COMPLIANCE LABOR & TAX

Transcription

1 N C, L T Volume 1 N 08 August 2014 Editor: Bun & Associates I. Ar cles COMPLIANCE LABOR & TAX Our Publica ons on associates.com 27 T T BY MR. VANN SINAT, MANAGER OF THE TAX DEPARTMENT, BUN & ASSOCIATES III. Recent Cases Labor Law 61 A A A A A A A A A A A A A A A A A A A II. Recent Regula ons 20 P N 195 F E B W P, A 20, P N 196 T U, A 20, P N 197 E C, A 20, 2014, 22 P N 198, A 20, 2014

2 I. A Volume 1 Number 08 August 2014 TAX ON THE TRANSFER OF OWNERSHIP OR POSSESSION RIGHTS OVER IMMOVABLE PROPERTY #D BY MR. VANN Sinat Under regula ons concerning the registra on tax, otherwise known as stamp duty tax, the following transac ons are subject to this tax: Transfer of ownership or of possession rights on immovable property; capital contribu ons made into a company in the form of immovable property; and the transfer of ownership or of possession rights on the means of transporta on and all kinds of vehicles; Transference of a por on of share capital or of the en re share capital; Contract on the supply of goods or services, using the government s budget; Legal documents e.g. registra on le ers, merging approval le ers, and de registra on approval le ers. However, not all of the above transac ons are always taxed. Some are allowed to be exempt from this tax; these include the following: Those receiving ownership or possession rights over land, in the form of a concession from the government for economic or social benefits, from state private land to poverty stricken people who have no land, in order so that they can build houses and/or do agro industry work or family agriculture. Receiving ownership or possession rights of immovable property and on means of transporta on or vehicles, which are recorded in the inventory lis ngs for ins tu ons in the Kingdom of Cambodia. Receiving ownership or possession rights on immovable property and means of transporta on B&A NL, compl. vol.1 I, p. 27 or vehicles used for a diploma c mission, by a foreign consulate, interna onal organiza ons, or on going technical coopera on agents of the government. Purchasing the means of transporta on or vehicles listed in the inventory, and also the reselling of any enterprises which have registered with the tax administra on and paid the monthly and yearly tax. For the purchase of means of transporta on and vehicles which have been registered with the Public Work and Transporta on Ins tu on, which are not exempt from stamp duty tax. A security investor who has received possession rights on share capital through the security market, the primary market or in the secondary market. Currently, the stamp duty tax is most commonly applied to the transfer of share capital rather than the transfer of ownership, or the possession of rights over immovable property or other transac ons. In other words, it suggests that the stamp duty tax is not applicable to other transac ons besides the transfer of share capital, although it actually does under the law. Stamp Duty Tax Implica ons on the Transfer of Ownership or the Possession of Rights over Immovable Property Normally, the transfer of ownership or the possession of rights over immovable property will be subject to the stamp duty tax at a rate of 4% on the market value of the property. In addi on, the receiver of such ownership or possession rights, will be responsible to pay this tax. The stamp duty tax shall be paid and filed with the tax administra on within 3 months a er having the approval from the chief of the municipal/provincial office of the land management, urban planning and construc on cadastral. For failure to comply with the

3 I. A Volume 1 Number 08 August 2014 equivalent to the amount of tax to be paid. In the worst case scenario, if the new receiver of the ownership or the possession rights does not pay such a tax, the cadastral administra ve will not issue the cer ficate of new ownership or the rights to that receiver. From a Legal Perspec ve In regards to the above tax implica ons, some key terms are considered as significant to the applica on of the stamp duty tax and those shall be defined and explained below: Within the stamp duty tax regula ons, the term Immovable Property is defined as land, houses, buildings, and other construc ons, even if they are already registered or not yet registered with the cadastral administra on. Furthermore, from a legal perspec ve, Ownership refers to the rights of an owner to freely use, receive income and benefits from and dispose of the thing owned, subject to applicable laws and regula ons. Moreover, Possession refers to the holding of a thing, and holding refers to the state of controlling a thing as a ma er of fact, whether directly or indirectly. According to the Cambodian Civil Code 2007, a Real Right is a right to directly control a thing, and it may be asserted against all persons. Real Right includes ownership, possession, usufructuary real rights (perpetual lease, usufructuary, right of use/right of residence and easement), and security rights. Following the wording of Ar cles 133 and 135 of the Civil Code, the crea on, transfer and alterna on of a real right shall take effect in accordance with those agreed upon between the par es. Furthermore, the transference of a tle by an agreement pertaining to immovable property shall come into effect only when the transfer is registered in accordance with the provisions of the laws and ordinances regarding B&A NL, compl. vol.1 I, p. 28 registra on. In addi on to this, an agreement considered as effec ve to the transfer of ownership of immovable proper es, which mostly refers to the purchase, exchange, or gi of the property, can only be valid a er it has been registered with the Cadastral Registry Unit. In reference to the above law s pula on, for any transac ons rela ng to the sale, purchase, exchange, or deliverance of a gi of immovable proper es from one person to another, by an agreement in which there is an administra ve procedure held by the Cadastral Registry Unit, then they will be treated as having had a transfer of ownership or of possession rights. Stamp Duty Tax over Land Concessions from a Non Government Source In regards to land concessions, there are two scenarios which come into considera on. Scenario 1 Understanding the Facts of Scenario 1 Under scenario 1, the Royal Government of Cambodia ( RGC ) is the owner of the land. RGC has agreed to make a land concession to Company A for its development opera ons.

4 I. A Volume 1 Number 08 August 2014 Stamp Duty Tax Implica ons By understanding scenario 1, it is clear that there are no par es concerned with the imposi on of the stamp duty tax, due to receiving the ownership or possession rights of the land in the form of a concession from the government, for economic or social benefits; this is because an exemp on from the stamp duty tax is created. Scenario 2 Understanding the Facts of Scenario 2 In reference to scenario 2, it is clear that the Royal Government of Cambodia ( RGC ) is the owner of the land. RGC has agreed to make a land concession to Company A for its development opera ons. Subsequently, Company A has agreed to transfer the possession rights over such a land concession to Company B, to con nue the opera ons. Stamp Duty Tax Implica ons Based on scenario 2, the party who should be concerned with the stamp duty tax obliga on is Company B. In accordance with the stamp duty tax law and regula ons men oned above, the exemp on from such tax could be allowed, only if the transfer of ownership or the possession rights will be made solely between the Cambodian government and the taxpayer (i.e. Company A). Therefore, it is important B&A NL, compl. vol.1 I, p. 29 to be aware that for the transfer of ownership or the possession rights over the land concession from a party (i.e. Company A) (other than from the government) to another party (i.e. Company B), such a transfer will be highly likely to be subject to the stamp duty tax at a rate of 4% on the current market value of the land. However, unofficial confirma on from a tax official confirms that the transfer of ownership or possession rights over a land concession, even if the transfer is made between the par es (i.e. Company A and B) rather than with the government, will s ll not be subjected to the stamp duty tax. Nevertheless, this is s ll a grey area in prac ce due to a lack of clarity over the expressions used within the laws and regula ons of the stamp duty tax, whereby the terms rela ng to the transfer of ownership or possession rights can be defined differently, depending on the individual tax official s own interpreta on. Therefore, in order to make it clear on the transfer of ownership or possession rights on land concessions between nongovernmental par es, a tax ruling is necessary. Legisla ve References: In prepara on of this memo, we have reviewed relevant legisla on including but not limited to the following: Law on Financial Management for 2013 No. 1212/010 dated 26 December 2012; Civil Code promulgated by Royal Kram No. NS/ RKM/1207/030 (2007); and Prakas No.735 on Collec on of Registra on Tax dated 08 August 2013 (the Prakas No.735 );

5 II. R R A Volume 1 Number 08 August 2014 Summary of the Updates Contained in This Newsle er Labor Law Updates Representa veness of trade unions the Council reaffirmed its posi on that it cannot make a ruling on an interests dispute if the union does not possess the most representa ve legal status Strikes during the arbitra on process case se lements will not be processed by the council if a party goes on strike during the arbitra on process Absence from a hearing if a party is absent from a Council s hearing without a valid reason, the Council can dismiss the case Burden of proof evidence needs to be provided by the par es to support their arguments in the hearing Contribu ons to trade unions the Council rejected the employees request for the employer to pay union contribu ons, as there was no evidence provided to suggest that the employees had previously requested this Discrimina on of trade unions due to lack of evidence provided, the employees discrimina on charge against their supervisor was rejected A endance bonus payments the employees claim for an increase in their bonus was rejected as it exceeded what the employer was legally required to provide under the applicable laws A endance bonus vs sick leave it was held that there are no provisions which require an employer to save the a endance bonus for an employee on authorized sick leave Pro rata deduc on of the a endance bonus the Council refused to allow the employees to obtain the a endance bonus on a pro rata basis as they were taking leave for their own personal reasons Transporta on and accommoda on allowance the Council rejected the employees request for an increase in their allowance, as it was rendered as an interests dispute, specific to the par es Minimum wage determina on the Council rejected the employees request for an increase in their wage payment, as it exceeded what the employer was required to provide under the law Replacing a UDC with a FDC in this case, the Council held that the employer could not replace the unspecified dura on contract with a fixed term dura on contract Termina on of a UDC the employee s request to receive dismissal indemnity was rejected as the employer had not dismissed the employee Suspension of work the Council held that an agreement between the employer and the employees was not lawful, as the employer had not received authoriza on from the labor inspector on its provisions Food allowance it was held that the employer had to provide a food allowance once a week to employees, mee ng the minimum legal requirements Unused annual leave the Arbitra on Council held that compensa on for unused annual leave should not be paid whilst the contract remained in force Pregnant employees as the employer was already providing more benefits than what was s pulated in the law, by allowing pregnant employees to leave earlier, the Council rejected the request for this me period to be increased Nursing rooms and daycare centers in two cases brought to the Council whereby the employees were seeking an increase in money provided by their employer in order to send their children to a daycare center outside of the company, the claims were dismissed as the employees hadn t sufficiently a empted to keep their children in the company s center first Employees uniforms the Council stressed the obliga on of an employer to provide 2 sets of uniforms per year to each employee B&A NL, compl. vol.1 II, p. 1

6 II. R R Volume 1 Number 08 August 2014 LABOR REGULATIONS Individual Rights Foreigner s Employment Book and Work Permit, #LR Ref: Prakas No 195 KB/BrK on Foreigner s Employment Book and Work Permitdated August 20, 2014, All employers who wish to employ the foreign employees shall apply for the Employment Books and Work Permits for them. The documents required for this applica on include: work permit for foreigner who has a limit visa in Cambodia: One (1) original copy of applica on form for Employment Books and Work Permits affixed with 1000 (One thousand) Riels stamp and enclosed with four 3x4 sized photos; One (1) original copy of Cer ficate of foreign employment number and Cambodia employment number One (1) copy passeport Annual tax in the amount of 400, 000 (four hundred thousand) Riels One (1) copy of employment contract (the Khmer version is required) One (1) original copy of a valid medical cer ficate provided by the country of origin which is valid no longer than 6 months. Note: For the foreigners who are ready in Cambodia but do not have the medical cer ficates, they must get this medical cer ficate from the Department of Occupa onal Health and Safety of the Ministry of Labor and Voca onal Training. For the Vietnamese and Lao an na onality who come to work at the Triangle Area of Cambodia, Vietnam and Laos and reside in the provincial border of the Kingdom of Cambodia including Steung Treng, Kra e, Mondulkiri and Ratanakiri have also to apply for Employment Books and Work Permits. The documents needed for this applica on are the same as what listed above except for the Annual Tax which is reduced to (Three hundred and twenty thousand) Riels only. Furthermore, the medical cer ficate may approved by Hospital in original country or Hospital in Cambodia. For the foreigner who has permission for permanent residence shall hold an employment book and work permit. Documents required are the same except for the Annual tax only (Two hundred and forty thousand) Riels. For renewal work permit, documents required are the same but the foreigner must provide only one (1) photos sized 3x4. Please be noted that the renewal work permit for foreign employee, Annual tax for employment book and work permit must submi ed before the end of March of each calendar year. In case that the validity of this work permit of the new calendar year did not renew, employer will be consider of using foreign labor force without employment book and work permit. Note: Any person viola ng the provision of this Prakas shall be penalized or punished as provided for in chapter 16 of the Labor Law. B&A NL, compl. vol.1 II, p. 20

7 II. R R Volume 1 Number 08 August 2014 The Using of foreign labor force, #LR Ref: Prakas No 196 KB/BrK on The Using of foreign labor force, dated August 20, 2014 Normally, Cambodian labor force has priority to be hired. By the way, if the qualifica on is not respond to the requirement, the foreign labor force could be recruited. All companies that employ the foreign labor should clarify about the employment number (both Cambodian and foreigner) and the reason of the need. A quota request should be forecasted for the whole year and submi ed to MVLT on November for each calendar year. Employment of foreign labor force may not exceed 10% of its Cambodian labor force, and all foreign employees must possess a work permit duly issued by MLVT. Furthermore, the 10% foreign labor force shall be divided as follows: Office employees : 3% Specialized employees : 6% Non specialized : 1% In case that the using of foreign labor is over than 10%, the reques ng le er should be clarified more detail and clearly the posi on, specialty, technology or professional skill of each foreign employee who will be choose to work and real reason of need. All employment contract of each foreign employee should be register at Department of Employment and Manpower of Ministry of Labor and Voca onal Training for whom residing in Phnom Penh and for whose residing in province must be register at Department of Labor and Voca onal training in province. Note: Any person viola ng the provision of this Prakas shall be penalized or punished as provided for in chapter 16 of the Labor Law. Employment book for Cambodia employee, #LR Ref: Prakas No 197 KB/BrK on Employment book for Cambodia employee, dated August 20, 2014 All employers must not employ Cambodian employees without employment book. Employer shall facilitate enough possibility for their employee in order for them to apply for an employment book/card. Document required for Cambodian employee s employment book are following: One (1) original copy of applica on form for employment book and work permit affixed with 1000 (One thousand) Riels stamp and enclosed 5 photos sized 3x4 One (1) original copy of Cer ficate of foreign employment number and Cambodia employment number One (1) copy of Cambodian iden ty card or le er of birth, family records, or cer ficate le er for vote Annual tax in amount (ten thousand) Riels If employer wishes to hire or terminate employees from their work, employer have to bring the employees employment book to register a visa in/out at Department of Employment and Manpower of Ministry of Labor and Voca onal Training for who reside in Phnom Penh and for who reside in province must be register (their employment book/card) at Department of Labor and Voca onal training in province no longer than 7 days from the day of recruitment or termina on. For all modifica on of the posi on or the wage of employees, employer shall respect the same procedure. This employment book must be returned to employees a er the B&A NL, compl. vol.1 II, p. 21

8 II. R R Volume 1 Number 08 August 2014 termina on from work and employer must not note his/her writ on the employment book or use it for other illegal objec ve. Note: Any person viola ng the provision of this Prakas shall be penalized or punished as provided for in chapter 16 of the Labor Law. The using of receipt of applica on form and money to request foreigner employment book and card, #LR Ref: Prakas No 198 KB/BrK on the using of receipt of applica on form and money to request foreigner employment book and card, dated August 20, 2014 The receipt of applica on form and money is an official document to clarify that the foreign employee has applied for employment book and work permit and paid annual tax for work permit. Employer or employee could receive an official employment book and work permit (final one) through the determinate date in the receipt. Please be noted that for the renewal work permit for foreign employee, Annual tax for employment book and work permit must be submi ed before the end of March of each calendar year. In case of the missing of the renewal of the work permit for the new calendar year, employer will be consider of using foreign labor without employment book and card. NATIONAL SOCIAL SECURITY FUND REGULATIONS There are no laws and regula ons to be updated. B&A NL, compl. vol.1 II, p. 22

9 III. R C Volume 1 Number 08 August 2014 ARBITRATION AWARDS The Arbitra on Council (AC) is an independent, na onal ins tu on 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 Arbitra on Council is empowered to assist par es in resolving collec ve labor disputes in Cambodia. Arbitral awards spell out the basis for each decision of the Arbitra on Council, whereby legal reasoning is applied to resolve the issues in each case. Procedure Interests Disputes Representa veness of Trade Unions #A ACA 039/14 E Garment, dated April 21, 2014 Issue #15 ACA 050/14 Global Apparels Limited, dated April 04, 2014 Issue #01 ACA 052/14 SL Garment, dated April 21, 2014 Issue #03 ACA 057/14 Yu Da, dated April 01, 2014 Issue #01 ACA 064/14 CamboUnisoll, dated April 23, 2014 Issue #01 ACA 068/14 EMB Jelkovi, dated April 09, 2014 (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: #A ) Note: Rights disputes are those related to legal rights, which result from or are stated in contracts, collec ve bargaining agreements (CBA) or provisions of law. Interests disputes are those rela ng to a benefit in the future and not to rights resul ng from or stated in contracts, collec ve bargaining agreements or provisions of law. A collec ve bargaining agreement is a wri en agreement rela ng to provisions which are s pulated in Ar cle 96 of the Labor Law, and it is formed between: one party: an employer, group of employers or a professional organiza on or numerous professional organiza ons working as representa ves of employers; and another party: a trade union or numerous trade unions working as representa ves of employees. A trade union which has the most representa ve status has the right to request an employer to nego ate on the terms of the collec ve bargaining agreement, which is implemented by all employees of whom the trade union represents. The employer has an obliga on to nego ate on the content of the collec ve bargaining agreement with the union. In addi on, by possessing the most representa ve status, this allows a union to nego ate on the crea on of a collec ve bargaining agreement in the establishment and also bring interests disputes to the Arbitra on Council for its considera on. In this case, the Arbitra on Council reconfirmed its previous posi on that it is not competent to decide on any interests disputes, if they are brought by a union without the most representa ve legal status. B&A NL, compl. vol.1 III, p. 61

10 III. R C Volume 1 Number 08 August 2014 Strikes during the Arbitra on Process #A ACA 092/14 Cocovol Apparel, dated April 28, 2014 (Legal Ref. Clause 20, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A ) During the arbitra on process, the par es to the dispute must abstain from any strikes or lockouts (as defined in Ar cle 318 of the Labor Law), or any other ac on likely to aggravate the situa on. The par es must a end all mee ngs to which the arbitra on panel summons them to. The Arbitra on Council confirmed that it will not process the se lement of a collec ve labor dispute, if during the Arbitra on Council s process, a party goes on strike and does not respect its order. No A endance Claimant #A ACA 044/14 Mai Shun, dated April 01, 2014 ACA 085/14 YTC Corpora on, dated April 29, 2014 (Legal Ref. Clause 21, Prakas No. 099 SKBY, dated April 21, 2004) (Ref. Precedent: #A ) Where both par es have been properly no fied about the hearing schedule, but the claimant party does not appear at the hearing and fails to provide an adequate reason for his or her absence, the Arbitra on Council may consider that such a party has given up his or her claim and therefore may close the case. Burden of Proof #A ACA 039/14 E Garment, dated April 21, 2014, Issue #12 (Ref. precedent: #A ) The Arbitra on Council gave a reminder that the plain ff has an obliga on to provide evidence to support his/her complaint; otherwise the Arbitra on Council will reject it. The Arbitra on Council found that the employee had no willingness to solve the problem, as they had failed to provide solid evidence to support their claims. Collec ve Rights Contribu on to Trade Unions #A ACA 039/14 E Garment, dated April 21, 2014, Issue #20 (Legal Ref. Para. 2 Art. 129 of Labor Law, Clause 5, Prakas No. 305 SKBY, dated November 22, 2001) (Ref. Precedent: #A ) Note: The wri en le er to request a deduc on of wages shall be official and state clearly its purpose, as well as include a list of the employees names and signatures. The request shall be submi ed 15 (fi een) days before the salary pay date. In this case, the employees did not provide any evidence to prove that they had requested the employer to deduce their wages to contribute to the union. The Arbitra on Council decided to reject the employees claim which required the employer to pay the remaining contribu on amount to the union, for the period in which the employer had previously not made any payments. The right to request a deduc on of wages or alterna vely not to deduct money from the employees wages to pay for union contribu on fees, lies at the discre on of the employees by way of delivering a wri en le er 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 contribu ons to the union, they shall provide sufficient documents to the employer, including documents relevant to the membership of the employees and registra on documents of the union. B&A NL, compl. vol.1 III, p. 62

11 III. R C Volume 1 Number 08 August 2014 Discrimina on of Trade Unions #A ACA 039/14, E Garment, dated April 21, 2014, Issue #04 (Ref. precedent: #A ) Note: Employers are forbidden from taking into considera on union affilia on or par cipa on in union ac vi es, when making decisions concerning recruitment, management and the assignment of work, promo on, remunera on and gran ng of benefits, disciplinary measures and dismissal. In this case, the employees argued that their supervisor had not informed the employees who were members of another union about over me work. This meant that the supervisor only informed the employees who were in the same union as himself. However, the employees who affirmed this discrimina on did not provide any evidence to prove the facts of the case. Therefore, the Arbitra on Council rejected the employees claim which required the supervisor to stop discrimina ng against members of other trade unions. Individual Rights OTHER BENEFITS A endance Bonus #A ACA 039/14 E Garment, dated April 21, 2014, Issue #16 ACA 050/14 Global Apparels Limited, dated April 04, 2014, Issue #02 (Legal Ref. Clause 2 of No fica on No. 230/12 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A ) Clause 2 of No fica on No. 230 states that the employees who have worked regularly each month without absence, shall be en tled to receive 10 USD per month. In this case, the employees required 5 USD more, which meant a total of 15 USD, as the employer had already provided 10 USD for the a endance bonus. There are no applicable laws or regula ons which require an employer to fulfill an obliga on which exceeds what is stated in this regula on. Therefore the Arbitra on Council rejected the claim of the employees. A endance Bonus vs. Sick leave #A ACA 064/14 Cambo Unisoll, dated April 23, 2014, Issue #07 (Legal Ref. Clause 2 of No fica on No. 230/12 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A ) Note: Clause 2 of No fica on No. 230 states that the employees who have worked regularly each month without absence, shall be en tled to receive 10 USD per month. In this case, the employer had provided 13 USD for the a endance bonus. Employees are required to keep this benefit while they take sick leave with prior approval from the employer. There are no provisions which oblige an employer to keep the a endance bonus for employees who take leave with prior approval from the employer. The Arbitra on Council in this case, considered that it was a kind of interests dispute and therefore rejected the employee s claim. B&A NL, compl. vol.1 III, p. 63

12 III. R C Volume 1 Number 08 August 2014 Pro rata Deduc on of the Regular A endance Bonus #A ACA 064/14 Cambo Unisoll, dated April 23, 2014, Issue #08 (Legal Ref. Clause 2 of No fica on No. 230/12 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A ) The Arbitra on Council reminded the par es that an employee shall be en tled to 100% (one hundred per cent) of the regular a endance bonus, if he/she takes leave prescribed under the Labor Law; this includes annual leave, special leave, maternity leave, public holiday and weekly days off. The Arbitra on Council held that if the employee takes leave other than the leave men oned above, but he/ she has obtained prior approval from his/her employer, the regular a endance bonus shall be deducted on a pro rata basis. However for this case, the Arbitra on Council held that the employees were not en tled to obtain the a endance bonus on a pro rata basis, because they had taken unpaid leave for their own personal affairs, which did not come under the obliga ons of the employer. Transporta on and Accommoda on Allowance #A ACA 057/14 Yu Da, dated April 04, 2014, Issue #02 (Legal Ref. Art 311, 385 and 396 of Civil Code, No fica on No. 230 KB/SCN, dated July 25, 2012) (Ref. Precedent: #A ) Note: A contract represents a mutual agreement between par es to create, modify or withdraw their obliga ons. The creditor is en tled to demand a debtor to complete his or her obliga ons. This contract is legally binding on the par es. Due to no fica on No. 230 KB/SCN, a transporta on and accommoda on allowance can be provided to employees at a rate of 7 (seven) USD per month, which is applicable only to employees of tex le, garment and footwear establishments. Alterna vely, the employer can provide actual means of transporta on and accommoda on directly to the employees, instead of paying the allowance. An employer can obey the exact terms of this no fica on or provide more financial support which is more favorable than what is s pulated in the law, but it can never provide less than what is legally required. In this case, the employer provided 7.5 USD for the transporta on and accommoda on allowance, but the employee requested 1 USD more which totalled 8.5 USD. However, the employer as a rule only provided 8.5 USD for transporta on and accommoda on to the employees who were members of the union which had an agreement with the employer. Due to the obliga ons of the par es set out in the agreement, the Arbitra on Council rejected the request of the employees who demanded protec on of their right to be a member of a union which was not in an agreement with the employer. B&A NL, compl. vol.1 III, p. 64

13 III. R C Volume 1 Number 08 August 2014 WAGES Minimum Wage Determina on for Employees in the Garment and Footwear Industries #A ACA 039/14 E Garment, dated April 21, 2014, Issue #17 Legal Ref: Clause 1&2, Prakas No. 317 KB/BrK, dated December 31, 2013 on minimum wage determina on for employees in the garment and footwear industries) (Ref. #LR and #A ) 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 from February 1, 2014 onwards. The Arbitra on Council rejected the claim that the employees couldn t demand a wage of 150 USD (one hundred and fi y US dollars) per month, as this was more than what the law provides. TERMINATION OF AN EMPLOYMENT CONTRACT Replacing a UDC with a FDC #A ACA 043/14 Violet Apparel, dated April 04, 2014 (Legal Ref. Art. 77, 89 and 91 of Labor Law, Art 336, 337 and 357 of Civil Code) (Ref. ACA 075/05 Issue #02, ACA 010/10 Issue #02) In this case, the employer wished to terminate the unspecified dura on employment contract of an employee and to compensate by providing a termina on indemnity in accordance with the employee s seniority, as well as replace the contract with a fixed dura on contract. The Arbitra on Council rejected the claim of the employee which required a calcula on of the termina on indemnity, and instead ordered the employer to keep the employment contract of the employee as an unspecified dura on employment contract. It was decided that the seniority of the employee would also remain unchanged, from the first date in which the employee had originally began working for the employer. Termina on of a UDC #A ACA 039/14, E Garment, dated April 21, 2014 (Legal Ref. Art 65 and 74 of Labor Law, Art. 311 of Civil Code) Note: A contract is the agreement held by two or more par es to create, change or ex nguish an obliga on. Furthermore, an unspecified dura on contract can be terminated at will by any one of the contrac ng par es. This termina on shall be subject to prior no ce made in wri ng by the party who intends to terminate the contract with the other party. If an employer wishes to dismiss an employee without any reasonable grounds, the employee is en tled to provide indemnity for the dismissal. In this case, the Arbitra on Council rejected the employee s claim because the employer did not dismiss the employee. Therefore, the employer had no obliga on to provide any dismissal indemnity for the employee, as the employer had not dismissed the employee for any reason related to the employee s a tude or behavior, based on the requirements of the opera ons of the company. B&A NL, compl. vol.1 III, p. 65

14 III. R C Volume 1 Number 08 August 2014 SUSPENSION OF EMPLOYMENT CONTRACTS Suspension Effects #A ACA 039/14 E Garment, dated April 21, 2014, Issue #14 (Legal Ref. Art. 71 point 6 and 72 of Labor Law) (Ref. Precedent: #A ) Note: During the suspension period of an employment contract, the employee is not required to work for the employer, and the employer has no obliga on to pay the employee. However, the Arbitra on Council confirmed in its previous interpreta on that the employer may not suspend employment contracts for the reason of serious economic or material difficulty, unless these 2 (two) condi ons are fulfilled: the suspension shall be under the control of a labor inspector through obtaining his or her prior permission; and the suspension shall not exceed 2 (two) months. If an employer suspends the employment contract without prior permission from the labor inspector, such an employer shall provide 100% (one hundred per cent) of the wage payment to the employee for the illegal suspension period. In this case, the Council considered the agreement between the employer and the employees, which held that when there is no work for the employees to do, the employees will receive only 50% of the wages. However, the Arbitra on Council explained that even where there is such an agreement through which the employees agree to receive only 50% of the wage amount, if the employer has failed to obtain approval from the labor inspector for the suspension of the work, this agreement will consequently provide low benefits to the employees and be considered unlawful. Therefore in this case, the Council ordered the employer to return the full wage amount to the employees. OVERTIME Food Allowance #A ACA 050/14 Global Apparels Limited, dated April 04, 2014, Issue #04 & 05 (Legal Ref. Clause 2, No fica on No 041/11, dated March 07, 2011) (Ref. precedent: #A ) There are no applicable laws or regula ons which require an employer to fulfill an obliga on to provide a food allowance to his/her employees, except for an over me food allowance. Due to no fica on No. 041/11 KB/SCN, dated March 07, 2011, a food allowance for over me work is provided for at a limited amount of 2000 KHR (two thousand Khmer Riels) per day or alterna vely, a free meal can be provided. An employer can provide more than this if he or she wishes to do so. The requirement for providing a food allowance at an amount of 4000 KHR (four thousand Riels) exceeds what the law provides. Furthermore, in this case the Arbitra on Council confirmed that the employer had to provide an over me meal allowance to the employees once a week, in order to sustain the health of the employees. B&A NL, compl. vol.1 III, p. 66

15 III. R C Volume 1 Number 08 August 2014 PAID LEAVE Unused Annual Leave #A ACA 052/14 SL Garment, dated April 21, 2014, Issue #01 (Legal Ref. Art. 166, 167, and 168 of Labor Law) (Ref. Precedent: #A ) Note: Upon termina on 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 the number of working days per month. This is then finally mul plied by the number of unused annual leave days. In addi on, Ar cle 167 (2) states that any collec ve agreement which provides compensa on in lieu of paid leave, as well as any agreement renouncing or waiving the right to paid annual leave, shall be rendered null and void. In this case, the Arbitra on 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. WOMEN CHILDREN Exis ng Rights for Pregnant Employees #A ACA 050/14 Global Apparels Limited, dated April 04, 2014, Issue #03 In this case, the employer allowed pregnant employees to leave work first, five minutes before the end of the day; however, the employees requested 10 minutes more, which would mean 15 minutes earlier. There are no applicable laws or regula ons which require an employer to fulfill an obliga on to allow pregnant employees to go first. Therefore, the Arbitra on Council considered the claim as an interests dispute and rejected it. However, the Arbitra on Council advised the employer to take ac on against normal employees leaving first, in order to make it less difficult for pregnant employees who leave work late. Nursing Rooms and Daycare Centers #A ACA 039/14 E Garment, dated April 21, 2014, Issue #05 ACA 064/14 Cmbo Unisoll, dated April 23, 2014, Issue #11 (Legal Ref. Art. 186 of Labor Law) (Ref. Precedent: #A ) Note: Managers of enterprises employing a minimum of 100 (one hundred) women shall set up, within their establishments or nearby, a nursing room and a daycare center. Alterna vely, the employer shall pay for the charges of any daycare center where the female employees keep their children who are over 18 months old, in receipt of payment. In the case 039/14, the female employees affirmed that the daycare center provided by the employer was too small and insufficient for their children. Therefore, they wanted to bring their child to a daycare center outside of the enterprise and also for the employer to pay for this at an amount of 30 USD per month. The Arbitra on Council rejected the employees claim, because they wished to bring their child to a daycare center outside of the enterprise without a emp ng to keep their child in the daycare center of the enterprise first. B&A NL, compl. vol.1 III, p. 67

16 III. R C Volume 1 Number 08 August 2014 In the other case 064/14, the employee s claim was not related to the daycare center of the company, so the Arbitra on Council has not competent to decide on the ma er. However, the employees did request an increase in their work payment whilst they brought their children to the daycare center outside of the company. The Arbitra on Council considered the employee s claim as an interests dispute and rejected it. Employees Uniforms #A ACA 052/14 SL Garment, dated April 21, 2014, Issue #02 (Legal Ref. Clause 6, Prakas No 307 KB/BRK, dated December 14, 2007) (Ref. precedent: #A ) The employer must supply at least 2 sets of uniforms to the employees per year without charge. Each set of uniforms must have at least: a skirt or trousers and a shirt which fits the body size of the employees. The Arbitra on Council reconfirmed that the employer must supply at least two (2) sets of uniforms per year to the employees in the company. B&A NL, compl. vol.1 III, p. 68

17 Volume 1 Number 08 August 2014 BUN & ASSOCIATES COMPLIANCE, LABOR & TAX NEWSLETTER Editor: Bun & Associates Editorial Commi ee: Labor Prac ce Group Head of Labor Prac ce Group: Dr. Antoine Fontaine, PhD, Member of Paris Bar Mr. Oem Sam Ann, LLM Ms. Ly Mengmeyly, LLM Ms. Katherine Lowe, LLB Tax Prac ce Group Head of Tax Prac ce Group: Dr. Antoine Fontaine, PhD, Member of Paris Bar Mr. Vann Sinat, Tax Manager Ms. Ham Sophorn, LLM Ms. Vann Amporpech, LLB Ms. Soeung Sovann, LLB Contribu ons and correspondence concerning the various sec ons of the B&A Newsle er Compliance should be sent to Dr. Antoine Fontaine, fontaine@bun associates.com. Subscrip on to the B&A Newsle er Compliance should be sent to: newsle er compliance@bunassociates.com. Disclaimer: The B&A Newsle er Compliance is published for the purpose of no fying readers of changes in the labor and tax regula ons. This is not an academic text, nor is it intended to be relied upon while making legal decisions. Bun & Associates accepts no responsibility for use of this informa on. Bun & Associates #29, St. 294, P.O. Box 2326 Phnom Penh, Cambodia Phone: +855 (0) Fax: +855 (0) info@bun associates.com