Lao Labour Law Interpretation Needed

The calculation of severance pay, the use of foreign labour, and many other matters stipulated in the newly amended Law on Labour needed explanation to ensure the law was effectively enforced.

These issues were discussed on Friday in Vientiane between employers, government officials, and international experts to test the Lao National Chamber of Commerce and Industry (LNCCI) labour code guides and training material.

The calculation of severance pay that is fixed to 10 percent of previous month’s salary or wage multiplied by the number of months worked under the 2013 Labour Law was a key topic raised at the discussion.

The calculation does not increase to 15 percent of monthly salary for employees having worked more than 3 years as under the 2006 Labour Law, but increases to 15 percent only in case of unfair dismissal.

A representative from Lao Beverage Company commented the company could not follow the rules of the newly amended law exactly, but made an average between the new and old stipulations.

He explained that a majority of employees at the company had worked there for more than 30 years, so if following the new law they would lose five percent of the previous month’s salary multiplied by 12 months and 30 years. The enforcement of the amended law would also affect employees in Electricite du Laos, State Water Supply Enterprises and telecom companies as a vast number of their workforce had been working for there for many years, he added.

A representative from State Enterprise Pharmaceutical Factory No.3 said the factory also faced the same problem as employees raised the related query, and the factory had yet to decide and he wanted clarification on the issue.

A consultant and labour lawyer from the International Labour Organisation (ILO) Ms Elisabeta Vitali commented that severance pay was the most pressing and relevant issue for all Lao employers.

She referred to the response of 50 members of the NCCI who to ld her that complying with the provision of severance pay was the most difficult issue for Lao companies because of perceived changing interpretations of the law.

About the amendment, Ms Vitali said the 10 percent was the same as in the 2006 law. She explained for employers the law with severance pay remained relatively unchanged as it was based on the months an employee had served. Therefore, the general framework was the same as before.

Another issue raised was about the amended law stipulating the term of an employment contract for foreign labourers which was 12 months-long, and could be extended to 12 months again and again with the combined term not longer than 5 years for working in Laos.

However, the question was raised about how would an international company planning to operate an electric power business for two years import a large amount of foreign labour.

The guide on the 2013 law says the recruitment of foreign labourers for large projects would be defined by specific agreement, between the related company and government.

Source: Vientiane Times

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