With claims that some companies are attempting to avoid forking out seniority indemnity payments, the Ministry of Labour and Vocational Training has reminded the owners and bosses of garment and footwear companies of their obligation to implement the new policy.
Indemnity payments for workers in the sector were to be paid for the first time at the end of June.
Minister of Labour and Vocational Training Ith Sam Heng signed a directive on Monday stating that such payments must be provided to all long-term employees whose contracts do not have a date of termination.
The directive said that workers whose contract specified a date of termination would receive the benefits automatically if they were to stay on the job longer than stated in the contract or longer than stipulated in the Labour Law.
Their contract would then automatically become long-term, thereby requiring employers to make such payments.
However, employees on fixed contracts are not entitled to indemnity if they have already received five per cent of payment to terminate their contracts, even if they were to stay on the job longer than stated in their contracts or in the Labour Law.
The directive also stated that indemnity paid before 2019 and from 2019 onwards will be exempt from tax.
Workers who resigned or are dismissed for serious wrongdoing are not entitled to indemnity.
At the beginning of this month, many factories, companies, and enterprises in Cambodia started to provide back pay and indemnity payment for workers in accordance with the ministry’s new policy.
Last year, the ministry changed its indemnity policy for workers in the garment and footwear manufacturing sector by paying workers twice a year instead of a lump sum at the end of their contract.
Indemnity payments before and from 2019 onwards must be made for the first time in June and then in December.
Similarly, companies outside the garment and footwear sector must also pay indemnity to their employees twice a year, the first time in June and December, while indemnity before 2019 is postponed until 2021.
Cambodian Labour Confederation (CLC) president Ath Thorn told The Post on Tuesday that the issue of indemnity payments had largely improved, though some factories still make irregular payments as they seemed not to understand the new policy, while others simply tried to avoid their obligations.
That, he said, has caused a lot of confusion and led to protests.
Nonetheless, Thorn said that most cases had been resolved after negotiations. He called on the Ministry of Labour to continue enforcing the new policy implementation in the interest of the workers.
“Currently, we don’t know how many companies have paid [indemnity] and how many have not. But we know that companies that provide infinite-term contracts have largely complied, while some others refrain from revealing their contracts with employees to avoid responsibility, leading to minor verbal conflicts."
“Regarding this issue, we’ve noticed that some ill-intentioned companies continue to exploit their workers, claiming their contracts are bound by a date of termination,” he said.
Ministry of Labour spokesman Heng Sour and Kaing Monika, the deputy secretary-general of the Garment Manufacturers Association in Cambodia, could not be reached for comment.