Minister of Labour Ith Sam Heng yesterday fingered large end-of-contract severance payments as a prime reason owners flee when their factories go bankrupt, suggesting the introduction of a yearly bonus scheme and fortnightly salaries would “reduce the risk” of garment workers being left in the lurch.
Sam Heng’s comments, made during the Ministry of Labour’s annual meeting, came a day after workers from the Chung Fai Knitwear factory blocked National Road 2 as they protested the lack of final salary and severance pay after their factory was suddenly shuttered.
Some workers had been at the factory for more than 10 years and were entitled to up to $5,000 in severance pay, worker representatives have said.
Sam Heng yesterday said the high costs of severance balloon payments due at employees’ termination put too much of a burden on factories, and called on employers and unionists to consider amendments to the Labour Law this year.
“The reason the employer abandons or escapes [is] because they owe the worker so much in severance pay that they do not have ability [to pay it],” he said, adding the liquidation of a company’s assets did not always cover the full cost.
“We want employers to pay severance pay to the worker per year ... so when the factory closes, the employer does not owe so much severance pay to the workers and the workers do not protest too much to demand their bonuses.”
But Sam Heng also took aim at the Chung Fai factory protesters yesterday, signalling that the government was seeking the arrest of the protest’s leader.
“We want to find the person who persuaded the workers to block the road, which affected the public,” he said. “We want them to appear to be responsible … and face the penalty of the law. We will give a reward if the workers show who their leader is.”
Chung Fai worker representative Khorn Chiven yesterday stressed that no one had persuaded the workers to block the road. “The group of workers decide to block the road by ourselves, because we do not have another choice to get a result,” she said.
But she welcomed the minister’s suggested changes to workers’ pay schedules, agreeing it would have lessened the pain she and her fellow workers had faced since the factory shuttered in June. “It is good if the employer paid us every two weeks, because when the employer escapes, at least we’d have the wage for two weeks,” she said.
But Garment Manufacturers Association in Cambodia secretary general Ken Loo said fortnightly paychecks would be administratively “unrealistic”, as most were still paid in cash.
He stressed the majority of factories closed not because severance costs were too high, but because business was going badly. “There is no need for the owners to run away. In the event of bankruptcy, their assets are liquidated,” he said. “The workers have the first claim, before any other creditors are paid.
“If the liquid value of the assets is insufficient to cover the full entitlement, then they will not get the full amount.”
Unionists, however, welcomed the idea. Ath Thorn, president of the Coalition of Cambodian Apparel Workers’ Democratic Union, said some shuttered factories could owe hundreds of thousands in salaries, which then tipped into millions when including bonuses.
“We want the factory to keep the money in a state bank for access … when the factory closes,” he said. Far Sally, president of the National Trade Union Coalition, said while she appreciated the ministry thinking of the workers’ benefit, she doubted employers would comply.
“The employers escape and take so much money away, but they leave workers in tears,” he said.
The Solidarity Center’s William Conklin welcomed discussion on the issue, but stressed there also needed to be a social safety net or social insurance that went beyond the current obligations of factory owners. “It shouldn’t impact the workers’ need to be on a long-term contract [in which they are entitled to indemnity] that’s what protects them against discrimination,” he said.
He said paying out indemnity which should also be open to those who leave their jobs for reasons other than termination – was a good concept and that fortnightly salaries could be helpful to many workers who send large chunks of their paycheck home in remittances.
Last year, the ministry reported 141 factories shuttered, but 149 opened, compared to 77 closures in 2015 and 43 openings. There were 220 protests in 2016, involving 54,978 workers, compared to 336 in the previous year. Of the 220,214 of those had been resolved, but six were ongoing.