piecework – under the law, employees who receive their wages based on the quantity of prod-ucts they produce (piecework) will get their wages based on the results of their work. If the amount of goods produced creates a wage that exceeds the minimum wage, the employee must receive that amount.
Pay Slips – the Council ordered the employer to provide pay slips to employees when their wage payment amount changed, such as with a salary increase or bonus. Type of Contracts vs. Consent of Parties – employees cannot force their employer to change an employment contract from a fixed duration contract into an unspecified duration contract or vice-versa. Conversion to an Unspecified Duration Contract – The Council ordered the employer to convert the fixed du-ration contracts of employees which exceeded a total length of 2 years into unspecified duration contracts. Payment for the Termination of an Unspecified Duration Contract – the employer is responsible for all pay-ments due arising out of any dismissal, but here the employees were required to return severance pay they had received prior to their contracts being converted into unspecified duration contracts. Right to Demand the Termination of Another Employee’s Employment Contract – the Council ordered the employer to remove an employee from his position as he was found to pose a danger in the company. Reinstatement of an Employee vs. Serious Misconduct – the Council allow employer to dismiss an employee who is under the influence of alcohol during working hours because it can be considered as a serious miscon-duct.
Wages for the 13th and 14th Months - The wages for 13th and 14th months can be provided as a show of appre-ciation by an employer based on the performance of the employees.
Incentive Bonus – the Council found that an incentive bonus can be provided in accordance with previous practice between the employer and employees.
Pro-rata Deduction of the Regular Attendance Bonus – the Council ordered the employer to deduct the regu-lar attendance bonus on a pro-rata basis when employees took leave with the employer’s permission. Transportation and Accommodation Allowance – the Council ordered the employer to provide 100% of the transportation and accommodation allowance to employees even when they took leave.
B&A NL, compl. vol.2-II, p. i
II. Recent Regulations 001-003 Volume 2 Number 07 July 2015
TAX REGULATIONS
Suspension of Prepayment of Tax on Profit for Listed Companies #LR1507-001 Ref: Prakas-MEF-855-dated 24 July 2015
Based on this prakas, listed companies are allowed to suspend the payment of their Prepayment of Tax on Profit during the period they are receiving tax incentives in accordance with Sub-decree No. 01 dated 08 Jan-uary 2015.
To receive this incentive, the companies must notify to the General Department of Taxation (“GDT”) via the Securities and Exchange Commission of Cambodia (“SECC”). All incentives will be ceased if there is any non-compliance found by the GDT or the SECC.
Collection of Tax on Means of Transportation and Vehicles for Year 2015 #LR1507-002 Ref: Notification-GDT-4621-dated 03 July 2015
The General Department of Taxation has informed the public that the collection of the tax on means of trans-portation and vehicles for the year 2015 will be from 10 July 2015 to 30 November 2015. The owners of all vehicles must file a tax return and pay the tax at the Department of Large Taxpayer or CANADIA Bank or ACLEDA Bank in accordance with the payment and tax filing procedures.
The following means of transportation and vehicles are exempted from this tax:
- Ambulances and fire trucks owned by state; - Means of transportation and vehicles owned by the Royal Cambodian Armed Forces and National
Police as stated in articles 11, 12 of the Sub-decree No. 77 អនក្រ.បរ dated 28 November 2003.
- Means of transportation and vehicles owned by diplomatic and foreign consulars, international organizations, or agencies of technical cooperation of other governments.
The owners of exempted vehicles must file a request and submit the documents as required to the GDT.
The control for compliance of this tax will begin on 01 January 2016. The non-compliance will be penalized
equal to 100% of the tax to be paid.
LABOR REGULATIONS
Modification to the Composition of the Members of the Labor Advisory Committee for 8th Mandate #LR1507-003 Ref: Prakas No. 303 KB/BrK-dated 17 July 2015
The composition of the Labor Advisory Committee is modified as follows:
A- Government Party:
1. H.E. ITH SAMHENG Minister of Labor President
2. H.E. PHAN PHALLA General Director of General Department of Economic and Public Financial Policy of MEF Member
3. H.E. SAMHENG BOROS Under-Secretary of State of Ministry of Social Affairs,
Veteran and Youth Rehabilitation Member
B&A NL, compl. vol.2-II, p. 14
II. Recent Regulations 003-003 Volume 2 Number 07 July 2015
4. H.E. SIM NARA General Director of General Department of Industry
of Ministry of Industry and Handicraft Member
5. H.E. KIM SIPHAT General Director of General Department of Gender
Equity and Economic Development of Ministry of
Women’s Affairs Member
6. H.E. NEB SAMOUTH General Director of General Department of Tourism
of Ministry of Tourism Member
7. H.E. PEN SOMETHEA General Director of General Department of Civil
Affairs of Ministry of Justice Member
8. H.E. CHEA VUTHY Under-Secretary of Cambodia Investment Committee
of Council for the Development of Cambodia Member
9. Mrs. TOUCH CHANKESEY Under-Secretary of General Department of Commercial
Services of Ministry of Commerce Member
10. Dr. SOK PO Vice President of Department of Hospitals of
Ministry of Health Member
11. Mr. SREY SOTHEA Under-Secretary of Ministry of Agriculture, Forestry
and Fisheries Member
12. Mr. NGOUN KONG Vice General Director of General technical Department
of Ministry of Environment Member
13. Mr. MOM NADA Vice President of Administration of Ministry
Public Works and Transport Member
14. Mr. CHIV PHALLY Vice President of Department of Anti-Human Trafficking
and Juvenile Protection of Ministry of Interior Member
B- Union Party:
1. Mr. CHOUN MOMTHOL Chief of Khmer Union Federation Member
2. Mr. CHEN NEN Chief of Union Federation of Worker’s Right Member
3. Mrs. TEP KIMVANNARY Chief of Union Federation of Cambodia Independent Member
4. Mr. HENG BUNCHHUN Chief of Union Federation of Cambodia Rice Industry Member
5. Mrs. KEN CHHENGLANG Vice Chief of Union Federation of National Garment
and Footwear Industry of Cambodia Member
6. Mr. ATH THUN Chief of Democracy Union of Cambodia Garment Member
7. Mr. VA CHANKOSAL Chief of Union Federation of Liberty of Workers Member
B&A NL, compl. vol.2-II, p. 15
II. Recent Regulations 003-003 Volume 2 Number 07 July 2015
C- Employer Party:
1. Oknha VAN SOU IENG Chairman of CAMFEBA Member
2. Oknha Dr. NANG SOTHY Member of Committee of CAMFEBA Member
3. Oknha KONG SANG 1st Vice President of GMAC Member
4. Oknha EUNG SEANGRITHY Chief of Association of Choosing Cambodia Worker
Agency Member
5. Mr. KEN LOO Secretary of GMAC Member
6. Mrs. VAN PORPHIN Member of Committee of GMAC Member
7. Mr. LOU MENG Chairman of Cambodia Hotel Association Member
Furthermore, the Ministry of Labor and Vocational Training has reserved the members as follows:
A- Government Party:
1. Mr. KIM PHALLA Vice General Director of General Department of
Economic and Public Financial Policy of MEF Member
2. Mr. OEM DARARITH Chief of Registration Department of MOC Member
3. Mr. HENG SOPHORN Vice General Director of Small and Medium-sized
Enterprise of Ministry of Industry and Handicraft Member
4. Dr. KIM SAVUON Vice-President of Department of Hospital of
Ministry of Health Member
5. Mr. OUM SAVY Vice President of Department of Personnel and
Development of Human Resource of Ministry of
Agriculture, Forestry and Fisheries Member
6. Mr. THENG CHHUNHAK Vice President Gender Equity and Economic
Development of Ministry of Women Affairs Member
7. Mr. HENG NARET Chief of Department of Environment Pollution
Control of Ministry of Environment Member
8. Mr. YAT YET Vice-President of Department of Personnel and
Human Resource of Public Work and Transport Member
9. Mr. KHEM SAMART Chief of Education Advertise and Human Resource
Development of Ministry of Social Affairs, Veteran
and Youth Rehabilitation Member
10. Mr. SAY MENGCHHEANG Vice President of Department of Anti Human Trade
and Minor protection of Ministry of Interior Member
11. Mr. TRY CHHIV Vice General Director Tourism of Ministry of Tourism Member
12. Ms. MAO PHRUM Vice General Director of General Department of Technic
of Ministry of Justice Member
B&A NL, compl. vol.2-II, p. 16
II. Recent Regulations 003-003 Volume 2 Number 07 July 2015
13. Mr. SOR SENERA Vice President of Department of Legal and Investment
Law of the Council for the Development of Cambodia Member
B- Union Party:
1. Mr. SOY SOMONN Chief of Khmer Union Federation of Construction
Workers and Forestry Member
2. Mr. CHHIN SONY Chief of Union Federation of Cambodia Work Service Member
3. Mr. KIM CHANSAMNANG Chief of Union Federation of Development
Democracy Workers Member
4. Mr. NAY SOKVEASNA Chief of Union Federation of SAMKYPHEAP Member
5. Mr. PHOUNG MONTRY Chief of Union Federation of Democracy and
Independence Member
6. Mr. LOO SAK Chief of Union Federation of National Cambodia Member
7. Mr. UN DARA Chief of Union Federation of Workers’ Spirit
Independence Member
C- Employer Party:
1. Ms. SANDRA D’AMICO Vice President of CAMFEBA Member
2. Mr. MATTHEW RENDALL Member of CAMFEBA Member
3. Mr. DAGN ENGKAKADA General Director of CAMFEBA Member
4. Mrs. CHREA DALIYA Chief Legal Department of CAMFEBA Member
5. Mr. KAING MONIKA Deputy Secretary of GMAC Member
6. Mr. KIM PICHDA Chief of Legal Department of GMAC Member
7. Mr. KHOV CHHAY Representative of GMAC Member
NATIONAL SOCIAL SECURITY FUND REGULATIONS
There are no laws and regulations to be updated.
B&A NL, compl. vol.2-II, p. 17
III. Recent Cases 001-001 Volume 2 Number 07 July 2015
ARBITRATION AWARDS
The Arbitration Council is an independent, national institution with quasi-judicial authority derived from the Labor Law of Cambodia. Established in 2003 with the support of the ministry in charge of labor, employers and unions, the Arbitration Council is empowered to assist parties in resolving collective labor disputes in Cambo-dia.
Arbitral awards spell out the basis for each decision of the Arbitration Council, whereby legal reasoning is ap-plied to resolve the issues in each case.
CASES - MARCH 2015
PROCEDURE
ARBITRATION COUNCIL
Interest Disputes #A1507-001
ACA 044/15-Ying He (Cambodia) Garment, dated March 06, 2015, Issue #04, 05 &06 ACA 055/15-Dewhirst (Cambodia), dated March 19, 2015, Issue #04 ACA 059/15- Teng Xun, dated March 17, 2015, Issue #03 ACA 051/15-Royal Cambodia Phnom Penh Golf Club, dated March 06, 2015, Issue #01 ACA 058/15-Jiun Ye Garment, dated March 23, 2015, Issue #02 &05 ACA 061/15-Hammer Stone Therapy, dated March 19, 2015, Issue #02 (Legal Ref. Art. 96 of Labor Law, Clause 9, Prakas No. 305 SKBY, dated November 22, 2001, Clause 43, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A1506-001)
Note: Rights disputes are those related to legal rights, which result from or are stated in a contract, collective bargaining agreement or provision of law. Interest disputes are those relating to a benefit in the future and not to rights resulting from or stated in a contract, collective bargaining agreement or provision of law.
A collective bargaining agreement (CBA) is a written agreement relating to provisions which are stipulated in Article 96 of the Labor Law, and it is formed between:
a. one party: an employer, group of employers or a professional organization, or numerous profes-sional organizations working as representatives of employers; and
b. another party: a trade union or numerous trade unions working as representatives of employees.
A trade union with the most representative status has the right to request an employer to negotiate on the terms of a CBA which covers all employees represented by the trade union. The employer has an obligation to negotiate on the content of the CBA with the union. In addition, by possessing the most representative status, a union may negotiate on the creation of a CBA and also bring interest disputes to the Arbitration Council for consideration. In this case, the Arbitration Council reconfirmed its previous position that it is not competent to decide on any interest dispute if the dispute is brought by a union lacking the most representative status.
B&A NL, compl. vol.2-III, p. 53
III. Recent Cases 002-004 Volume 2 Number 07 July 2015
No Attendance – Claimant #A1507-002 ACA 068/15-S L Garment Processing (Cambodia), dated March 23, 2015 (Legal Ref. Clause 21, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A1506-002)
Note: The Arbitration Council may decide to close a case if:
1. the party has been invited;
2. the party was not present in front of the Arbitration Council; and
3. the party did not provide any adequate reason for his/her absence.
Where both parties have been properly notified about the hearing schedule, but the claimant does not ap-pear at the hearing and fails to provide an adequate reason for his or her absence, the Arbitration Council may consider that such a party has given up his or her claim and therefore may close the case. Res Judicata #A1507-003 ACA 058/15-Jiun Ye Garment, dated March 23, 2015, Issue #01 &07 (Ref. Precedent #1411-002)
The Arbitration Council confirmed that when a claim/issue is brought before it which it has already issued a decision, it has the sole discretion to reject receiving the same claim/issue again, unless otherwise prescribed by applicable laws and regulations. The Council ruled that a claim/issue will be denied reconsideration if it fulfills the following 3 conditions:
- identical parties have previously participated in the claim/issue;
- identical claim/issue was brought to the Arbitration Council; and
- the Arbitration Council has already decided on the merits on the claim/issue.
In this case, the Arbitration Council confirmed that these three conditions were met and the same award could not be made again.
Strikes during the Arbitration Process #A1507-004 ACA 045/15 &057/15-Quantum Clothing (Cambodia), dated March 03, 2015 ACA 052/15-Global Fashion Garment, dated March 11, 2015 ACA 071/15-M&V Kampong Chhnang, dated March 23, 2015 ACA 072/15-Meroson (Cambodia), dated March 24, 2015 ACA 081/15-Siu Quinh Garment, dated March 30, 2015 (Legal Ref. Clause 20, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A1506-003)
During the arbitration process, the parties to the dispute must abstain from any strikes or lockouts (as de-fined in Article 318 of the Labor Law), or any other action likely to aggravate the situation. The parties must attend all meetings to which the arbitration panel summons them.
The Arbitration Council confirmed that it will not process the settlement of a collective labor dispute if during the Arbitration Council’s process a party does not respect its order and goes on strike.
B&A NL, compl. vol.2-III, p. 54
III. Recent Cases 005-006 Volume 2 Number 07 July 2015
Collective Disputes #A1507-005 ACA 049/15-Guinwin Industry (Cambodia), dated March 16, 2015 (Legal Ref. Article 302 of Labor Law) (Ref. Precedent: #A1505-003)
According to Article 302 of the Labor Law, a collective labor dispute is any dispute which:
1. Is a dispute between a number of employees and one or more employers;
2. Has the subject of the dispute related to:
a. working conditions;
b. the exercise of recognized rights by professional organizations;
c. the recognition of professional organizations within the enterprise; or
d. issues regarding relations between employers and employees; and
3. The dispute could jeopardize the effective operations of the enterprise or the social peace.
In this case, the first and second conditions were met. However, the third condition was not met because there are only two employees (a union leader and a union activist) and there were no union members due to their resignation from the company. Finally, the Arbitration Council decided not to examine the other ele-ments and decided that it was not competent to bring forward an award.
COLLECTIVE RIGHTS
PROTECTED EMPLOYEES
Reinstatement of Protected Employee #A1507-006 ACA 015/15-Seduno Cambo Knitting, dated March 03, 2015, Issue #02 (Legal Ref. Article 282, 293 of Labor Law and clause 3 and 4 of Prakas No.305, dated November 22, 2001) (Ref. Precedent: #1506-004)
Note: The Arbitration Council held that in order for an employee to be entitled to special protection under the law, the following three conditions must be fulfilled:
1. the employee is one who is under the special protection status as set forth in Prakas No. 305;
2. the dismissal of the employee falls within the period of protection; and
3. the employee must have notified the employer the protected status by any reliable means.
If the three conditions above are cumulatively fulfilled, in order to dismiss a protected employee, the employer must then obtain prior approval from a labor inspector in accordance with the applicable procedure.
The dismissal of a protected employee without prior approval from a labor inspector will be rendered null and void. Here, the Arbitration Council found the dismissed employees were entitled to special protection but had been dismissed without prior approval. The Arbitration Council ordered the employer to reinstate the dis-missed protected employees.
B&A NL, compl. vol.2-III, p. 55
III. Recent Cases 007-008 Volume 2 Number 07 July 2015
INDIVIDUAL RIGHTS
SUSPENSION OF EMPLOYMENT CONTRACTS
Non Compliance - Payment of Wages #A1507-007 ACA 066/15-M&V International Manufacturing, dated March 31, 2015 (Legal Ref. Art. 13, 71 of Labor Law) (Precedent: #A1501-004)
Note: When an enterprise faces a serious difficulty (whether economic or other) which leads to a suspension of the enterprise’s operation, the suspension must remain under the control of a labor inspector and may not exceed two months in duration. In a previous award by the Arbitration Council, the Council clarified that the last sentence of paragraph 11 of Article 71 of the Labor Law which states that “this suspension shall not ex-ceed two months and be under the control of the Labor Inspector” means that the employer has to follow the obligation of prior notification and receive permission from a labor inspector in order to have a legal work sus-pension.
In this case, the Arbitration Council found that the employer had failed to suspend an employee’s employ-ment contract in accordance with the procedures set out in the Labor Law. Therefore, the Arbitration Council decided to order the employer to provide full wages and benefits to the employee during the suspension of the employment contract.
Wages and Other Benefits during a Strike #A1507-008 ACA 050/15-Vantage River Textile, dated March 24, 2015, Issue #03 (Legal Ref. Art. 72, 320, 332 and 334 of Labor Law) (Ref. Precedent: #A1505-014)
Note: Strikes suspend employment contracts. During a strike, work performance is not provided and therefore salary is not paid.
During a strike, a minimum service must be maintained in order to protect the facility installations and equip-ment of the enterprise and also to avoid any endangerment to the life, health and safety of the persons affect-ed by the strike.
The Arbitration Council interpreted Articles 72 and 332 of the Labor Law to mean that anytime employees go on strike, even if such a strike follows the correct legal procedures, the employer is not required to pay wages or other benefits for this period.
However, during the strike, the employer is prohibited from recruiting new employees in order to replace those on strike, except for the purpose of maintaining a minimum service as provided in Articles 326 and 328 of the law. For any violation of this obligation, the employer may be required to make a payment of the wag-es and benefits to those on strike for its duration.
B&A NL, compl. vol.2-III, p. 56
III. Recent Cases 009-011 Volume 2 Number 07 July 2015
WAGES
Payment of Piecework #A1507-009 ACA 043/15-M&V International Manufacturing, dated March 10, 2015 (Legal Ref. Article 108, 137 of Labor Law and clause 1 &2 of Prakas No. 283, dated November 12, 2014) Note: For task-work or piecework, whether it is done in the workshop or at home, the wage must be calculated in a manner that permits the worker of mediocre ability working normally to earn, for the same amount of time worked, a wage at least equal to the guaranteed minimum wage as determined for a worker.
In all establishments of any nature, whether they provide vocational training, or they are of a charitable nature or liberal profession, the number of hours worked by workers of either sex cannot exceed eight hours per day, or 48 hours per week.
For the employees who receive their wage based on the quantity of the products (piecework), they shall get the wage based on the result that they have done. If the produced work exceeds the minimum wage, the em-ployees shall get the exceeded amount. If the produced work is lower than the minimum wage the employer shall increase to USD 123 per month for probationary employees and USD 128 for regular employees.
In this case, the employees demand their employer increase their payment by 28% over the old payment re-ceived for their piecework. The new amount of payment requested was based on the 28% increase in the min-imum wage given under Prakas No. 283 for employees in the textile, garment and footwear sector. The em-ployer responded that this increase was not possible for piecework workers due to the recent low orders from customers, the poor quality of the piecework, and the need to suspend the employment of some regular em-ployees due to the slowdown in orders. Ultimately, the Arbitration Council decided to reject the employees’ claim for failure to provide sufficient evidence.
Pay Slips #A1507-010 ACA 054/15-Eco-Base Factory Limited, dated March 31, 2015, Issue#04 (Legal Ref. Art 112 of Labor Law) (Ref. precedent: #A1506-008)
Note: The employer must take precise and clear measures to inform the employees about the items that make up their wages for every pay period when there is a change to the payment amount, such as a salary increase or a bonus.
In this case, the employees demanded their employer to provide them with pay slips 2 days before the date of payment. The Arbitration Council decided to reject the employees’ claim and ordered the employer to provide pay slips to employees when their wage amounts changed, such as when there is a salary increase or a bonus.
EMPLOYMENT CONTRACTS
Type of Contracts vs. Consent of Parties #A1507-011 ACA 059/15- Teng Xun, dated March 17, 2015, Issue #04 (Legal Ref. Article 65 of Labor Law and Article 311, 336, 337 and 664 of civil code) (Ref. Precedent: #A1506-006)
The Arbitration Council declared that an employment contract is regarded as fully formed and effective only if both parties agree to the same terms and conditions of the contract. The employer legally has the right to of-fer a fixed duration contract for three, four, five or six months. If a potential employee accepts such a condi-tion, a fixed duration contract is formed. Therefore, an employee has no right to force the employer to change a fixed duration contract into an unspecified duration contact or the inverse.
B&A NL, compl. vol.2-III, p. 57
III. Recent Cases 012-013 Volume 2 Number 07 July 2015
Conversion to an Unspecified Duration Contract #A1507-012 ACA 029/15-British American Tabacco (Cambodia) dated March 02, 2015, Issue #01 &02 (Legal Ref. Article 67 and 73 of Labor Law) (Ref. precedent: #A1505-010)
According to Article 67 of the Labor Law, a fixed duration contract (FDC) is a contract of fixed length which can be renewed one or more times as long as the total time period of the original term and the renewal terms does not surpass a maximum duration of two years.
The Arbitration Council provides two supporting reasons for this time limitation; firstly, the Labor Law favors unspecified duration contracts (UDC) as they provide job security as well as benefits for the employee. Sec-ondly, due to the instruction by ILO No. 166 related to the termination of employment contracts, an FDC must not have a period longer than two years. In the meantime, it is emphasized that an FDC becomes a UDC when the employer renews the contract many times for a total time period of more than two years. In this case, the FDCs of the employees were for a period of either three months, six months, one year or two-years and these contracts had all been renewed with a total length exceeding the two year maximum. The Arbitration Council ordered the employer to transfer the employment contracts of these employees into UDCs.
TERMINATION
Payment for the Termination of an Unspecified Duration Contract #A1507-013 ACA 029/15-British American Tabacco (Cambodia) dated March 02, 2015, Issue #07 ACA 035/15-PYC-Pou Yuen (Cambodia), dated March 19, 2015 (Legal Ref. Art. 74, 75, 77, 89, 91, 166 Labor Law) (Ref. Precedent: #A1505-017)
Note: Article 74 of the Labor Law provides that an unspecified duration contract can be terminated at will by one of the contracting parties. However, no termination can be taken without a valid reason relating to the employee’s attitude or behavior, based on the requirements of the enterprise’s operation.
By virtue of Article 74 of the Labor Law, the Arbitration Council held that the employer bears the burden of proof for proving that a dismissal is based on a valid reason. For failing to provide such evidence in this case, the Arbitration Council considered that the termination was taken without a valid reason, which entitles the employee to the following:
1-Compensation in lieu of prior notice: such compensation is calculated based on Article 75 of the Labor Law, which sets the minimum period for prior notice as follows: 7 days if the employee’s length of continuous service is less than 6 months;
15 days if the employee’s length of continuous service is from 6 months to 2 years;
1 month if the employee’s length of continuous service is longer than 2 years and less than 5 years;
2 months if the employee’s length of continuous service is longer than 5 years and less than 10 years;
3 months if the employee’s length of continuous service is longer than 10 years.
2-Indemnity for dismissal: the calculation of such indemnity is based on the following formula as set forth in Article 89 of the Labor Law:
7 days of wages and fringe benefits if the employee’s length of continuous service at the enter-prise is between 6 months and 12 months (if the length of continuous service is less than 6 months, the employee is not entitled to this indemnity);
if the employee has more than 12 months of service, an indemnity for dismissal will be equal to 15 days of wages and fringe benefits for each year of service. The maximum indemnity cannot
B&A NL, compl. vol.2-III, p. 58
III. Recent Cases 013-014 Volume 2 Number 07 July 2015
exceed 6 months of wages and fringe benefits.
3-Compensation in lieu of unused annual leave: all unused annual leave must be compensated at the ter-mination of the contract. However, in this case the Arbitration Council did not take into consideration the practice of the employer compensating unused annual leave in cash, as this practice is illegal.
4-Damages: according to Article 91 of the Labor Law, the termination of an unspecified duration contract without a valid reason entitles the employee to damages. The employee, however, can request for a lump sum equal to the indemnity of dismissal.
The Arbitration Council provided a reminder that in the case of termination of an unspecified duration con-tract in the absence of a valid reason, any agreement between the employer and the employee which pro-vides compensation less favorable than what is described above will be rendered null and void. This will be for the reason that the provisions of the Labor Law are for the benefit of public order. Furthermore, based on Article 119 of the Labor Law, the Arbitration Council expressly interpreted that by sign-ing an agreement whereby the employee agrees to waive his/her rights to receive other benefits and also ac-cepts a final settlement which is less than what he/she would have received according to the applicable law, this does not mean that he/she has waived partially or entirely his/her rights to other benefits. He/she is al-ways entitled to all benefits provided under the applicable law. According to the facts of the case, the employees had an unspecified duration contract. However, the employ-ees have received severance pay of 5% at the end of the contract before the transformation into an unspeci-fied duration contract. Therefore, the Arbitration Council ordered the employer to provide compensation in lieu of prior notice, indemnity for dismissal, damages, and 1 day for annual leave for 3 years of work experi-ence. Furthermore, the Arbitration Council ordered the employees to pay back the 5% severance pay to the employer.
Right to Demand the Termination of Another Employee’s Employment Contract #A1507-014 ACA 015/15-Seduno Cambo Knitting, dated March 03, 2015, Issue #01 (Legal Ref. Art. 2, 65, 280 of Labor Law, and Art. 311 and 664 of Civil Code) (Ref. Precedent: #A1505-012)
The Arbitration Council reminded the parties in this case that generally only the parties to an employment contract, the employer and the employee, have the right to terminate the contract. A third party to an em-ployment contract, including other employees, do not have the right to demand the employer to dismiss any employee. However, this is unless the third party (including other employees) can prove that the employee poses a danger to the workplace.
In this case, the employees demand their employer to dismiss one administrator of the company. The employ-ees affirmed that this administrator had persuaded the union leader to collect thumbprints in order to deprive the chief administrator of his position. Furthermore, he always interfered in the work of the union leader. The Arbitration Council found that those acts are wrongful acts which can affect the safety of the workplace by causing a strike or other type of dispute. Therefore, the Arbitration Council ordered the employer to remove the administrator from his position.
B&A NL, compl. vol.2-III, p. 59
III. Recent Cases 015-018 Volume 2 Number 07 July 2015
Reinstatement of an Employee vs. Serious Misconduct #A1507-015 ACA 055/15-Dewhirst (Cambodia), dated March 19, 2015, Issue #02 (Legal Ref. Art. 73 and 83 of Labor Law) Note: If both parties do not agree, a contract of a specified duration can be canceled before its termination date only in the event of serious misconduct or an act of God. In this case, the employees demanded their employer reinstate a mechanic and provide wages and other ben-efits to the mechanic until reinstated. However, the employer affirmed with sufficient evidence that the me-chanic was drunk during working hours, was out of control, and could not be reasoned with. Under the inter-nal regulations of the company, all employees who are under the influence of alcohol at work can be consid-ered as having committed serious misconduct. Therefore, the Arbitration Council decided to reject the em-ployees’ claim.
OTHER BENEFITS
Wages for the 13th and 14th Months #A1507-016
ACA 029/15-British American Tabacco (Cambodia) dated March 02, 2015, Issue #03, 04 &05 (Legal Ref. Art. 103 of the Labor Law) (Ref. precedent #A1504-021)
There are no applicable laws, regulations or collective bargaining agreements which require an employer to provide 13th and 14th month payments to his/her employees. These benefits can be provided based on the employee’s performance evaluation. In this case, the Arbitration Council rejected the employees’ claim which sought to require the employer to provide these benefits after their employment contracts were converted from fixed duration into unspecified duration contracts. The Arbitration Council ordered the employer to evaluate the performance of employees from 2012 until 2014 in order to decide on the provision of benefits for each of those years.
Incentive Bonus #A1507-017 ACA 059/15- Teng Xun, dated March 17, 2015, Issue #02
In this case, the employees demanded their employer continue to provide an incentive bonus which had been provided to them since the establishment of the company. They wanted their employer to maintain the previ-ous practice in the company. The Arbitration Council held that the previous practice was clear and recognized by all parties. However, the employer and employees had agreed in 2014 to bring an end to this practice. Therefore, the Arbitration Council decided to reject the employees’ claim.
Pro-rata Deduction of the Regular Attendance Bonus #A1507-018 ACA 044/15-Ying He (Cambodia) Garment, dated March 06, 2015, Issue #10 ACA 063/15-Man Ou Garment, dated March 31, 2015, Issue #01 (Legal Ref. Art. 71, 72 of Labor Law and Clause 2 of Notification No. 230/12 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A1506-012)
The Arbitration Council reminded the parties that an employee is entitled to 100% of the regular attendance bonus if he/she takes leave prescribed under the Labor Law; this includes annual leave, special leave, materni-ty leave, public holidays and weekly days off.
The Arbitration Council held that if an employee takes leave other than the leave mentioned above, but he/she has obtained prior approval from his/her employer, the regular attendance bonus will be deducted on a pro-rata basis.
B&A NL, compl. vol.2-III, p. 60
III. Recent Cases 019-019 Volume 2 Number 07 July 2015
Transportation and Accommodation Allowance #A1507-019 ACA 063/15-Man Ou Garment, dated March 30, 2015, Issue #05 (Legal Ref. Notification No. 230 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A1504-026)
According to Notification No. 230 KB/SCN, a transportation and accommodation allowance can be provided to employees at a rate of USD 7 per month, which is applicable only to employees of the textile, garment and footwear sector. Alternatively, the employer can provide actual means of transportation and accommodation directly to the employees instead of paying the allowance. An employer can obey the exact terms of this noti-fication or provide more favorable financial support than what is stipulated in the law, but he/she can never provide less than what is legally required.
In this case, the employees demanded their employer not reduce the transportation and accommodation al-lowance on a pro-rata basis when an employee was absent. The Arbitration Council found that this practice by the employer did not comply with the spirit of the Notification No. 230 KB/SCN. Therefore, the Arbitration Council ordered the employer to provide 100% of the transportation and accommodation allowance to em-ployees even when they took leave.
Head of Labor Practice Group: Dr. Antoine Fontaine, PhD, Member of Paris Bar Mr. Oem Sam Ann, LLM Ms. Ly Mengmeyly, LLM Mr. Jay Galik, JD, Member of New York Bar
Tax Practice Group
Head of Tax Practice Group: Dr. Antoine Fontaine, PhD, Member of Paris Bar Mr. Vann Sinat, Tax Manager Ms. Ham Sophorn, LLM Ms. Vann Amporpech, LLB Ms. Phlong Sowathbannha, LLB Mr. Soeung Sovann, LLB
Contributions and correspondence concerning the various sections of the B&A Newsletter - Compliance should be sent to Dr. Antoine Fontaine, email: [email protected]. Subscription to the B&A Newsletter - Compliance should be sent to: [email protected]. Disclaimer: The B&A Newsletter - Compliance is pub-lished for the purpose of notifying readers of changes in the labor and tax regulations. This is not an aca-demic text, nor is it intended to be relied upon while making legal decisions. Bun & Associates accepts no responsibility for use of this information.
