The Basic Rules Of Employment In Laos: Updates to the Lao Labour Law

• provide training to develop employees’ skills and knowledge;
• ensure working conditions are safe, and ensure there is appropriate lighting, supply of drinking water and washing water, showers, toilets etc., a storage room for the storage of toxic substances and other measures against electric shocks and fire.;
• facilitate medical examinations of employees once a year and provide a first aid kit on site.

• any members of the employee’s immediate family are injured and hospitalized and nobody else can care for them;
• the employee’s immediate family pass away;
• the employee gets married;
• the employee’s wife gives birth or miscarries;
• the employee is affected by a natural disaster.

• Employers have a duty to give priority to Lao nationals, -approval must be obtained from the Ministry of Labour and Social Welfare to employ foreign workers.
• Foreigners undertaking manual labour can make up no more than 15% of the total number of Lao employees, and no more than 25% of the Lao workforce for professionals with specialised skills.
• Foreign workers must hold a valid business visa and work permit.
• Foreign workers can enter into employment agreements for a period of 12 months, renewable for another 12 months. The total working period for foreigner workers in Laos cannot exceed 5 years. Employers can however submit a request to the Labour Administration Authority for a foreign employee to continue working in Laos for an additional period (up to 5 years) based on the expertise of the employee and the requirements of the business/organisation of the employer.

• Children of the ages of 14-17 years may be employed provided they do not work overtime.
• Children of ages 12 and 13 may be employed for “light work” provided they shall not be required to undertake work that is unsafe, interferes with their schooling or vocational training or is dangerous to their body, psychology or mind.

• An employment contract must be in writing between the employer and employee.
• The contract can either be for a fixed term or an indefinite period. If a fixed term contract, including any extensions, is longer than 3 years, the contract will be deemed to be an indefinite employment contract.
• If the parties wish to extend the term of a fixed term employment contract they must notify each other 15 days before its expiry, with the extension commencing within 60 days of the date of expiration of the contract.
• The contract must stipulate the place of work, the work to be performed, the level of wages, the duration of the contract, commencement date, expiry date and any probationary period, workings days, rest days and holidays, any welfare entitlements of the worker, the benefits the employee will receive at the expiration of the employment contract and any other matters agreed between the parties.

• The employer has the right to impose a probationary period on the employee. In the case of manual labour, the period will not exceed 30 days. In the case of specialized skills, the period will not exceed 60 days. The probationary period cannot be extended.
• During the period of probation, each party has the right to terminate the employment. 3 days’ notice is required for manual labour and 5 days’ notice is required for specialized fields.
• If the employment is terminated during probation, the employee is entitled to receive salary or wages and other entitlements under the law, calculated from when he began work to when he stopped.
• 7 days before the end of the probationary period, the employer shall inform the worker in writing whether or not his or her employment will be confirmed.

• An employment contract for a fixed term will terminate upon expiration or may be terminated by mutual agreement or for reasons of breach by one of the parties.
• An employment contract made for an indefinite period may be terminated any time by either party, with 30 days’ notice for manual work and 45 days’ notice for specialized skills.

• An employer can dismiss an employee where the employee lacks specialized skills, where the worker is not in good health and cannot continue work, or the business needs of the company require a reduction in staff.
• The employer must notify the Labour Administration Authority in writing when an employee is dismissed for reasons of redundancy.
• Where an employment contract is terminated by the employer, the employer shall pay a termination allowance according to their period of work.

• Deliberately causing damage to the employer (where there is evidence of same);
• Violating Internal Regulations in spite of previous warnings from the employer;
• Abandoning work for 4 consecutive days without a valid reason;
• Being sentenced to prison by a court;
• Violating the rights of other employees having already been warned by the employer.

• Terminates the employment contract without a valid reason;
• Abuses their power (i.e. directly or indirectly forces the employee to terminate the employment contract);
• Violates the fundamental rights of the employee; or
• Acts in breach of its contractual obligations.

In such cases, the employee then has the right to request reinstatement. If the employer does not reinstate the employee, the employer is required to pay a termination allowance.

• If employment contracts are terminated unilaterally, either by the employee or by the employer (for justified reasons) the employee will be entitled to a severance payment of 10% of the monthly salary before termination for each month of work.
• Where an employment contract is terminated by the employer for unjustified reasons, the employee is entitled to compensation of 15% of the employee’s monthly salary for the whole period of working.

• The employer must pay at least the minimum wage set by the government. The minimum wage is currently 626,000 kip / month.
• Wages are to be paid at the beginning or end of the month.
• Deductions from an employee’s salary are permissible to compensate for damage to the property of the employer to the value of the item damaged. If the employee is not able to repay the amount owing, the compensation must be deducted from his salary or wage but not exceeding 20% of his salary or wage.
• The employer has the duty to declare the income which is paid to the employee to the Tax Department in order to deduct personal income tax.

• A woman is entitled to at least 105 calendar days of fully paid maternity leave, at least 45 days of which must be after the birth.
• During the year after birth, the woman is entitled to have one hour a day of rest in order to feed and take care of the child.
• If a woman suffers a miscarriage, she is entitled to leave on full pay for a period as determined by a doctor. On the birth of a baby, a woman is entitled to an allowance as specified in the Social Security Law.

• On a regular working day, 150% of the regular hourly rate for each hour;
• Overtime at night on a regular working day, 200% of the regular hourly rate for each hour;
• Overtime worked on a weekly rest day or holiday, 250% of the regular hourly rate for each hour;
• Overtime worked from 4:00pm to 8:00pm on a weekly rest day or holiday, 300% of the hourly wage of a regular working day for each hour;
• Overtime worked from 10:00pm to 6:00am on a weekly rest day or holiday, 350% of the hourly wage of a regular working day for each hour worked.

Specific payments for night work or shift work shall be paid at no less than 15% of the hourly wage of a regular working day for each hour worked.