DFDL’s Employment Practice Group is dedicated to advising clients on employment and labor issues and preparing human resources documentation that is compliant with local laws. Our employment team’s in-depth knowledge of the law and practices in the countries where we operate allows us to provide specialized, tailored, and practical advice on issues that arise in employment relationships. Our Head of the Regional Employment Practice Group is Marion Carles-Salmon, who is based in Bangkok. This legal update is to advise you on important legislation and employment issues in the region.
An action plan known as the ‘National Tripartite Plan of Action on Fire Safety and Structural Integrity in the garment Sector of Bangladesh’ (“NTPA”) was issued by the Government of Bangladesh represented by the Ministry of Labour and Employment, Rajdhani Unnayan Kartipakhya, Bangladesh Fire service and Civil Defense, the representatives of employers and the representatives of workers in relation to occupational safety in the Bangladeshi garment sector. Pursuant to the NTPA, the Ministry of Commerce recently published guidelines titled ‘Subcontracting Guidelines for the Ready Made Garments sector 2019’ (the “Guidelines”) for the purpose of implementing the NTPA, to ensure a safe working environment, transparency in contracts between exporters and subcontractors, to establish worker‘s rights and others. These Guidelines are applicable to entities that export ready-made garments from Bangladesh (“Exporters”) and factories that take orders from these Exporters to produce readymade garments (“Subcontractors”).
As per the Guidelines, Subcontractors are required to be members of relevant trade bodies such as the Bangladeshi Garment Manufacturers and Exporters Association (“BGMEA”) or Bangladeshi Knitwear Manufacturers & Exporters Association (“BKMEA”). Furthermore, a written contract must be executed between the Exporters and Subcontractors in relation to subcontracting work and a copy of the same has to be submitted to the BGMEA or BKMEA. Moreover, Subcontractors must comply with all the laws and regulations relating to labour, employment, health and safety, building layout plan approval, minimum wage requirements and others. In addition, workers of Subcontractors must have group insurance coverage and to pay the premiums on a regular basis. As per the Guidelines, Exporters are responsible to monitor whether Subcontractors are in compliance with the relevant laws and regulations. Furthermore, if any non-compliance issues arise, Exporters must notify the BGMEA or BKMEA to take remedial measures for such infringements. According to the Guidelines, Exporters or Subcontractors can apply to the arbitration committee of BGMEA or BKMEA for dispute resolution. However, the dispute has to be dealt with under Bangladesh’s arbitration rules within four weeks. The Guidelines require the BGMEA and BKMEA to submit a report every six months to the Ministry of Commerce and the National Board of Revenue in relation to Subcontractor activities. The Government of Bangladesh and BGMEA or BKMEA can temporarily or permanently suspend production and export if any party violates any provisions of the Guidelines. Therefore, it appears that only compliant factories will be eligible for subcontracting work.
Guidelines dated 17 May 2019 on fixed duration and probationary contracts
The Ministry of Labour and Vocational Training (“MLVT”) issued Official Guidelines 050/19 on Fixed Duration Contracts (“FDC”) providing that a signed labour contract for a specific duration cannot exceed two years. It may be renewed one or more times provided that the renewal does not surpass the two year maximum duration. In such an event, the labour contract will convert into an Unfixed Duration Contract (“UDC”). The Guidelines illustrate that if the first FDC is for one year, the maximum duration of the FDCs is three years in total. Therefore, the maximum duration for FDCs (plus renewals) is contingent upon the length of the initial FDC and in any event cannot exceed four years.
It should be noted that the clarification provided by these Guidelines contradicts the Arbitration Council’s (“AC”) interpretation under which the maximum duration of an FDC and any renewals cannot exceed two years.
Furthermore, the Guidelines provide that, except in limited circumstances (seasonal work, employees recruited, etc.), in the event that the FDC maximum duration is reached, employers may enter into a new FDC with the same employee for the same or similar work provided that there is a gap of at least one month between the previous and new FDC. Otherwise, the new FDC will be considered as a renewal causing it to convert into a UDC.
Guidelines dated 10 June 2019 on seniority payments before 2019 for enterprises in the garment, textile and footwear sectors
To further clarify the calculation of seniority payment back pay for employees before 2019 (“Back Pay”) in the Garment, Textile, and Footwear (“GTF”) Sectors, the MLVT issued official Guidelines 057/19 establishing the following calculation of Back Pay:
- average base wages per month equal to total base wages during the Back Pay entitlement period divided by the total number of months during the period of Back Pay entitlement period;
- average base wage per day equal to average base wage per month above divided by 26 days;
- Back Pay per year equal to average daily base wages above multiplied by 15;
- the calculation does not factor in probationary contracts; and
- the period of maternity leave, sick leave and leave due to work related accidents, shall be factored into the calculation of Back Pay.
Guidelines 057 also provide other notes:
- Back Pay installments for GTF Sectors are provided in the second cycle of salary payment;
- Back Pay installments should be stated separately from monthly wages for tax purposes;
- for employees who retire or die from 2019 onward, the employer shall provide outstanding Back Pay due to him or her to his or her heir (in the event of death) and to the employees (in the event of retirement); and
- employers and employees shall keep signed/thump printed documents by both parties of all payments of Back Pay or other equivalent documents.
Notification dated 8 July 2019 on seniority payments before 2019 and new seniority pay from 2019 onward for enterprises in the garment, textile and footwear sectors
The MLVT issued Notification No. 023/19 on Back Pay and New Seniority Payments Each Year from 2019 (“New Seniority Pay”) reconfirming six key points, mostly clarified in its previous Guidelines 057/19, in relation to seniority payment under a UDC and severance pay under a FDC for the GTF Sectors. First, it reconfirms that Seniority Payment is only applicable to employees under a UDC. Second, it reconfirms that employees under an FDC are entitled to Severance Pay of 5% if there is no separate collective bargaining agreement that provides differently. Third, in the case that an FDC exceeds the maximum period allowed by law, employees who have received severance pay of 5% are not entitled to Back Pay under a UDC. Fourth, in the case of converting an FDC to a UDC and the FDC is being used, it must be converted into a UDC by the end of 2019 at the latest. In such a case, the employer must provide seniority payments from the conversion date. Fifth, both Back Pay and New Seniority Pay are exempt from tax, except for foreign employees. Sixth, in the event of resignation by an employee or termination due to serious misconduct, such an employee will not be entitled to seniority payment.
The Minister of Labor and Social Welfare issued the Decision on the Determination of Hazardous Work Prohibited for Young Workers (No. 4182/MLSW, 23 November 2016) which came into force on 25 May 2019. This decision sets out a list of hazardous work which, as a result of its nature is deemed to be dangerous to the physical health, mind, morality and safety of workers between the ages of 14 to 18 years.
Examples of such work include: (i) coming into contact with chemical or toxic substances or any substance that causes cancer, electric radiation or excess dust, such as: Asbestos, Benzene, Cadmium or Mercury; and (ii) training or raising of wild or poisonous animals such as at a zoo, veterinary clinic or circus.
The decision also contains an exception to the general prohibition provided that the labor unit complies with certain requirements, being:
- if the young worker obtains adequate training and technical advice related to the work;
- if the young worker is adequately trained to properly and effectively use personal protective equipment required for the work; and
- the labor unit has obtained approval from the Labor Management Authority.
Any violations of the decision will be strictly prosecuted in accordance with the laws and regulations of the Lao PDR.
The decision also states that the Ministry of Labor and Social Welfare has the right to update the list of hazardous work from time to time.
The second amendment to the Settlement of Labour Disputes Law of 2013 was passed on 3 June 2019 by the Parliament of the Union of Myanmar. Among others, some key distinct changes are as follows:
- Directors of companies are explicitly defined under the term “Employer” in the law.
- The terms “individual dispute” and “collective dispute” have been replaced by “dispute for employment rights and privileges” and “dispute for benefits” respectively. Under the Settlement of Labour Disputes Law 2013, both individual and collective disputes by the employee need to be settled through the dispute conciliation body before appeals can be lodged with a competent court (in the case of an individual dispute) or step-by-step appeals to an arbitration council (in the case of collective disputes). Under the amendment law, if a dispute is related to employment rights and privileges, either the employer or employee can submit his/her complaint directly to the relevant Department of Labour Relations or to a competent court. For disputes related to employment benefits, the grievance shall be submitted on a step-by-step basis from the dispute conciliation body to the arbitration council in the same manner as a collective dispute under the old law.
- Employers with 30 or more employees are responsible for forming a so-called “Workplace Coordinating Committee” which includes three representatives each for the employer and the employees (the number of representatives required to form a committee under the original law was two). The term of the committee is two years (it was one year under the original law). In the case of any dispute between the employer and the employee, the Workplace Coordinating Committee shall attempt to resolve the dispute and if successful, the parties shall form a collective agreement. Within one year from the signing date of such an agreement, any terms and conditions agreed to thereunder shall not be raised in complaint again. The collective agreement is to be filed with a relevant dispute conciliation body.
Fines and penalties for non-compliance with the law have been revised. Among others, the fine levied on an employer for non-compliance with formation of a Workplace Coordinating Committee has been revised to a range from MMK 300,000 to 1 million (under the original law it was MMK 100,000 then revised to MMK 500,000 in 2014).
The Thai Personal Data Protection Act (“PDPA”) is the first consolidated law in Thailand concerning personal data protection. It was published in the Royal Gazette on 27 May 2019, and will become effective one year after its publication, i.e. 27 May 2020, allowing businesses to familiarize themselves with the new PDPA requirements and ensure appropriate data protection measures are put in place before the deadline. The scope of the PDPA covers the collection, use/processing, disclosure, and transfer of data pertaining to individuals, which includes data of employees.
In principle, prior consent shall be obtained from any individual for lawful collection of his/her data, but this principle contains a number of exceptions. Pursuant to Section 26 (6), the employer may collect the employees’ personal data without their consent provided that such data is collected for purpose of compliance with applicable laws and regulations (e.g. labour protection, social security registration, tax return). The employer shall also be entitled to collect the employees’ data without their consent if that is necessary for the performance of a contract to which the employee is a party (provided that the use of the information is only for the purpose of performing obligations under the contract) (Section 26 (3)). Data collection could prove to be necessary to fulfil certain obligations stipulated in an employment contract for instance. However, to this date, further clarification from the Personal Data Protection Committee is awaited as to the extent of these exemptions to obtain an individual’s consent.
In addition, an employee’s sensitive data (e.g. ethnicity, political opinions, criminal record, health records, disability, labour union) may be collected without obtaining his/her prior consent provided that it is necessary for the employer or the employee to comply with applicable laws related to labour protection, social security, national health security scheme and benefits of medical treatment (Section 26 (5) (c)). It is further specified that appropriate measures shall be put in place to ensure protection of the employee’s fundamental rights in situations where sensitive data are processed.
Any individual whose data is processed benefits from a number of rights over their data. Hence, an employer must implement appropriate technical measures and organizational measures to ensure capacity to meet an employee’s request to exercise his/her rights, as the case may be, with undue delay. In brief, employees have the right to (i) request access to and copy of their data, (ii) data portability where technically possible, (iii) object to the use of their data or request a suspension of such use in specific situations and (iv) ask for rectification in cases of inaccuracy of their data held by the employer. Employees shall also be entitled to request the employer to delete all data relating to them under certain circumstances. In addition, the employer must ensure that it deletes the employees’ personal data after the expiry of the legal retention period for storage of the same, or when the data is no longer necessary for the purpose for which it was used initially, or as per an employee’s request to exercise his or her right to be forgotten (under certain circumstances).
The Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (“CPTPP”) was signed by 11 member states, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam in March 2018. The CPTPP took effect in Vietnam on 14 January 2019.
One of Vietnam’s outstanding commitments under the CPTPP is the creation of new opportunities for employees. As a participant in the CPTPP, Vietnam agreed to follow the commitments covered in Chapter 19 regarding labor. Particularly, Vietnam as well as other parties of the CPTPP must adopt and maintain in its statutes and regulations, and practices thereunder, the following rights as enshrined in the International Labor Organization (“ILO”) issued in 1998:
- freedom of association and the effective recognition of the right to collective bargaining;
- the elimination of all forms of forced or compulsory labor;
- the effective abolition of child labor, a prohibition on the worst forms of child labor and other labor protections for children and minors; and
- the elimination of discrimination in respect of employment and occupations.
On the State management side, the Vietnamese government issued Decision 121/QD-TTg dated 24 January 2019 approving the plan to implement the CPTPP (“Decision 121”). Accordingly, the legal system will be improved to bring labor relations and labor standards into conformity with international standards, commitments and conventions. According to Decision 121, Vietnam will implement guidelines and policies to trade-unions and employee organizations at the grassroots level in enterprises across Vietnam from 2019 to 2020, as follows:
- Complete the legislative system which governs labor relationships, labor standards compliance with international standards, and commitments and conventions entered into by Vietnam.
- Coordinate with the Vietnam General Confederation of Labor (“VGCL”) and trade-unions to propose specific policies and methods so that the VGCL may be reinforced, increase its prominence and achieve operational efficiency.
- Increase the effective management and operation of organizations representing employees at enterprises to:
- protect the employees’ legal rights and legitimate interests;
- facilitate enterprises in running their businesses stably and successfully; and
- operate smoothly under Vietnam law, be compliant with the rules of the ILO, operate without political purposes as well as maintain social and political stability
- Strengthen the organization of State bodies which has as its main functions the management of establishment and operation of organizations representing employees in enterprises.
In particular, the Labor Code 2012 will be modified in accordance with the roadmap stipulated in the CPTPP. So far, the fifth-amendment draft of the Labor Code 2012 has supplemented the right to establish an organization representing employees in the labor relationship and detail the functioning of the organization representing employees. This indicates that the Vietnamese government is trying to complete local regulations on work conditions to ensure that employees and employers enjoy their fair share of economic gains.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situation.
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This article is written by DFDL Lawyers.