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Unions and companies alike unhappy with draft changes to law on worker contracts

Garment workers wait to listen to Prime Minister Hun Sen speak at an event in September. Facebook
Garment workers wait to listen to Prime Minister Hun Sen speak at an event in September. Facebook

Unions and companies alike unhappy with draft changes to law on worker contracts

Both unionists and private sector representatives are unhappy with draft amendments to Cambodia’s Labour Law, which would overhaul the regulations surrounding worker contracts and guaranteed employee protections.

Negotiations between the Ministry of Labour and representatives from employers and unions have been ongoing since the draft amendments were released on December 14. The amendments closely follow calls from Prime Minister Hun Sen for additional worker protections to be codified in law, part of an ongoing political charm offensive to woo the country’s garment workers ahead of July’s national election.

The current Labour Law stipulates that a fixed duration contract (FDC) cannot exceed two years in length, but allows FDCs to be renewed indefinitely. The proposed changes would keep the FDC maximum length at two years, but after four years of contract renewals – no matter how many renewals occur within that time – the contract would automatically shift to an unlimited duration contract (UDC).

UDCs require employers to pay additional benefits to employees, and – unlike FDCs – provide protection for workers against being fired by requiring cause for any dismissal.

Business representatives raised concerns about the law’s potential effects on employers at a luncheon held by the Cambodian Federation of Employers and Business Associations (CAMFEBA) in Phnom Penh on Friday.

“The government wants workers to have long-term working contracts, and wants employers to give workers protections including worker’s compensation and medical insurance,” said Van Sou Ieng, CAMFEBA’s president. “But we [employers] have to be careful, because this costs us a lot of money, and we want the government to use this money properly.”

Sou Ieng added that the final draft of the law would likely favour workers over employers due to the government’s push for political support ahead of national elections in July.

“In the current political environment, I don’t think any [further Labour Law negotiations] will work in our favour,” he said.

Matthew Rendall, a partner at law firm Sok Siphana & Associates, used the luncheon to raise the issue that the proposed law is geared specifically towards the garment and textile industry, and may negatively affect other industries.

“We need to run the constitutional law test and determine if this law applies only to the garment industry, or if we can make it more flexible for other industries,” he said. “[This law] will make business less attractive [to investors], and we’ve got to let the government know that.”

Ministry of Labour spokesman Heng Sour declined to comment on the ongoing negotiations yesterday.

On the other side of the negotiations, unionists are also concerned about some of the law’s provisions. Yang Sophorn, president of the Cambodian Alliance Trade Union, an independent union with about 10,000 members, said yesterday that she believed the draft amendments would serve to protect employers’ interests.

“We are not satisfied with the new law the government is working on,” she said, citing the provision allowing workers to remain on FDCs for four years, rather than the two-year cap that unions have pushed for.

She also said she was concerned that some of the law’s seemingly employee-friendly stipulations, which include increased seniority payments and guaranteed severance pay at the end of each individual FDC, are small concessions meant to convince the unions to accept the terms of an overall unpalatable law.

Additional reporting by Cheng Sokhorng

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