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GMAC says new labour policy could hurt business

Mom Kunthear / Khmer Times Share:
Workers stage a protest over unpaid wages. KT/Chor Sokunthea

The Garment Manufacturers Association in Cambodia yesterday issued a statement asking for the Labour Ministry to reconsider its intent to amend article 89 concerning worker protection and severance pay.

The statement came as a response to a statement by Labour Minister Ith Samheng, who said that companies are required to pay a maximum of six months’ worth of compensation, based on employee seniority, should the factory close.

The statement from GMAC said that the association acknowledged the distress caused by the closure of several garment factories across the country, but noted that the amendment could hurt employers.

“We understand that the government is amending article 89 to protect workers, depending on how long they have been working at the company,” it said. “While it’s good for employees, the need to make companies pay it all at once will create a new degree of financial burden for the employer and possibly other human resource management challenges.”

“We would like to express our concern and ask the government to please carefully consider the issue,” the statement added. “We strongly suggest that employers pay the compensation in phases.”

GMAC said that amending article 89 could have more far-reaching ramifications than just the financial burden, arguing that it could spark an influx of resignations in order to collect the maximum severance amount.

GMAC has asked the Labour Ministry to reconsider amendments. KT/Chor Sokunthea

Mr Samheng said last week that in order to help workers whose employers flee, the ministry is prepared to amend labour laws related to their benefits.

“Any amendment to the labour law won’t add any pressure to anyone at any side,” he said, adding that the ministry will amend some articles in order to create an opportunity for employers to pay their workers.

In March, Prime Minister Hun Sen ordered all stakeholders to find a solution to the problem of employers who abandon their factories without paying workers.

“I ordered relevant officials to solve this problem. The problem is that factory owners owe salaries, along with seniority bonuses and other benefits too,” he said. “We have many ways to solve it. For example, factory owners pay a seniority bonus once per year to workers. So we can change that to having factories pay every two or three months instead.”

Mr Samheng also said the ministry will take action to prevent owners from fleeing.

“The ministry is preparing regulations that will require all enterprises to pre-deposit money with the National Social Security Fund, so that if factories close unexpectedly, NSSF will have the ability to pay workers,” he said.

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