AS promised in the last edition of the "Rule of Law", this week's column

will compare rules regulating labor unions and the right to strike, as defined under

Cambodia's new Labor Law*, with how other countries deal with these two topics.

In determining whether to invest in Cambodia, an investor should be aware of new

provisions in the Labor Law which affect labor unions and the right to strike. At

this point, Cambodia's new Labor Law has been passed by the National Assembly, but

not yet signed by the King. As illustrated below, the provisions in this new Labor

Law relating to labor unions and the right to strike do not seem to deviate from

standard provisions other countries have adopted.

Formation of Unions

Allowing "labor unions" to be formed in Cambodia can be positive for both

employers and employees. Unions and employers do not necessarily have to work against

each other. It is possible to view unions as an opportunity whereby employers and

employees can develop a better working relationship through collective bargaining

and open discussion between the parties. After all, an unhappy employee creates an

unproductive employee. If better relationships can be harnessed by having unions

and employers work out their differences, then both parties will benefit from the

outcome.

Cambodia

Under Cambodia's Labor Law, unions can be established by all workers, except government

employees if the founding members send the charter of the union and a request to

form a union to the Ministry of Labor. If the Ministry of Labor does not respond

to the request within 2 months after receiving it, the union is considered officially

registered. Thereafter, the charter and a list of individuals managing the unions

shall be sent for notification to the Labor Commission where the union is located,

the Council of Ministers, the Minister of Justice and the Minister of the Interior.

Formation of Unions in Other Countries

In Canada, the decision to certify or decertify unions is within the powers of Canada's

Labor Relations Board. Certification of a union will depend on the Board's finding

whether a majority of the employees in the bargaining unit wish to have a union represent

them. The Board also has broad powers to determine whether certain employees (proposed

by the unions) can participate in the collective bargaining with an employer.

In Thailand, labor unions can be created by employees working in the same profession

or working for the same employer. The Department of Labor Protection and Welfare

(DLPW) has jurisdiction to grant licenses to unions. The grant of a union license

is dependent upon a finding by the DLPW that the union's charter is "not contrary

to law and public order and does not constitute a threat to national security or

economy."

Like Cambodia, the Philippines prohibits government employees from joining or creating

unions. The Philippines further prohibits managerial employees, employees of religious

and non-profit organizations to be members of a labor union. To be legitimate, all

labor organizations are required to register at the Department of Labor and Employment.

The Right to Strike

In most countries, the right to strike is only granted after all peaceful means have

been used by the employees and prior notice has been given to the employer or the

relevant governmental body which has jurisdiction over labor issues. Placing procedural

requirements before initiation of a strike protects employers from surprise strikes

and gives both employees and employer an opportunity to resolve their disputes peacefully.

Generally, if a strike is found to violate the procedures specified by the government

and then is declared illegal by the relevant government body, the employer may have

the discretion to terminate the employment of those individuals who do not show up

to work after notice of the strike's illegality has been given.

Cambodia

Before a strike can be initiated by union members or a group of employees, the Cambodian

Labor Law requires the parties to attempt all peaceful means of dispute resolution.

This includes mandatory negotiations between the parties and mandatory conciliation/mediation

by the Ministry of Labor. If mediation fails, the parties are obligated to submit

their disputes to arbitration in accordance with arbitration procedures of the collective

agreement, procedures agreed upon by the parties or procedures contained in the Labor

Law .

Under the Labor Law's arbitration procedure, an arbitration panel must be appointed

by the Minister of Labor five days after the conclusion of the mediation process,

otherwise employees have the right to strike. Employees also have the right to strike

if the arbitration panel fails to render its decision after two weeks of its appointment.

In addition, the decision to strike must be adopted by secret ballot, and notice

stating the reasons for the strike must be given to the employer(s) and the Ministry

of Labor at least a seven days prior to the strike. For essential areas which affect

the life, safety and health of part of the population, certain workers are still

required to provide minimum services while they are on strike. In addition, Cambodian

Labor Law prohibits the right to strike to revise a collective bargaining decision

or to revise an accepted arbitration decision.

Right to Strike in Other Countries

In Canada, the right to strike is prohibited if there is a valid collective agreement

between the employers and employees. Like Cambodia, Canada requires employers and

unions to do everything possible to resolve the dispute before initiating any strike,

such as negotiation and conciliation. In contrast to Cambodia, Canada requires an

extra step whereby the unions may strike only after the Minister advises the parties

that he/she will not appoint a conciliation officer or board to resolve the dispute.

Before initiating a strike in the Philippines, a 15 days to 30 days notice must be

filed at the Department of Labor and Employment. However, in the event that the union's

existence is jeopardized or threatened, an immediate strike is allowed and no notice

is required. Unlike Cambodia, Philippines Labor Law explicitly permits the President

of the Philippines and/or the Secretary of Labor and Employment to stop any impending

strike and require the disputing parties to undergo a compulsory arbitration process

if the strike would "adversely affect the national interest" of the Philippines.

Conclusion

Investors should evaluate the issues discussed above, but keep in mind that the right

to form labor unions, collective bargaining, and the right to strike can be positive.

Substantive and procedural regulations by the Cambodian government in these two areas

are crucial to prevent potential chaos in the relationship between employers and

employees in Cambodia.

*This article is based on an English translation of a draft of the Labor Law. The

final version passed by the National Assembly may differ substantively from the draft.

Ratha L. Panh, is an attorney at the Phnom Penh Office of Dirksen, Flipse, Doran

& Le.