Business in Cambodia may soon be required to deposit severance payments on a monthly basis with the government in an attempt to protect garment workers, Labour Minister Ith Samheng announced on Tuesday.
Labour rights advocates welcomed the move after calling for the government to solve the perennial problem of garment factory owners shutting down their companies and fleeing without paying severance to their workers.
At a ceremony to present the ministry’s year-end report, Samheng said ministry officials are drafting a prakas to require companies to pre-deposit the severance money with the National Social Security Fund.
If factories do shut down unexpectedly, the NSSF will distribute the severance to workers on behalf of the factory, Samheng said.
“We do not want to just take government money to compensate,” Samheng said. “The important thing is to create an ongoing system of regular payments.”
Last month, the ministry announced that it set aside $4.6 million to pay severance workers at nine garment factories that were abruptly shuttered – shortly after the Taiwanese owner of Yu Fa garment factory in Por Sen Chey district shut down the factory and fled while workers were listening to a speech by Prime Minister Hun Sen.
On Tuesday, Samheng acknowledged that as many as 20 garment factories had faced the same problem since 2016 but claimed all but nine had been resolved. “If there are more factories that shut down, the government will look at it and solve the problem,” he said. The ministry has yet to reveal which nine factories are on the list.
Deuk Doeun, a 35-year-old garment worker at the now-closed Yu Fa factory, said that workers are desperate to know whether they will be included.
According to Doeun, workers at Yu Fa have agreed to accept roughly $130 each – money recouped from selling off the factory’s remaining equipment. However, it is just two-thirds of the salary owed them for their last month’s work, and none have received their severance pay, she said.
“I don’t know how to get the factory’s name confirmed,” Doeun said. “I’ve contributed a lot in the factory over the past nine years, but the owner just fled and my seniority is gone.”
William Conklin, of Solidarity Center, applauded the idea to require severance deposits.
“In some ways, it’s a standard business practice in many companies that they set aside severances as their exit costs,” Conklin said. “But it hasn’t been a practice of the garment sector. It will be good to start this.”
Central Director Moeun Tola said there is still much to figure out, including the process for workers to claim their severance and how the ministry will make sure the factories are increasing their deposits as new employees are hired.
Overall, however, “that is good news for workers”, Tola said. “I would welcome [it].”
