DFDL’s Employment Practice is dedicated to advising clients on employment and labor issues throughout Southeast and South Asia and preparing human resources documentation that is fully compliant with local laws. Our employment team’s in-depth knowledge of the local laws, practices and customs in the countries where we operate allows us to provide specialized, tailored and practical advice on the various issues that arise in employment relationships. Our Head of the Regional Employment Practice Group is Marion Carles-Salmon, who is based in Bangkok. This legal update is to advise you on important recent legislative developments and employment issues across the region.
2021 Foreign Employee Quota Application
The application window to apply for the 2021 foreign employee quota is open as of September 2020. Organizations employing or intending to employ foreign employees in 2021 are required to apply for a foreign employee quota from the Ministry of Labour and Vocational Training (“MLVT”). Under the quota system, a maximum of 10% of an employer’s total local workforce may be foreign nationals (based on a calculation of foreign employees/local employees), comprised of: office employees (3%); skilled employees (6%); and unskilled employees (1%).
However, in August 2020, the MLVT issued Prakas No. 277/20 concerning Special Conditions on the Employment of Foreign Nationals, to permit the hiring foreign nationals in excess of the above foreign employee quota thresholds. Prakas 277/20 relaxes some of the restrictions on owners or directors of enterprises/establishments governed by the scope of Article 1 of the Labour Law who need to hire employees. If they cannot find suitably qualified Cambodian nationals or sufficient numbers thereof for a given workplace, type of work or any shift, they may now file a request to hire foreign nationals under special conditions in excess of 10% of the total number of Cambodian personnel.
Public Housing Savings
On 20 May 2020, the Indonesian government issued Government Regulation No. 25 of 2020 on Public Housing Savings (“GR 25/2020”). Public Housing Savings (‘Tabungan Perumahan Rakyat’ or “Tapera”) corresponds to members’ savings (as further detailed below), lodged within a certain period that can only be used to fund housing and/or be returned to the members after their membership ends. Tapera is intended to be a long-term, sustainable low-cost source of financing to meet the needs of its members for decent and affordable housing.
Workers, both Indonesian and foreign nationals with a working visa lasting for at least six months, earning a salary equal to or above the minimum wage and who are at least 20 years old or married, are required to be a Tapera member. Self-employed individuals earning a salary below the minimum wage are also welcome to register as Tapera members. Employers must register their workers with the Tapera Management Body (Badan Pengelola Tapera or “BP Tapera”), while registration is optional in the case of the self-employed. Any changes to the members’ personal information is to be reported to BP Tapera by the employer within seven working days from receiving such information from the employee. In the event of any workplace change occurring, both the former and new employer must notify this to the BP Tapera on behalf of the relevant employee.
The total level of Tapera contribution is 3% of the worker’s monthly salary, 2.5% is borne by the worker and the remaining 0.5% by the employer. For the self-employed, the contribution level is 3% of their average monthly salary within one calendar year and fully payable by themselves.
Membership will cease in the event that the worker:
Upon the cessation of his/her membership, the worker has the right to receive his/her savings along with any accrued interest.
The range of applicable sanctions for failure to comply with the provisions of GR 25/2020 may vary from warning letters, administrative fines, publication of the failure to comply to suspension and/or revocation of the employer’s business license.
Of note, in accordance with Article 68 of GR 25/2020, private companies must register their workers with BP Tapera by 20 May 2027.
The Lao PDR
Amendment to Employment Terms
On 1 June 2020, the Ministry of Labor and Social Welfare (“MLSW”) issued Notification 1559/MLSW (“Notice”) relating to applicable procedures to implement any changes to an employee’s conditions of employment.
The Notice confirms that any changes to an employee’s remuneration package or leave entitlements, which by their nature constitute amendments to that employee’s employment terms, require the employee’s consent. The Notice also provides that should the employer be impacted by the COVID-19 pandemic, it is entitled to adjust the employment terms of its personnel (whether individually or collectively) only after having consulted and negotiated with the employee(s) and reached a compromise. The relevant procedures are set out in Article 12 of the Decree on Labor Conflict Resolution (No: 76/GO, 28 February 2018) (“Labor Conflict Decree”). Should the employer and employee(s) fail to reach a compromise, they must follow the collective bargaining procedures described in Articles 13 and 14 of the Labor Conflict Decree. Should collective bargaining fail, the employer or employee(s) may approach the Labour Conflict Resolution Committee to seek resolution of the dispute.
The employer must also follow the abovementioned compromise and collective bargaining procedures under Articles 12 to 14 of the Labor Conflict Decree should it seeks to implement temporary suspension provisions as envisaged under Article 111 of the Labor Law. This similarly applies to redundancies or downsizing of operations under Article 82 of the Labor Law. The procedures must be followed irrespective of whether such suspension or redundancy applies to only one or more employees.
While the Notice only applies to COVID-19 related business reasons for downsizing, redundancies or suspensions, it may be difficult for an employer implementing redundancies in the ordinary course of business per Article 82 of the Labor Law to delink such redundancies from the COVID-19 outbreak and the related economic downturn. This may leave employers vulnerable to claims for non-compliance with the directives in the Notice being brought against them.
Covid-19 Related Governmental Measures
The Ministry of Labor, Immigration and Population (“MOLIP”) has introduced certain relief measures in Myanmar this year in light of the COVID-19 pandemic.
The MOLIP issued official instruction No. 1/2020 on 20 March 2020. Under this, factories and workshops registered with the Social Security Board (“SSB”) in accordance with the Social Security Law were obliged to notify the SSB if they reduced their workforce, temporarily ceased their activities or permanently shut down their operations. If the SSB determines that such factories and workshops have actually shut down or temporarily ceased operations, they will be exempt from social security contributions. Of note, upon re-opening their business, the factories and establishments must notify the SSB within ten days from the re-opening date and re-start social security payments to the SSB to obtain relevant benefits under the Social Security Law.
The SSB and MOLIP have issued a number of subsequent notifications in relation to providing social security benefits for insured workers, in view of the economic disruption caused by the COVID-19 crisis. Such benefits include sickness cash benefits for quarantined and medically ill workers, maternity cash benefits for pregnant workers and income support for employees directly affected by temporary or permanent factory closures.
Personal Data Protection Legislation Postponed Until 2021
The Personal Data Protection Act B.E. 2562 (2019) (“PDPA”) was widely touted to result in a seismic shift in employee data management obligations for Thai employers. Though originally slated to go into effect on 27 May 2020, a Royal Decree postponing the effective date of the PDPA to 31 May 2021 was published in the Royal Gazette of the Kingdom of Thailand on 21 May 2020. This was closely followed by an official statement from the Ministry of Digital Economy and Society (“MDES”) on 8 June 2020 indicating that government agencies along with other public and private bodies were unprepared for the forthcoming legislation’s entry into force. The MDES further noted that it would need to elaborate on measures whereby personal data is stored discretely from other forms of data by means of adequate security and access rights. In a parallel development, the constituent members of the Personal Data Protection Commission have also been approved by the Thai government.
On 17 July, 2020, the MDES outlined personal data security measures which seek to combine the three elements of confidentiality, integrity and availability that are to be implemented by Data Controllers. These are summarized below:
In the face of the COVID-19 economic crisis that continues unabated, the postponement of the PDPA combined with regulatory clarity will provide Thailand’s employers with a much needed window of opportunity to institute fair and transparent employee personal data management platforms and infrastructure that will ensure compliance with the PDPA when it does go into effect in 2021.
Recruitment and Management of Vietnamese Employees Working for Foreign Entities in Vietnam
The Ministry of Labour – Invalids and Social Affairs of Vietnam (the “MOLISA”) is currently drafting a new decree (the “Draft Decree”) to replace Decree No. 75/2014/ND-CP relating to the recruitment and management of Vietnamese employees working for foreign organizations and individuals in Vietnam. While not passed yet, this Draft Decree might dramatically impact the recruitment and management of Vietnamese employees working for foreign-owned companies in Vietnam.
Under Decree 75 (currently in force), foreign entities cannot directly recruit Vietnamese employees; they must use duly authorized service providers, namely (i) organizations assigned or authorized by the Ministry of Foreign Affairs of Vietnam or (ii) employment services centers duly established by an official decision passed by the Minister of Labour – Invalids and Social Affairs of Vietnam or by the chairman of a provincial People’s Committee (the “Service Providers”) for this purpose. The term “foreign entities” currently refers to foreign agencies and organizations permitted to operate in Vietnam and comprise:
As currently drafted, the Draft Decree adds another category of entities that ultimately would be subject to the same restriction: company with 51% or more of foreign-invested capital. In other words, if the Draft Decree were issued in its current form, such foreign-invested companies would also be subject to the obligation to use Service Providers as a conduit to hire Vietnamese employees and unable to directly recruit them.
In practice, when there is a need to recruit Vietnamese employees, foreign entities must submit a request to recruit Vietnamese employees to the Service Providers. Within 15 working days upon receipt of the foreign entities’ request, the Service Providers have the responsibility of recruiting Vietnamese employees and managing them at the request of the relevant foreign entity. When the Service Provider cannot select and offer any suitable Vietnamese candidate as requested within the 15 working day limit, only then may the foreign entity directly recruit Vietnamese employees by itself. Within seven working days after the signing of a labor contract with a Vietnamese employee, the foreign entity must notify the Service Provider in writing and enclose a copy of the labor contract to this effect.
This regulation has been criticized for being a hindrance to an enterprise’s ability to effectively and autonomously recruit and train its own personnel. The Draft Decree, in its current version, would drastically affect the recruitment of Vietnamese personnel by foreign companies and, ultimately, may have an adverse effect on the Vietnamese employment landscape. We will continue to monitor the development of the Draft Decree and eventual passing of an amended Decree 75 in Vietnam
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.