The Ministry of Labour and Vocational Training has postponed seniority indemnity payments for non garment and footwear workers until 2021, it said in a statement.
“Seniority payments” replaced Cambodia’s previous system of “indemnity for dismissal” payments – a legal concept requiring employers to give employees severance pay if their contracts are terminated – at the start of this year.
The amendment was stipulated in Prakas 443 – released by the ministry on September 21 last year – which dictates that an employer is no longer required to indemnify an employee who is dismissed but will be required to pay seniority payments every six months, equivalent to 15 days of the employee’s pay.
The first payment was expected to occur in June of each year, and the second payment in December.
However, the latest ministry directive states that only workers in the garment and footwear sectors would receive the senior indemnity back pay from this year onwards.
“During the postponement, employers must pay seniority payments immediately for workers, or their relatives, who were laid off for less serious reasons, retirement or death,” the statement read.
It further said: “The workers who have resigned from their jobs spontaneously or been laid off due to serious mistakes shall not receive the seniority indemnity back pay prior to 2019.”
Speaking to The Post on Sunday, ministry spokesperson Heng Sour said “the garment and footwear industries are universal and hold bigger risks, given that factories and assets can easily be moved to other countries”.
“Whereas in other sectors, the assets – as universally viewed by economists – cannot be easily moved. Employees and the government alike are less likely to face bankruptcy if the business owners run away. Therefore, the payments of seniority indemnity back pay from before 2019 for industries outside the garment and footwear sectors have been postponed until 2021,” Sour said.
Moeun Tola, the executive director of the Centre for Alliance of Labour and Human Rights (Central) echoed similar remarks.
He said he was not worried about the announcement of the delay, noting that “non garment and footwear sectors rarely hold risks as long as the enterprises fully abide by the law”.
However, he fretted about the garment and footwear sectors, stressing that “vulnerable sectors are prone to risk should the implementation of seniority payments become unclear”.
“There must be seniority payments upon termination of a contract between companies and workers. The new law [Prakas 443] is good because it gradually indemnifies the employees. However, if it was implemented with the intention to reduce their seniority then it would make dismissal by employers easier,” Tola said.
Keo Mom, director-general of Ly Ly Food Industry Co Ltd, lauded the delay, saying it would ease “some burdens on them”.
“We are happy to follow the government’s direction. However, some small enterprises still find difficulties in indemnifying their workers. Therefore, we hope the ministry would give us more time,” she said.