The Labour Law (2013) came into effect on 28 October 2014, repealing and replacing the previous Labour Law (2006) and introducing a number of significant changes relating to the basic rules of employment in Lao PDR. As the Labour Law is now well into its third year in force, we consider one of its more significant yet often overlooked legal requirements for employers in Lao PDR – internal regulations or “work rules” of the workplace for employees.
While the Labour Law is silent on the topic, we understand that employers with five or more employees are, in practice, required to adopt a set of internal regulations for the workplace. Nevertheless, it is good practice for an employer to devise a set of internal regulations to establish and clarify specific regulations, benefits or entitlements for its employees which may not already be covered under Lao PDR law. Like an employment contract, internal regulations may provide for better labour conditions, benefits and entitlements beyond the minimum labour standards provided for under the Labour Law.
In the event of inconsistency between an employer’s internal regulations and the Labour Law, provisions of the Labour Law will prevail to the extent that the internal regulations improve the labour conditions provided for under the Labour Law. Examples of improved employment conditions, benefits and entitlements which may be stated in an employer’s internal regulations include bonus or salary incentive schemes, private insurance entitlements and retirement packages.
In order for an employer to adopt a set of internal regulations for its workplace, the internal regulations must, depending on the circumstances of the workplace, first be approved by either the trade union, a majority of the employer’s labour force or its appointed employee representative. Following this, an employer’s internal regulations must be submitted to the Labour Administration Authority (LAA). The internal regulations must be made accessible and available to all employees in the Lao language and also be translated into any other working language of that workplace. For foreign organisations such as international NGOs, aid organisations, embassies and consulates (whose labour matters are managed by the Ministry of Foreign Affairs (MOFA)), we understand that, as a matter of practice, these organisations are required to register their internal regulations with the MOFA.
Legal requirements aside, one of the benefits of utilising internal regulations, particularly for workplaces with many employees, is that it is easier for an employer to revise its internal regulations (in accordance with the above-mentioned process) than it is to amend existing employment agreements – the idea being that an employer may move towards using simplified employment contracts coupled with the flexibility of more detailed internal regulations. It is necessary to note, however, that only provisions in the internal regulations that provide for better labour conditions, benefits and entitlements than those provided for in a signed employment contract will be enforceable.
Although cases of inspection and fines for non-compliance with the Labour Law were rare in the past, we understand that there will be a stronger trend of enforcement by the LAA and the MOFA to require employers to have internal regulations in the workplace, particularly in the wake of the recently implemented Decision on the Operation of the Labour Inspection Committee effective from 5 December 2016. This Decision outlines the function, rights, duties and powers of the Labour Inspection Committee and prescribes sanctions for non-compliance with respect to the Labour Law. Of particular note, the Decision prescribes that, following a warning, an employer in non-compliance with the internal regulations requirement is liable to pay a fine of LAK 1,000,000 per instance of non-compliance (for employers with less than 100 employees) and, following multiple instances of non-compliance, the Labour Inspection Committee may take the matter to the relevant Court for further sanctions.
This article has been provided by Arion Legal. Operating in Laos since 2008, Arion Legal’s experienced team of lawyers provides focused, results orientated and cost effective legal and tax services to foreign and Lao investors. Should you have any questions or would like your internal regulations reviewed to ensure that they are in compliance with the Labour Law, please contact the Arion Legal team at firstname.lastname@example.org.