COMPLIANCE LABOR & TAX

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1 Newsletter Compliance, Labor & Tax Our Publications on COMPLIANCE LABOR & TAX Volume 1 N 06 June 2014 Editor: Bun & Associates Timing - Do not miss the Compliance Requirements for July July 2014 Upcoming Events 2 CAMFEBA 2 Better Factories Cambodia 2 ILO I. Articles 23 Salary on Tax Implications BY MR. VANN SINAT, MANAGER OF THE TAX DEPARTMENT, BUN & ASSOCIATES III. Recent Cases Labor Law 38 A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A II. Recent Regulations Summary Page 18 Public Holiday to Respect the Spirit and Royal Ash Procession of the Royal Remains of His Majesty BY DR. ANTOINE FONTAINE, PARTNER IN CHARGE OF THE LABOR, TAX AND INSURANCE DEPARTMENTS, BUN & ASSOCIATES

2 Timing Volume 1 Number 06 June 2014 JULY July Filing with the General Department of Taxation (GDT) You must file the following tax returns for your transactions: Tax on Salary ( TOS ) Tax on Fringe Benefit ( TOFB ) Withholding Tax ( WHT ) The company will be required to submit a monthly tax with the GDT or a local tax branch by the specified deadline. For failure to submit or for a late submission, you shall be subject to penalties. 20 July Filing with the GDT You must file the following tax returns for your transactions: Value Added Tax ( VAT ) The company will be required to submit a monthly tax payment with the GDT or a local tax branch by the specified deadline. For failure to submit or a late submission, you shall be subject to penalties. Any Time During The Month Obligations with the Ministry of Labor and Vocational Training (MLVT) Registration of internal regulations (in cases where the company has 8 (eight) or more employees); Election of an employees' representative (in cases where the company has 8 (eight) or more employees); Hold an employment book and card for Cambodian B&A NL, compl. vol.1, p. 1 employees; Quota for using foreign employees (in cases where the company hires a foreign employee); Health check up; Work permit (where the company hires a foreign employee); and Notification (in cases where the company changes its address, production structure, owner, or closes its business). The labor inspector may do an inspection at any time on the site of the company to review compliance with these obligations. In cases where non-compliance is found, the company might be subject to a warning, fine and/or another penalty in accordance with the law. Obligations with the National Social Security Fund (NSSF) Monthly contribution returns; and Employers hiring 8 (eight) or more employees shall register with the NSSF and pay monthly contributions to it. If Required Obligations with the Ministry of Interior (MoI) Business visa for expatriate staff (register with the MOI) Appointing an External Auditor If the legal entities in Cambodia meet two (2) of the criteria below, the companies are required to be audited by an external auditor registered with the Kampuchea Institute of Certified Public Accountants and Auditors (KICPAA). Annual turnover of 3,000,000,000 Riels (approximately US$750,000) and above; and Total assets of 2,000,000,000 Riels (approximately US$500,000) and above, based on the average value of assets held during the year subject to audit requirements. Note: It is a mandatory requirement for public limited companies.

3 Upcoming Events Volume 1 Number 06 June 2014 CAMFEBA Trainings AOTS training program- There are around six courses per year that members can join under a full scholarship from the AOTS. These courses include human resource management and industrial relations; trainers training program on management; occupational safety and health management; and improvements to the working environment etc. HR club meetings- held twice a month. Free of charge to attend for HR- related members. Camfeba also runs a new training platform called One Full Year Staff Development Package. This package is divided into three categories: direct, indirect and non-members. The price for the package is at a reduced rate for the first 30 registered persons and then there is a full price fee. The price covers the costs for staff to attend 12 courses per year and to be exposed to local trainers for public training courses only. A registration form needs to be completed in order to sign up for the package. Contact details In order to register to attend the upcoming public training schemes, s can be sent to: training@camfeba.com or training_manager@camfeba.com. Better Factories Cambodia (BFC) Training BFC provides daily updates on its website and you can sign up for an subscription of the updates on the website also. Video training program- There are currently six episodes of the At the Factory Gates Soap Opera with accompanied reading materials. The employers can decide themselves which episodes to buy, each of which costs 100$, or if all six videos are bought, the total cost is 500$. There is additionally an advisory service by BFC, which is for a duration of one year and the price varies depending on the number of employees. The general training by BFC includes the following units- labor law; child labor training and senior management training etc. The training units range from 1 to 3 days and the price ranges from 75 to 125$ for each unit. There is a discount rate of 10% for those who gather participants in one training course. Also there is a human resources management system course, which lasts 12 days and is 3000$ per factory. Contact details s can be sent to Mr Dara Nov at dara@ilo.org or to Ms Chanthy Leang at chanthy@ilo.org. ILO Publication of The Informal Economy And Decent Work: A Policy Resource Guide Supporting Transitions to Formality was made on 1 March This is a useful guide which we would recommend reading. Government Private Sector Forum (G-PSF) The forum which is held twice a year, is chaired by the Prime Minister and attended by eight working groups. It is broadcast on the radio and television. Contact details In order to submit an issue to the co-chairs or to the G-PSF Secretariat, s can be sent to Mr Lay Sok Heng, Administrative Officer at info@gmaccambodia.org. Also you can call Tang Monika on B&A NL, compl. vol.1, p. 2

4 I. Articles Volume 1 Number 06 June 2014 TAX ON SALARY IMPLICATIONS #D BY MR. VANN Sinat installments made, which shall be added to the monthly taxable salary paid. They shall then be deducted from each salary payment for the month in which any repayments are made by the employees. Who should really be concerned when Tax on Salary ( TOS ) fails to levy for tax purposes? Obviously, TOS is similar to Withholding Tax ( WHT ) whereby there is a withholding agent and the tax amount will be collected through the withholding mechanism before the salary or payment is made. In accordance with the Law on Taxation ( LOT ), TOS is not a tax burden belonging to the employer, but in the case of negligence, even if it is unintentional, in order to withhold and pay this tax to the tax authority, the employer shall be further responsible for the tax to be paid and it will become a nondeductible expense for tax purpose. Therefore, the employer must pay a considerable amount of attention to his/her obligations so as to avoid any tax consequences at a later time. General Tax on Salary Implications As stated in the LOT, a resident person shall be liable to pay TOS on the salary received from Cambodian and foreign sources, whereas a non-resident person will be liable to pay TOS on the salary received from a Cambodian source only. In this regards, in relation to the TOS calculation, there are two significant things to be determined, which refers to the taxable salary and the taxable rate. Determination of the Taxable Salary In accordance with law, a taxable salary or monthly tax base does not refer only to a fixed payment in cash or in kind agreed on by the employer and the employee. Instead, it refers to all payments which will include but not be limited to the salary, remunerations, wages, bonuses, overtime paid, compensation, advance money and loans or B&A NL, compl. vol.1-i, p. 23 In addition, further to the above determination, the dependent children and spouse shall be allowed by tax provisions, to claim a rebate from the taxable salary at an amount of 75,000 (seventy five thousand) Riels each per month, before going through the tax calculation. However, in the case where both parents have a taxable salary at the same time, the deduction for the dependent child will be limited to the taxable salary of one parent only. In addition, this provision will be applicable solely for an employee who is a resident person. Determination of the Taxable Rate Under the LOT, the TOS rate shall be applied in accordance with the residency status of the employee. In respect to this, the taxable rate, which is a progressive rate that ranges from 0% to a maximum of 20%, will be imposed on an employee who is considered as a resident person in the Kingdom of Cambodia. In contrast, an employee who is considered as a non-resident person will be subjected to the TOS flat rate of 20%. Residency Status In accordance with the former and current practice, most taxpayers are always confused and believe that in order to be treated as a resident person by the tax authority, there is only one criteria which shall be taken into a consideration. This refers to cases in which a foreign physical person has a presence in the Kingdom of Cambodia for more than 182 days. However, in accordance with Article 42 para. 1 of the Law on Taxation ( LOT ), the term resident when used for an employee, taxpayer, or physical person, refers to an individual who has his/her residence in or his/her principal place of abode in the Kingdom of Cambodia, or if he/she has been present in the

5 I. Articles Volume 1 Number 06 June 2014 Kingdom of Cambodia for more than 182 days in any period of twelve months ending in the current tax year. In addition, according to Section 1.3 para. 1 of Prakas No on the Salary Tax dated 31 December 2003 ( Section 1.3 para. 1 ), it was further reiterated that the criteria for a residence in Cambodia includes the factors set out below and any physical person who satisfies any one of these three criteria shall be considered as a resident in the Kingdom of Cambodia. mitigate the TOS implications. Please note that late of payment of TOS shall be strictly penalized at the rate of 10%, 25%, or 40% based on the seriousness of the negligence, and plus 2% per month. In the worst case, the employer might be subject to a criminal charge. However, under current practice, it is a very rare for a criminal charge to be imposed. The first criterion is determined by a physical person s residence. A physical person has his/her residence located or situated in the Kingdom of Cambodia if he owns, rents, leases, or has available for use, a house, apartment, dormitory, etc. in which he usually stays or occupies; The second criterion is determined by a physical person s principal place of abode in the Kingdom of Cambodia, which is a factual assessment based on factors such as the physical person s centre of economic interest, the amount of time and the nature of the time spent there, where that person s family resides, where the physical person s bank accounts are held, and where his/ her main social activities take place; The third criterion is the presence of the physical person in the Kingdom of Cambodia for more than 182 days during one or more separate periods of time within any period of 12 months ending in the current tax year. In determining the number of days spent in the Kingdom of Cambodia, presence within any part of a day shall be counted as a whole day. Conclusion This makes reference to any foreign employees coming to perform their employment activity in the Kingdom of Cambodia for a resident employer in Cambodia. Referring to the TOS purpose, the taxpayer (employer) is recommended to study the residency status for such an employee, to avoid or B&A NL, compl. vol.1-i, p. 24

6 II. Recent Regulations and Awards Volume 1 Number 06 June 2014 Summary of the Updates Contained in This Newsletter Labor Law Updates Representativeness of trade unions- the Council reaffirmed its position that it cannot make a ruling on an interests dispute if the union does not possess the most representative legal status Strikes during the arbitration process- case settlements will not be processed by the council if a party goes on strike during the arbitration process Burden of proof- the Council held that as the disputing parties did not provide any sufficient evidence to support their arguments that their resignations had been characterized by violence, they demonstrated unwillingness to solve the case at hand. Therefore the case was rejected Res judicata- the Council ruled that a case would not be reconsidered if identical parties to the previous case brought the same issue forward to be ruled on by the Council and if the Council had already made a judgment on it Serious misconduct- an award was granted which held that if employees on strike did not return to work within 48 hours, they would be dismissed for serious misconduct. However authorization from the labor inspector would still be required to dismiss a shop steward Representativeness of employees- the Council confirmed that a person shall not be considered as a representative of an employee unless a delegation letter is provided. In this case, the Council held that the union leader was the only plaintiff present in the case as a representative, despite the fact the leader had no confirmation letter or delegation letter, authorizing it to undertake the role of a representative Jurisdiction over a pending case- the Arbitration Council has no jurisdiction to rule over a case currently being heard in another Cambodian court Reinstatement of collective employees- in this case, the Council ordered the reinstatement of the protected employees due to the employer having not obtained authorization from a labor inspector Protection for those in a union which exceeds 200 members- it was held that special protection cannot be given to a member of a union with more than 200 members, if the union didn t notify the employer about the total number of union members and the names of those with special protection Discrimination of trade unions- employers are forbidden from taking into consideration union affiliation when making decisions, such as that of employees dismissal. In this case, the Council held that as the employer had not respected the company s internal rules, the dismissed employees had to be reinstated Contributions to trade unions vs. public order- the Arbitration Council held that the employer was wrong to have refused to repay the employees for the money in which the employer had deducted from their wages without their consent, to pay for union contributions Right to take a rest- in this case, the Council held that the employer was not obliged to provide a 15 minute break to employees after each two hour period of working standing up Termination of a fixed duration contract- the Council ruled that as the employer had not responded to the notice that the fixed duration contract was to expire, the contract in question should be considered as an unfixed duration contract Demanding the cancellation of other employment contracts- only under certain conditions can an employee or a third party demand their employer to terminate another person s employment contract Fixed duration contracts- it was held that an employee cannot demand an employer to enter into a fixed duration contract for a one year period Wages and benefits during a strike- the Council interpreted provisions of the Labor Law to rule that an employer is not required to pay wages and benefits to employees who are on strike Minimum wage determination- the Council reaffirmed that the minimum wage for those working in the garment and B&A NL, compl. vol.1-ii, p. 1

7 II. Recent Regulations and Awards Volume 1 Number 06 June 2014 footwear industries had increased from 80 to 100 USD (US dollars) Wage and other benefits- in response to complaints over the amount of benefits provided, the Council held that it could not decide on a case filed by a union without the most representative status Wage for the 13 th month- it was previously determined that there are no laws which require an employer to fulfill an obligation to provide a wage for the 13 th month to their employees Health allowance- as a health allowance is included in employees wages, an employer is not required to provide an additional allowance outside of this Transport and accommodation allowance- it was affirmed that an employer can either provide a transport and accommodation allowance to his/her employees working within the textile, garment and footwear industries, or it can actually provide them with transport and accommodation Skills bonuses- the Council ruled that the granting of skills bonuses is at the discretion of the employer, so therefore if employees do not meet the set requirements of the employer, then they are not entitled to obtain the additional bonuses Special leave- the Arbitration Council held that the employer could require his/her employees to make up for time lost during special leave, if the employees had none of their annual leave holiday remaining Indemnity for maternity leave- the Council determined that the employer has to provide the entire total amount of the maternity pay given to the female employees before their maternity leave begins Compensation for unused annual leave- it was decided that the employer did not need to compensate for the unused annual leave in cash to the employees, while the contract remained in force Food allowance- it was determined that working on a public holiday shall not constitute overtime work, so therefore the employee shall not be entitled to a food allowance. However working on a Sunday does constitute overtime work, therefore a food allowance should be granted. In this case, the Council also confirmed that an overtime meal allowance should be given to employees once a week in order to sustain their health Use of a toilet card- the Council held that the employer should stop allowing the use of toilet cards, as they had the same effect as limiting the frequency for which employees could go to the toilet Work suspension for attending a court hearing- in this case, the Council ruled that the employer had to pay the employee 100% of the wage amount, as the employee had been attending the final judgment in a case of the Council at the time of absence, which does not in itself constitute an undetermined suspension Employees uniforms- the Council stressed the obligation of an employer to provide 2 sets of uniforms per year to each employee Health check- it was reaffirmed that there are no laws which require an employer to provide a health check to an employee, one year after seniority Public holiday-a new public holiday was announced in order to mark the Participation in Paying Respect to the Spirit and Ash Processing of the King Father Norodom Sihanouk B&A NL, compl. vol.1-ii, p. 2

8 III. Recent Regulations Volume 1 Number 06 June 2014 Procedure Public Holiday to Respect the Spirit and Royal Ash Procession of the Royal Remains of His Majesty #LR Ref: Notification-SChN-MLVT-193-dated 24 June 2014 Within notification No: 193 KB/SCN dated 24 June 2014 and issued by the Ministry of Labor and Vocational Training concerning the Participation in Paying Respect to the Spirit and Ash Processing of the King Father Norodom Sihanouk, Great King, Father of Independence, Territorial Integrity and Khmer National Unity and in accordance with the circular of the Royal Government of Cambodia No.05 SRN dated 12 June 2014, the Ministry has declared 11 July 2014 to be regarded as a day of paid holiday for all workers to participate in the ceremony and to show their respect to the Spirit and Royal Ash Procession of the Royal Remains of His Majesty. Therefore the Ministry of Labor and Vocational Training wishes to provide this information to owners and directors of enterprises/establishments and to their workers. The concerned parties as mentioned above, should acknowledge and implement this notification effectively. B&A NL, compl. vol.1-iii, p. 18

9 III. Recent Cases Volume 1 Number 06 June 2014 ARBITRATION AWARDS The Arbitration Council (AC) 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 Cambodia. Arbitral awards spell out the basis for each decision of the Arbitration Council, whereby legal reasoning is applied to resolve the issues in each case. Procedure Interests Disputes Representativeness of Trade Unions #A ACA 275/13-Calacam Investment, dated February 06, 2014, Issue #5 ACA 02/13- G4S Security Service, dated February 08, 2014, Issue #1 (Legal Ref. Art. 96 of the Labor Law, Clause 9, Prakas No. 305 SKBY, dated November 22, 2001, Clause 43, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A ) Note: Rights disputes are those relating to legal rights, which result from or are stated in contracts, collective bargaining agreements (CBA) or provisions of law. Interests disputes are those relating to a benefit in the future and not to rights resulting from contracts, collective bargaining agreements or provisions of law. A collective bargaining agreement is a written agreement relating to provisions which are stipulated in Article 96 of the Labor Law, and it is formed between: one party: an employer, group of employers or a professional organization or numerous professional organizations working as representatives of employers; and another party: a trade union or numerous trade unions working as representatives of employees. A trade union which has the most representative status has the right to request an employer to negotiate on the terms of the collective bargaining agreement, which is implemented by all employees of whom the trade union represents. The employer has an obligation to negotiate on the content of the collective bargaining agreement with the union. In addition, by possessing the most representative status, this allows a union to negotiate on the creation of a collective bargaining agreement in the establishment and also bring interests disputes to the Arbitration Council for its consideration. In this case, the Council reconfirmed its previous position that it is not competent to decide on any interests disputes, if they are brought by a union without the most representative legal status. Strikes during the Arbitration Process #A ACA 19/14-Dongdu Textile, dated February 06, 2014 ACA 34/14-Harta Packaging Industry, dated February 21, 2014 (Legal Ref. Clause 20, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A ) During the arbitration process, the parties to the dispute must abstain from any strikes or lockouts (as defined in Article 318 of the Labor Law), or any other action likely to aggravate the situation. The parties must attend B&A NL, compl. vol.1-iii, p. 38

10 III. Recent Cases Volume 1 Number 06 June 2014 all meetings to which the arbitration panel summons them to. 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 goes on strike and does not respect its order. Burden of Proof #A ACA 02/13- G4S Security Service, dated February 08, 2014, Issue #1 ACA 11/14 Southland (Cambodia), dated February 13, 2014, Issue #1 ACA 277/13-Woorie Garment, dated February 20, 2014, Issue #4 and #8 (Ref. Precedent: #A , #A ) The Arbitration Council gave a reminder that the plaintiff has an obligation to provide evidence to support his/her complaint, otherwise the Arbitration Council will reject it. In this case, the Council rejected the decision on the reclamation of employees relating to resignation characterized by violence, as the plaintiffs had not provided any evidence to prove the violence. Res Judicata #A ACA 06/14- Sun Well Shoes, dated February 28, 2014, Issue #7 (Ref. Precedent: #A ) The Arbitration Council confirmed that when the same claim/issue is brought by parties to the Council, which has already issued a decision on such a dispute, the Council has the sole discretion to reject receiving the same claim/issue, unless otherwise prescribed by applicable laws and regulations. The Council ruled that a claim/issue will be denied reconsideration if it fulfills the 3 (three) conditions set out as follows: identical parties have previously participated in such a claim/issue; identical claim/issue was brought to the Arbitration Council; and the Arbitration Council has already decided on the merits of such a claim/issue. In this case, the Arbitration Council confirmed that the three conditions were applicable and because of this, the same award could not be made again. Representativeness of Employees in Front of the Arbitration Council #A ACA 21/14 Victco Hangbag, dated February 24, 2014 (Legal Ref. Art. 268 and 302 of the Labor Law, Clause 19 &32, Prakas No 99 SKBY, dated April 21, 2004 (Ref. precedent #A ) Note: A party may appear before the arbitration panel in person, and be represented by a lawyer who is a member of the Bar Association of the Kingdom of Cambodia, or be represented by any other person expressly authorized in writing by that party. This written note should be clear on the name of the representative and who delegated rights to the representative. If the employee does not provide a delegation letter to the Arbitration Council, the representative shall not be considered as a real representative of the employees. The Council confirmed this through an award only related to collective labor disputes. B&A NL, compl. vol.1-iii, p. 39

11 III. Recent Cases Volume 1 Number 06 June 2014 In order for organization to enjoy the rights and benefits recognized by this law, the founders of professional organizations must file their statutes and list of names of those responsible for the management and administration with the ministry in charge of labor. All requests for registration shall be made with a statement of the constitution of the organization. It means that upon receiving a confirmation letter, the union leader could become a representative of the employees who belong to that specific union. If the union has not yet received a confirmation letter, they could be a representative of the employees under the condition that the latter provides a delegation letter. In this case, the Arbitration Council confirmed that the union leader had not yet received a confirmation letter from the MLVT or a delegation letter from the employees belonging to the union, but the leader was the only plaintiff presenting the case to the others. Arbitration Council s Jurisdiction vs. Pending Case in a Cambodian Court #A ACA 14/14 Manhattan Textile and Garment Corp, dated February 18, 2014, Issue #2 (Legal Ref. Art.302 of the Labor Law) (Ref. Precedent: # ) The Arbitration Council has no jurisdiction over a dispute which is pending in a Cambodian court. In this specific case, the subject of the complaint was the same as the complaint proceeding in the court of Cambodia; therefore, the Arbitration Council decided to reject the claim based on the grounds that the Arbitration Council had no jurisdiction over this case. Strike Serious Misconduct for Not Respecting the Court s Decision #A ACA 07/14-Alim (Cambodia), dated February (Legal Ref. Art. 26-2, 74, 293, 295 of the Labor Law, Court s decision No 22 F, order to all strike employees to return back to work in 48 hours, dated November ) (Ref. ACA-64/05 Issue#1, ACA-57/07 Issue #1 and ACA-17 Issue #1) Note: An employer can immediately dismiss an employee who has committed serious misconduct. For a dismissal to be made, a shop steward (protected employee) should have authority from a labor inspector. A Cambodian court s decision No 22 F, dated November 14, 2013 required all employees on strike to return back to work in 48 hours, after this decision was made effective. The Arbitration Council reaffirmed the court s decision that if employees did not return back to work in 48 hours, it could be considered as serious misconduct when they did not provide a valid reason. The Council held that an employer couldn t dismiss a stop steward without permission from a labor inspector. Collective Rights Reinstatement of Protected Employees #A ACA 277/13-Woorie Garment, dated February , Issue #4 and #8 (Ref. Precedent: # )) Note: The Arbitration Council held that in order for employees to be entitled to special protection according to the law, the 3 (three) following conditions must be fulfilled: employees are those who are under the special protection status, as set forth in Prakas No. 305; B&A NL, compl. vol.1-iii, p. 40

12 III. Recent Cases Volume 1 Number 06 June 2014 dismissal of the employees falls within the period of protection; and the employees must have notified the employer about their identities as protected employees by any reliable means. If the 3 (three) conditions above are cumulatively fulfilled, in order to dismiss the protected employees, the employer must then obtain prior permission from a labor inspector in accordance with the applicable procedure. Therefore, the dismissal of the protected employees without prior permission from a labor inspector will be rendered null and void. The Arbitration Council ordered the employer to reinstate the dismissed protected employees and to also compensate them with their full wage and benefits starting from their dismissal date. Special Protection for Members of a Union with More Than 200 Members #A ACA 277/13-Woorie Garment, dated February , Issue #4 & #8 (Legal Ref. Clause 7, Prakas No 313 SKBY, dated November 27, 2000, Clause 4 paragraph 2, Prakas No 305 SKBY, dated November 22, 2001) Note: The three union leaders are entitled to special protection and for unions with more than 200 members, one employee for each additional 200 members of the union shall enjoy the same protection as a shop steward. For the purposes of this protection, the union shall communicate to the employer by any reliable means, the names of the individuals to be protected. The Arbitration Council clarified that special protection for a member of the union, when the union has more than 200 members, cannot be obtained, if the union does not notify the employer about the number of members and the names of the members who wish to obtain special protection by any officials means. Discrimination of Trades Union #A ACA 02/13- G4S Security Service, dated February 08, 2014, Issue #1 ACA 277/13-Woorie Garment, dated February 20, 2014, Issue #4 and #8 (Legal Ref. Art. 12, 279 and 302 of the Labor Law, Clause 3&4, Prakas No 305 SKBY, dated November 22, 2001) (Ref. Precedent: #A ) Note: Employers are forbidden from taking into consideration union affiliation or participation in union activities, when making decisions concerning recruitment, management and the assignment of work, promotion, remuneration and granting of benefits, disciplinary measures and dismissal. The Arbitration Council provided a reminder that employers should reinstate dismissed employees, where the termination of the employment contracts was a result of discrimination against the trade union. In this case, there was no evidence to prove that the employee concerned was a vice-president of the union who was elected. Furthermore, changes to the workplace were noticeable every month and the concerned person never rejected them. The Arbitration Council recognized that there was no discrimination relating to the trade union. However for the case of dismissal, as the employer didn't respect the internal regulations of the company, the Arbitration Council required the employer to bring the employees back to work. B&A NL, compl. vol.1-iii, p. 41

13 III. Recent Cases Volume 1 Number 06 June 2014 Contributions to Trade Unions vs. Public Order #A ACA 277/13-Woorie Garment, dated February , Issue #14 (Legal Ref. Art. 114 and 129 of the Labor Law) (Ref. Precedent: #A ) Note: The right to request a deduction of wages or alternatively not to deduct money from the employees wages to pay for union contribution fees, lies at the discretion of the employees by way of delivering a written letter to their employer. In the case where a trade union and its employees desire the employer to deduct the employee s wage amount in order to pay contributions to the trade union, they shall provide sufficient documents to the employer, including documents relevant to the membership of the employee and registration documents of the union. The Arbitration Council confirmed that the employer had to stop reducing employees wages to pay for union contributions without the consent of the employees, who were not members of a union. It also required that the employer pay back the wages which were deducted to pay for the union contributions without the consent of the employees. In conclusion it was decided that the employees have the right to claim back the money which their employer deducted from their wages in order to pay for the union contributions, after the employees had already informed the employer in a written letter to stop deducting their wages. Working Time Right to Take a Rest after Two Hours of Working Standing Up #A ACA 12/14-UFI Tailor Corporation, dated February 20, 2014, Issue #03 (Legal Ref. Art 2 of the Labor Law) (Ref. precedent ACA-119/09 Issue #4&#5) Note: The employer has the power to control and manage the enterprise. The Arbitration Council confirmed that employers are entitled to the exclusive power to manage their company in a legal and reasonable manner. There are no applicable laws, regulations or collective bargaining agreements which require employers to fulfill an obligation to provide a 15 minute break after each 2 hour period of standing up working. Employers already allow employees to go to the toilet, drink water and take a rest for a few minutes. In this case, the Arbitration Council rejected the demand of the employees to obtain a 15 minute break after each 2 hours of standing up working. Individual Rights Employment Contracts Termination of a Fixed Duration Contract #A ACA277/13- Woorie Garment, dated February 20, 2014, Issue #4 and #8 (Legal Ref. Article 73 of the Labor Law) (Ref. precedent #A ) Fixed duration contracts (FDC) normally terminate at their specified end date. The expiration of a FDC leads to the end of the employment relationship between the employer and employee. The decision to continue the B&A NL, compl. vol.1-iii, p. 42

14 III. Recent Cases Volume 1 Number 06 June 2014 contract or not to continue it, is the right of the parties of the contract, because the contract represents a mutual, voluntary agreement between the parties. The Arbitration Council considered that as the employer did not reply to the prior notice on the ending of the contract (no evidence), the employment contract in question was considered as an unfixed duration contract. Right to Demand the Cancellation of Others Employment Contracts #A ACA 277/13, Woorie Garment, dated February 20, 2014, Issue #7 (Legal Ref. Article 65-1 of Labor Law and Article 311 of Civil Code) (Ref. #A ) The Arbitration Council reminded the parties in the case that only the parties to an employment contract, the employer and the employee, have the right to terminate the contract. A third party to an employment contract or other employees, do not have the right to demand the employer to dismiss any employees. However, this is unless the third party or other employees can prove that such an employee is a dangerous person, who should not be allowed to enter into the establishment or factory; therefore keeping the person in employment could be damaging to the workplace. The Arbitration Council defines a dangerous person in the company by the following conditions: Commits serious misconduct which is an abuse of Article 83 of the Labor Code; and Discrimination against a union member. Note: this definition could be used if the plaintiff has sufficient evidence to prove it. Length of a Fixed Duration Contract #A ACA 06/14-SunWell Shoes, dated February 28, 2014, Issue #5 (Legal Ref. Art 65 Labor Law, Art 311, 336, 664 Civil Code) (Ref. Precedent: #A ) 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 such a contract. The employer legally has the right to offer a fixed duration contract for three, four, five or six months. If a potential employee accepts such a condition, a fixed duration contract is formed. Therefore, an employee has no right to force the employer to enter into a fixed duration contract for a one year period. Wages Wages- Strikes Wages and other Benefits during a Strike #A ACA 06/14-Quality textile, dated February 03, 2014, ACA 09/14-Shino Garment, dated February 03, 2013, ACA 14/14-Manhattan Textile and Garment Corp, dated February 18, 2014, Issue #3 (Legal Ref. Art. 72, 332 and 334 of Labor Law, Clauses 3 & 4, Prakas No. 305 SKBY, dated November 22, 2001) (Ref. Precedent: #A ) Note: Strikes suspend employment contracts. During a strike, the work performance is not provided and therefore the salary is not paid. B&A NL, compl. vol.1-iii, p. 43

15 III. Recent Cases Volume 1 Number 06 June 2014 The Arbitration Council interpreted Articles 72 and 332 of the Labor Law to mean that any time in which employees go on strike, even if such a strike follows the correct legal procedure of a strike, the employer is not required to pay wages or other benefits for this period of time. 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 violations to this obligation, the employer may be required to make a payment of the wages and benefits to those on strike for its duration. Note: A minimum service must be maintained in order to protect the facility installations and equipment of the enterprise and also to avoid any endangerment to the life, health and safety of persons affected by the strike. Wages- Procedure Minimum Wage Determination for Employees in the Garment and Footwear Industries #A ACA 22/174 Zhong Yin, dated February 24, 2014, Issue #11 ACA 06/14 Sun Well Shoes, Dated February 28, 2014, Issue #6 Legal Ref: Clause 1&2, Prakas No. 317 KB/BrK, dated December 31, 2013 on minimum wage determination for employees in the garment and footwear industries) (Ref. #A and #LR ) The minimum wage for employees in the garment and footwear industries has increased from 80 USD (eighty US dollars) to 100 USD (one hundred US dollars) per month. The increment amount shall be also added to each and every employee s current wage amount. This Prakas was implemented on February 1, The Arbitration Council rejected that the employees cannot demand a wage of 150 USD (one hundred and fifty US dollars) per month, as this is more than what the law provides. Wages and Other Benefits #A ACA 02/13- G4S Security Service, dated February 08, 2014, Issue #1 (Ref. Precedent: #A ) This case concerned complaints relating to the attendance bonus amount of 10 USD (ten US dollars), health support amount of 15 USD (fifteen US dollars), seniority bonus amount of 5 USD (five US dollars) and the accommodation amount of 15 USD (fifteen US dollars). After hearing the facts of the case, the Arbitration Council decided to dismiss the case, due to the insufficient status of the union which brought it to the Council. Wages for the 13 th month #A ACA 06/14-Sun well shoes, dated February 28, 2014, Issue #3 (Legal Ref. Art. 96 of the Labor Law, Clause 9, Prakas No. 305 SKBY, dated November 22, 2001, Clause 43, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. precedent #A ) There are no applicable laws, regulations or collective bargaining agreements which require an employer to fulfill an obligation to provide a wage for the 13 th month to their employees. B&A NL, compl. vol.1-iii, p. 44

16 III. Recent Cases Volume 1 Number 06 June 2014 Other Benefits Healthcare Allowance #A ACA 22/14 Zhong Yin, dated February 24, 2014, Issue #3 (Ref. precedent #A and #A ) The amount of 5 USD (five US dollars) for a healthcare allowance per month shall be included in the actual wage of employees in the garment, textile and footwear sectors. This means that the 5 USD (five US dollars) health allowance per month is already included in the minimum wage. Therefore, the employer has no obligation to provide an additional health allowance besides the minimum wage. Transport and Accommodation Allowance #A ACA 22/14 Zhong Yin, dated February 24, 2014, Issue #5 (Legal Ref. Notification No. 230 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A and #A ) Due to notification No. 230 KB/SCN, a transportation and accommodation allowance can be provided to employees at a rate of 7 USD (seven US dollars) per month, which is applicable only to employees from textile, garment and footwear establishments. Alternatively, the employer can provide actual means of transportation and accommodation directly to the employees, instead of paying the allowance. The Council held that an employer can obey the exact terms of this notification or provide additional financial support which is more favorable than what is stipulated in the law, but it can never provide less than what is legally required. If an employee needs more than what the law provides, he/she can issue an interests dispute to the Council. Appreciation of an Employer on Skills Bonuses #A ACA 275/13-Calacam Investment, dated February 06, 2014, Issue #7 (Ref. Precedent: ACA24/05 Issue #6 and ACA264/13 Issue #2) The Arbitration Council confirmed that an individual decision by the employer can provide other benefits besides the benefits determined by the Labor Code, in order to encourage all employees to waste less time and increase productivity. The employer may provide a skills bonus in order to encourage employees productivity, based on two main conditions stated as follows: The performance of their mission; To be punctual without absence; even absence with permission from the employer, including rejecting to overtime work. The Arbitration Council confirmed that the skills bonuses were provided in order for the employer to encourage employees to work; there is no labor law provision which covers this point. Therefore it was held that the employer shall not provide the skills bonus if the employees did not complete the requirement conditions set by the employer; this is a supervisory right of the employer which needs to be rendered legal and reasonable. B&A NL, compl. vol.1-iii, p. 45

17 III. Recent Cases Volume 1 Number 06 June 2014 Paid leave Special leave #A ACA 277/13-Woorie Garment, dated February 20, 2014, Issue #16 (Legal Ref. Art. 171 of the Labor Law, Clause 2&4, Prakas No 267 SKBY, dated October 11, 2001) (Ref. Precedent: #A ) Note: The employer has the right to grant his/her employee special leave during an event directly affecting an employee s immediate family. If the employee has not yet taken his/her annual leave, the employer can deduct the special leave from his/her annual leave. If the employee has taken all of his/her annual leave, the employer cannot deduct the special leave from the annual leave for the next year, but the employer can demand the employee to make up for the time lost. Furthermore, payments for making up for lost time shall be paid in accordance with the ordinary working hour rate. If the employees do not have any more annual leave, the employer cannot reduce the wage and other advantages of the employees according to the absent days, without allowing them to make up for the time lost. In this case, the Arbitration Council confirmed that the employer had to pay back wages to the employees if they took special leave, even if they had already taken all of their annual leave, or they did not have enough leave days to calculate. Indemnity for Maternity Leave #A ACA 12/14- UFI Tailor Corporation, dated February 20, 2014, Issue #1 (Legal Ref. Art. 96, 103, 115, 182 and 183 of the Labor Law, Clause 9, Prakas No 305 SKBY, dated November 22, 2001) (Ref. ACA 139/08 Issue #8, ACA109/06 Issue #7 and 27/12 Issue #12) Note: Woman shall be entitled to maternity leave for ninety days with payment of half of their wage amount including their perquisites, paid by the employer. This wage shall be granted only for the female employees who have a minimum of one year of uninterrupted service in the enterprise. In relation to 100% of the indemnity for maternity leave, the Arbitration Council confirmed that the employer has to provide the entire total of the maternity pay given to the female employees before their maternity leave. Compensation of Unused Annual Leave #A ACA 12/14- UFI Tailor Corporation, dated February 20, 2014, Issue #07 ACA 16/14-Sunwell Shoes, dated February 28, 2014, Issue #02 (Legal Ref. Art. 166, 167 and 168 of the Labor law) (Ref. ACA 27/04 Issue #3 and ACA94/07 Issue #2 and #A ) Note: Upon termination of the employment contract, all unused annual leave shall be compensated and calculated by taking all of the salary, including other benefits and the bonus paid during the last 12 (twelve) months of service, divided by 12 (twelve) and then divided by 26 (twenty six) working days per month. This is then finally multiplied by the number of unused annual leave days. B&A NL, compl. vol.1-iii, p. 46

18 III. Recent Cases Volume 1 Number 06 June 2014 In addition, Article 167 (2) of the Labor Law states that any collective agreement which provides compensation in lieu of paid leave, as well as any agreement renouncing or waiving the right to pay annual leave, shall be rendered null and void. In this case, the Arbitration Council decided not to allow the employer to compensate for the unused annual leave in cash to the employees, while the contract remained in force. This award reconfirmed that the employer has to use the total amount of the employees wages which includes perquisites, in order to calculate unused annual leave, if the employment is terminated. Food Allowance vs. Public Holiday and Weekly Days Off #A ACA 275/13-Calacam Investment, dated February 06, 2014, Issue #15 (Legal Ref. Art. 137, 139 and 164 of the Labor Law, Clause 2, Prakas No 10 SKBY, dated February 04, 1999) (Ref. ACA 115/08 Issue #4 and ACA 52/12 Issue #4 Public holiday s work and #A food allowance ) Note: In all establishments of any nature, whether they provide vocational training, a charitable nature or liberal profession, the number of hours worked by employees cannot exceed eight hours per day, or 48 hours per week. If employees are required to work overtime for exceptional and urgent jobs, the overtime hours shall be paid at a rate of fifty percent higher than normal hours. If the overtime hours are worked at night or during weekly time off, the rate of increase shall be one hundred percent. In establishments or enterprises where work cannot be interrupted because the nature of their activities requires the employees to work during holidays, those employees shall be entitled to an indemnity in addition to wages for the work performed. The amount of this indemnity to be paid by the employer shall be set by a Prakas of the ministry in charge of labor. The Arbitration Council reconfirmed its previous position that working during public holidays is not the same as overtime work. There are no applicable laws, regulations or collective bargaining agreements which require an employer to fulfill an obligation to provide a food allowance to his/her employees who perform their work during public holidays. According to the previous precedent, the Arbitration Council confirmed that working hours are 48 hours per week (8 hours per day) which are from Monday to Saturday. Therefore if employees wish to work on a Sunday, it will be considered as overtime work. Food Allowance #A ACA 277/13- Woorie Garment, dated February 20, 2014, Issue #5 ACA 22/12- Zhong Yin, dated February 24, 2014, Issue #8 (Ref. Precedent: #A ) There are no applicable laws or regulations which require an employer to fulfill an obligation to provide a food allowance to his/her employees, except for an overtime food allowance. Due to notification No. 041/11 KB/SCN, dated March 07, 2011, a food allowance for overtime work is provided for at a limited amount of 2000 KHR (two thousand Khmer Riels) per day or alternatively, a free meal can be provided. An employer can B&A NL, compl. vol.1-iii, p. 47

19 III. Recent Cases Volume 1 Number 06 June 2014 provide more than this if he or she wishes to do so. Furthermore, in this case the Arbitration Council confirmed that the employer has to provide an overtime meal allowance to employees once a week, in order to sustain the health of the employees. Prevention from Using the Toilet Card #A ACA 275/13-Calacam Investment, dated February 06, 2014, Issue #6 (Legal Ref. Art. 2 of the Labor Law) (Ref. Precedent: ACA 129/9 Issue #6) Note: Every enterprise may consist of several establishments, each employing a group of people working together in a defined place such as in a factory, workshop, and worksite and under the supervision and direction of the employer. In the previous award (ACA 129/9#6), the Arbitration Council provided that employees are under the supervision and control of the employer, who has the right to control the number of toilet visits within the enterprise, in order to ensure the employees quality of work. This is so long as it does not affect the health of the employees and is considered legal and reasonable under the law. In this case, the company provided only two toilet cards to a group of employees to be used when they went to the toilet and the employees were later required to stop using the cards. The Arbitration Council provided an opinion that the employer should stop using the toilet cards because the termination of using the toilet cards has the same effect as a limitation on the duration of going to the toilet, which can affect the health of the employees. Furthermore, everyone can control themselves when they go to the toilet, by determining the time in advance. Work Suspension vs. Attendance Court Hearing #A ACA 14/14- Manhattan Textile and Garment Corp, dated February 18, 2014, Issue #1 (Legal Ref. Article 2, 71, 72, and 332 of the Labor Law and Article 38 of the Cambodian Constitution) (Ref. Precedent: #A1402/014) A strike suspends an employment contract. During a strike, the work allowance is not provided and the salary is not paid. The employee shall be reinstated in his/her job at the end of the strike, if the suspension of the employment contract was made in order to attend a Council s decision relating to a charge of persuading or forcing employees to not perform their work. The Arbitration Council explained that this suspension is not considered as an undetermined suspension. Furthermore, according to Article 38 of the Cambodian Constitution the accused shall be considered innocent until the court has finally judged on the case. In this case, the Arbitration Council required the employer to pay 100% of the salary during the attendance of the investigation and the final judgment from the Council to the employees, whose employment contracts were suspended. Employees Uniforms #A ACA 14/14- Woorie Garment, dated February 20, 2014, Issue #3 (Legal Ref. Clause 6, Prakas No 307 KB/BRK, dated December 14, 2007) B&A NL, compl. vol.1-iii, p. 48