PAYMENT OF SENIORITY INDEMNITY

Transcription

1 JBL newsletter 12 Nov. 2018_attachment 1 PAYMENT OF SENIORITY INDEMNITY BY HIS EXCELLENCY HENG SOUR Ministry of Labour and Vocational Training dated 23 September 2018 unofficial translation by JBL Mekong Co., Ltd. 1

2 CONTENT 1. Coverage to the Implementation of Seniority Indemnity A. Apply to enterprises, establishments under provisions of the Labour Law B. Apply to Undetermined Duration Contract (UDC) 2. Amendment that Requires Payment of Seniority Indemnity A. Grounds to the Amendment B. Requirement of Payment of Seniority Indemnity existed before Content of the Prakas No. 443 on Payment of Seniority Indemnity A. Payment of Seniority Indemnity counting from 2019 B. Back Pay of Seniority Indemnity existed before 2019 unofficial translation by JBL Mekong Co., Ltd. 2

3 1. Coverage of the Implementation of Seniority Indemnity Article 1 of Prakas No. 443 A. Cover enterprises, establishments under the provisions of the Labour Law Cover all enterprises, establishments and those who are covered by the provisions of the Labour Law. B. Cover Undetermined Duration Contract (UDC) The seniority indemnity as stipulated in new Article 89 of the Labour Law shall apply to only workers/employees who have undetermined duration contract. unofficial translation by JBL Mekong Co., Ltd. 3

4 1. Coverage of the Implementation of Seniority Indemnity (Continue) Not Applicable for Fixed Duration Contract (FDC) Duration of Fixed Duration Contract Article 67-2 of the Labour Law provides that: The labor contract signed with consent for a specific duration cannot be for a period longer than two years. This contract can be renewed one or more times, as long as this renewal does not surpass the maximum duration of two years. Therefore, the maximum duration of the FDC is 4 years. For Example: - In case the 1 st contract has a duration of 2 years, this contract can be renewed one or more times but this renewal shall not surpass the maximum duration of two years. Therefore, the total duration of this contract is 4 years. - In case the 1 st Fixed Duration Contract (FDC) has a duration of 1 year, this contract can be renewed one or more times but the total duration of this renewal does not surpass the maximum duration of two years. Therefore, the total duration is 3 years. - In case the 1 st Fixed Duration Contract (FDC) has a duration of 6 months, this contract can be renewed one or more times but the total duration of this renewal does not surpass the maximum duration of two years. Therefore, the total duration is 2 years and 6 months. Payment of Severance Pay shall be applied in accordance with the Article 73 of the Labour Law Severance pay for termination of Fixed Duration Contract (FDC) shall be made following the rules of Article 73 of the Labour Law: - The amount of severance pay shall be determined in the collective bargaining agreement; or - If nothing set forth in such agreement, the severance pay shall be at least equal to 5% of wages paid during the length of the contract. unofficial translation by JBL Mekong Co., Ltd. 4

5 2. Amendment that requires Payment of Seniority Indemnity A. Grounds for the Amendment For Workers/Employees For Employees Prevent risk for workers/employees in case the factory is closed by the boss who runs away with no responsibility. Permit workers /employees to receive payment of seniority indemnity once every 6 months. Provide better protection for workers/employees in labour relations by permitting workers/employees to receive this indemnity permanently in a work life without limiting the maximum length. Protect better interest of workers than previous rules because this amendment will favor the selection of an undetermined duration contract (UDC) other than fixed duration contract (FDC). Provide more flexibility for workers/employees to choose a new work based on location and type of factory. To avoid the maintaining of severance pay calculated based on annual seniority which may cause much amount upon each time of the termination of the contract. This is just a new formula to ease the responsibility of employers who shall be responsible to his/her workers as set forth in the provisions of the Labour Law Employers concern about the payment of seniority indemnity at the same time. Should it provides possibility to employers to provide installments of past seniority indemnity in semester. It could be an additional burden for employers since in previous Article 89 no matter how long the workers/employees has worked the maximum duration of the indemnity for the dismissal or termination of the contract is 12 years only. unofficial translation by JBL Mekong Co., Ltd. 5

6 2. Amendment that requires Payment of Seniority Indemnity (Continue) B. Requirement of Payment of Seniority Indemnity before 2019 Article 2 of Law on the Amendment to the Labour Law (2018) The calculation and payment of seniority indemnity of the workers/employees who have fulfilled their duties before this law comes into force shall be determined by the Prakas of the Minister in charge of Labour. Purpose: The provision of this Article 2 is designed in the purpose of protecting the interest of the workers/employees which has been provided by the Labour Law If there is no such determination, the workers/employees who have seniority before 2019 especially the workers/employees who have many years of seniority will lose the interest due to this amendment to this Labour Law. unofficial translation by JBL Mekong Co., Ltd. 6

7 3. Content of Prakas No. 443 on Payment of Seniority Indemnity A. Payment of Seniority Indemnity counting from 2019 (Article 2 of the Prakas) Commencement Date from 2019 onward Payment Not Applicable Equal to wage and benefits of 15 days per year Provide 2 times per year for the workers who are performing the service: - 7,5 days in June each year; and - 7,5 days in December each year. For the first year of work performance, the workers/employees who have seniority of work from 1 month up to 6 months shall be entitled to receive 7,5 days of indemnity Not limiting the maximum amount (provided full of work life) Workers/employees who have committed serious misconduct (Article 83 of the Labour Law); and Workers who resign at his/her own will unofficial translation by JBL Mekong Co., Ltd. 7

8 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) For workers/employees who have performed the service within the enterprises and establishments Textile, Garment, and Footwear Sectors Employers shall back pay 30 (thirty) days of the total seniority indemnity once every 1 (one) year: - 15 (fifteen) days in June of each year; and - 15 (fifteen) days in December of each year. Other Sectors besides Textile, Garment, and Footwear Sectors Employer shall back pay 15 (fifteen) days of the total seniority indemnity once every 1 (one) year: - 7,5 (seven and half) days in June each year; and - 7,5 (seven and half) days in December each year. The maximum number for calculation of back pay of seniority indemnity - Maximum seniority of work counting from 2008 to Maximum 6 months of the total basic wage in average each year. - Maximum 156 days. unofficial translation by JBL Mekong Co., Ltd. 8

9 3. Content of Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) Note: Basis for Calculation of Seniority Indemnity For Back Pay of Seniority Indemnity before 2019: Basic Wage Basic wage refers to the wage a worker/employee who has been paid by performing his/her service that has not been taxed. It is popularly called basic wage. For Seniority Indemnity counting from 2019: Wages and Benefits Basic wage; Overtime Pay (if any); and Bonuses such as attendance bonus or seniority bonus (if any). Calculation of Seniority of Workers/Employees for Payment of Seniority Indemnity Seniority of workers/employees for payment of seniority is counting from the time of execution to the labor contract to be a regular worker without including the probation period. unofficial translation by JBL Mekong Co., Ltd. 9

10 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) For the first year of work which is the foundation for back pay of seniority indemnity Seniority of Work from 1 month to 6 months is entitled to seniority indemnity of 7,5 days Seniority of Work exceeding 6 months is entitled to seniority indemnity of 15 days Shall not be entitled to back pay of the remaining seniority indemnity in case: Workers/employees who commit a serious misconduct (Article 83 of the Labour Law); and Workers/employees who resign at his/her own will. unofficial translation by JBL Mekong Co., Ltd. 10

11 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) Table for Number of Days Each Year Seniority of Work Number of Days for Calculation of Back Pay of Seniority Indemnity 11 years up years years years years years years years years years year unofficial translation by JBL Mekong Co., Ltd. 11

12 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) Example: In an enterprise and establishment has 110 staffs with different commencement dates which: Type Number of Staffs (person) Commencement Dates Seniority of Work before 2019 (By the end of December 2018) Total of Seniority Indemnity (15 days/year) years *156 days (15 x 10) years 105 days (15 x 7) years 45 days (15 x 3) year 15 days (15 x 1) year 0 *For Type 1 Staffs who have 11 years of seniority of work is entitled to the total seniority indemnity of 156 days (26 working days per month x 6 months is the maximum number) not 165 days. In order to obtain the number of working days per month shall take 52 which is the number of weeks per year multiple 6 which is the number of working days in a week (therefore the number of working days per year equal to 52 x 6 = 312). Then take 312 which is the number of working days per year divide 12 which is the number of months per year. Therefore, the number of working 12 days per month equal to = 26. unofficial translation by JBL Mekong Co., Ltd.

13 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) Example: (Continue) Based on the calculation, from 2019 the 110 staffs will be entitled to the following determination: Staff Group For Textile, Garment, and Footwear Sectors (In 1 year shall back pay 30 days of the total seniority indemnity) June December June December June December June December June December Type 1 (156 days) Type 2 (105 days) Type 3 (45 days) Type 4 (15 days) Type 5 (0 day) 7, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,5 + 0 unofficial translation by JBL Mekong Co., Ltd. 13

14 3. Content of the Prakas No. 443 on Payment of Seniority Indemnity (Continue) B. The Back Pay of Seniority Indemnity existed before 2019 (Article 3 of the Prakas) (Continue) Example: (Continue) Based on the calculation, from 2019 the 110 staffs will be entitled to the following determination: Staff Group For other Sectors besides Textile, Garment, and Footwear Sectors (In 1 year shall back pay 15 days of the total seniority indemnity) June December June December June December June December June December Type 1 (156 days) 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 Type 2 (105 day) 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 Type 3 (45 days) 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7,5 + 7,5 7, , , ,5 + 0 Type 4 (15 days) 7,5 + 7,5 7,5 + 7,5 7, , , , , , , ,5 + 0 Type 5 (0 day) 7, , , , , , , , , ,5 + 0 unofficial translation by JBL Mekong Co., Ltd. 14

15 THANK YOU! Contacts for More Information: Ministry of Labour and Vocational Training Building No. 3, Russian Federation Boulevard, Sangkat Toek Laak, Khan Toul Kouk, Phnom Penh unofficial translation by JBL Mekong Co., Ltd. 15