The Labour Ministry yesterday issued a reminder to the garment sector that companies are required to pay seniority indemnity to their workers.
It noted that some in the sector still do not understand how the policy works.
The reminder, entitled the Instruction on Payment of Back Pay Seniority Indemnity before 2019, was issued during a meeting between Labour Minister Ith Samheng, employers and employees in the garment sector.
In it, the ministry issued points clearing up any misunderstanding.
“Seniority indemnity payments must be carried out effectively to ensure harmony in industrial relations,” it said. “The ministry would like to reiterate that seniority indemnity is stipulated under Article 89 of the Labour Law, which shall be applied to [permanent] workers who have Undetermined Duration Contracts.”
“Employees who have Fixed Duration Contract [temporary] shall receive severance pay, which is proportional to both wage and duration of the contract,” it added. “The amount of this pay is stipulated by their Collective Bargaining Agreement.”
“If there is not CBA, this severance pay shall be at least five percent of total wages paid during the duration of the contract,” it said. “FDC employees exceeding the time limit and have received their severance pay cannot ask their employers to pay seniority indemnity.”
It noted that any FDC employee who have worked beyond the duration of their contracts, must be converted into a UDC employee by the end of this year.
The ministry said that employers must pay seniority indemnity after the UDC conversion, as stipulated by Article 89 of the Labour Law, Directive 443, dated September 21, 2018, on Payment of Seniority Indemnity.
It said that these payments will be exempted from tax.
“Seniority indemnity payments shall be exempted from tax,” it said. “Workers will not receive payments if they have resigned or have committed misconduct.”
Pav Sina, president of the Collective Union of Movement of Workers, yesterday said his union has also noted that some in the industry still do not understand how the policy works.
“Workers and companies are not clear about the payment, causing the ministry to hold discussions,” Mr Sina said. “The worker thinks one way, the company thinks another.”
“The workers think that when the company pays their seniority indemnity, they will get less benefits from their many years of working,” he added. “There are also many workers who have not received their seniority indemnity benefits.”