CAMBODIA: Monitoring Progress in Labor Law Reform

Tracing Cambodias progress in labor law reform Cambodia, a young market economy, is a country in the process of developing labor institutions supportive of democracy and human rights. In this context, the three affiliates of the International Trade Union Council Asia-Pacific (ITUC/AP) the Cambodian Confederation of Trade Unions (CCTU), Cambodian Labor Confederation (CLC) and Cambodia Confederation of Unions (CCU) -- are jointly involved in a program of tracing or monitoring the progress of Cambodia in instituting appropriate labor laws consistent with the requirements of industrial democracy. This solidarity project, which enjoys the support of LO/FTF Council of Denmark, tries to measure the progress of Cambodia in pushing needed labor law reforms based on a list of weaknesses and gaps in the existing labor law system that have been identified by the ITUC/AP affiliates in Cambodia.

The idea is to have substantial progress in labor reforms by 2015.

Overview of Cambodias economy and labor force Pushing labor reforms is neither easy nor smooth given the complex political history of Cambodia and the unevenness in the development of its economy and its labor institutions. Cambodia is one of the least developed countries in the Asia-Pacific region, with a per capita of US$356.00 in 20051. As of 2008, it has a population of over 13.4 million, 51.4 per cent of whom are females2. About 80 per cent of the population live in the rural areas; however, urban growth has been rapid, fueled by the tremendous growth of tourism, garments and banking industries.
Abridged version of a longer report prepared for LO/FTF and ITUC/AP by Tola Moeun and Dr. Rene E. Ofreneo. Tola Moeun is Head of the Labor Programme of Cambodias Community Legal Education Center; Dr. Rene E. Ofreneo is Director of the Center for Labor Justice, School of Labor and Industrial Relations, University of the Philippines.
1

ILO, ASEAN Labor and Social Indicators, Bangkok: ILO Regional Office, 2007. Census 2008, National Institute of Statistics (NIS).

The narrow and difficult base for union organizing is reflected in the statistics: 5 per cent unemployment (out of 5.5 million labor force), limited number of wage workers (20 per cent of the total employed), large number of informal workers (estimated to be 85 per cent of the labor force). The major industrial employer is the export-oriented garments industry, which employs around 80 per cent of the industrial work force and which developed due to the support of the international community and the ILO. There are around 350,000 garments workers distributed in over 300 companies, mostly foreignowned. Cambodia has been among the top 20 garments-producing countries in the world even after the expiry of the Multi-Fibre Arrangement (MFA) in 2004.

Overview of the labor law system and labor administration Constitution and labor. Cambodia has been evolving a rules-based industrial relations (IR) system for less than two decades. Following the Peace Agreement of 1991, Cambodia formed a democratic government and adopted a new Constitution in 1993. The Constitution recognizes, among others, a number of fundamental principles relating to labor, specifically - the principle of equality among Khmer citizens before the law regardless of race, colour, sex, language, religious belief, political tendency, birth origin, social status, wealth or other status (Article 31); the right to choose any employment, enjoy equal pay for equal work, obtain social security and other social benefits as determined by law, and form and to be a member of trade unions (Article 36); the right to strike and engage in non-violent demonstration (Article 37); the right to establish association and political parties (Article 42); the abolition of all forms of discrimination against women and the prohibition of the exploitation of women in employment (Article 45); the guarantee of womens job security during pregnancy and their right to maternity leave (Article 46); and the establishment of a social security system for workers (Article 751).

Ratification of ILO Conventions (ILCs). Cambodia has also ratified the UN Charter on Human Rights, the UN Convention on the Rights of the Child and a number of ILCs, including all dealing with core labor rights freedom of association, collective bargaining, non-discrimination, non-use of forced labor and elimination of child labor.

Labor Law. In 1997, the Cambodian National Assembly enacted a labor code dubbed simply as the Labor Law. This Labor Law covers, with several exceptions, all kinds of work where there is an employer-employee relationship. The Labor Law guarantees freedom of association and the right to strike, sets a minimum age, and provides for the free registration of labor unions, collective bargaining and a system for resolving disputes. However, the Labor Law explicitly excludes from its coverage the following: all civil servants, including judges, military and the police; workers covered by diplomatic statutes; personnel in the air and maritime transportation sector; and domestic or household servants. Labor regulations. The Government is also empowered to issue executive regulations defining how provisions of the laws can be interpreted. The most important regulations related to labour are the Prakas issued by the Ministry of Labor and Vocational Training (MoLVT). For examples, the following had been issued in 2001: Prakas No. 318 on Procedures for Individual Disputes Settlement, Prakas No. 317 on Procedures for Collective Disputes Settlement, and Prakas No. 305 on Representativeness of Professional Organizations of Workers. In 2002, Prakas No. 338 was issued regarding the creation of the Arbitration Council and the appointment of 21 arbitrators. Labor administration. The lead agency in labor administration is MoLVT, which was spun off from the Ministry of Social Affairs, Labor, Vocational Training and Youth Rehabilitation in 20043. It has four bodies focused on labor concerns, namely: 1. Labor Inspection. Labor Inspectors and Labor Controllers ensure enforcement of the labor laws and regulations. They provide information and technical advice to employers and employees on the effective ways of observing labor laws; bring to the attention of the competent authority any impropriety or abuses; give advice on issues relating to the arrangement or restructuring of enterprises; and monitor the enforcement of the legal provisions regarding the living conditions of employees. 2. Legal Advisory Committee (LAC). The LAC is composed of the Minister of Labor, representatives of relevant ministries, and an equal number of representatives from the workers unions and the employers associations. The

After the Pol Pot regime was overthrown in 1979, the care of the disabled and others affected by the war and the genocide was lodged with the Social Affairs Committee. This Committee was supplanted with the creation in 1985 of the Ministry of Social Affairs and Disabled Veterans. In 1992, this Ministry was expanded into a Ministry of Social Affairs and Labor. In 1996, another law broadened the role of the Ministry by tasking it to attend to the labor and veteran concerns; thus, the re-titling of the Ministry into the Ministry of Social Affairs, Labor and Veteran Affairs. Later, the Ministry was re-named as the Ministry for Social Affairs, Labour, Vocational Training and Youth Rehabilitation or MOSALVY. Today, it is known as the MoLVT or the Ministry of Labor and Vocational Training.

LAC makes recommendations and inputs on labor and related policy issues; however, it does not issue any regulations. 3. Labor Medical Inspection (LMI). LMI, through a corps of Medical Inspectors, help enforce regulations regarding the health of employees at the workplace. 4. Arbitration Council (AC). The AC has 15 tripartite members: one-third nominated by the Ministry of Labor and Vocational Training, one-third nominated by LAC labor unions, and one-third nominated by LAC employers associations. The main duties of the AC are to examine issues relating to collective labor disputes as stated in the Labor Law and to decide on disputes concerning the enforcement of laws and/or interpretation of a collective agreement.

KEY WEAKNESSES/GAPS IN LABOR LAWS Cambodia has made great progress in developing labor laws and instituting an administrative machinery to implement the said laws. However, per reports by the CCTU-CLC-CCU group, progress on the ground is painfully slow and limited, particularly in relation to the laws guaranteeing freedom of association and workers right to collective bargaining. As of January 2010, the number of unions with the power to bargain and conclude collective bargaining number only 217 out of the total of 1,670 plus registered unions. The number of unions with collective bargaining agreements (CBAs) or collective labor agreements (CLAs) are even fewer less than a hundred. By the end of 2009, there were only around 49 CBAs in the garments industry, 11 in the tourism industry, 1 in construction and around 24 in the financial sector (see Table 1).

Table 1. Unionism and CBAs at a glance. (January 2010) Indicators Registered unions Unions w/ CBA authority Number of CBAs Garments Finance Tourism Construction

Number 1,670 217 > 100 49 24 11 1

The above figures clearly reflect weaknesses and gaps in the labor laws and in their implementation. In the context of the LO/FTF-ITUC/AP-supported tracing/monitoring

project, the CCTU, CLC and CCU have formed a consensus4 (or benchmark list) that the following are the major weaknesses in Cambodias labor laws and their implementation: Abuses in hiring and employment contracts. The practice of short-term hiring for regular and necessary jobs and the non-signing/non-sharing of employment contracts by employers are widespread. Per estimate by the Community Legal Education Center (CLEC), around 85 per cent of the employed workers are under short-term employment arrangements, usually under fixed-term employment contract (lasting between three to six months) or under the scheme of re-hiring of probationaries as probationaries. Short-term hires are laid off at less than 12 months of service, the period needed by a worker to acquire regularization status. Short-term hiring disempowers workers in two major ways: non-enjoyment of legal benefits extended to regular employees (e.g., seniority bonus, maternity leaves and annual leaves) and inability to join unions and get protection through free trade unionism and collective bargaining. Union members claim losing employment status at the start of the CBA negotiation, during the formation of trade unions, or when women workers get pregnant. And while Article 10 of the Labor Law provides for equal treatment of regular and casual workers, the same Article subverts this principle with the phrase except for the clauses stipulated separately", meaning terms and conditions set by the employers for non-regular workers. Additionally, the Veasna-Serrano study5 found that a large number worker respondents have signed contracts yet they were not given copies of the said contracts, many of which have open-ended provisions. Abusive and union-avoidance subcontracting. Some employers resort to unionavoidance subcontracting, which subverts the CBA, union and job security of the regular unionized employees. This CBA-and-union-avoidance behavior is compounded by the absence of clear government guidelines and monitoring of this type of contracting. Worse, subcontracting is done by garments producers in shadowy work rooms, factories without names and do not observe fair labor standards, e.g. poor health and safety conditions and underpayment of minimum wage (since workers are working under piece rate daily basis). Violations of labor standards. There are widespread violations or noncompliance with labor standards, particularly in relation to minimum wage, occupational safety and health (OSH), hours of work, overtime (OT) and other statutory benefits. In the Veasna/Serrano study, the most common violations pertain to non-observance of leaves (annual, sick) and public holiday. In the

The CCTU, CLC and CCU met in the National Conference-Workshop on Decent Work and Cambodian Labor Law, 0507 October 2009, to specifically list down key labor problems in Cambodia.
5

Nuon, Veasna and Serrano, Melisa, Baseline Study on Violations of the Cambodian Labour Law, Phnom Penh, April 2009.

study of the Cambodia Institute for Development and Study, factories in the provinces have not even applied the current minimum wage amount. This is why workers are eager to increase their monthly incomes by doing OT work, which can be abusive on the body if done excessively (more than two hours of OT). The most common health problems are frequent headaches, intestinal flu, sickness and miscarriages by pregnant women. Obstacles in union registration and MRS determination. There are legal and non-legal obstacles in union formation, registration and determination of the most representative (MRS) status of union, which is crucial in the selection of bargaining agent. On union registration, problems abound due to rivalry among federations and hostility and interference by employers. On MRS status or representativeness, there are no clear guidelines on its determination and on the role of MoLVT in the selection. More importantly, the rules under Prakas No. 305 are clear on the minimum requirements for unions seeking MRS status and yet are unclear if these unions can automatically sit down with the employers to engage in bargaining. Employers, through the LAC, are also allowed to deny the MRS recognition of a union. Harassment of trade unions. Prakas 305 requires the union to notify management of the list of candidates before they can organize a union election. This allows anti-union employers to harass or even terminate the employment of genuine union leaders. Some employers also blatantly discriminate against union officials and organizers in their personnel policies and practices. Efforts of the MoLVT and even the AC to settle union organizing complaints are not settled because employers do not show up in the hearings. Political parties/government agencies also interfere. Uncertainties on the CBA process. The low number of CBAs compared to the number of unions is also traceable to the absence of clear legal procedures on the conduct of collective bargaining as well as the absence of a system of resolving CBA deadlocks. For examples, there are no clear answers to the following questions: When can the parties sit down and talk? What can be done if the employer refuses to recognize the union and engage in the CBA process? If there is an impasse or bargaining deadlock, how shall it be resolved? Limitations on the rights to strike and other concerted activities. Again, the rules of engagement/disengagement in strike situations and during concerted activities of the workers are not clear. There are no clear guidelines for the behavior of police, military and other enforcement body in such situations. Very often, authorities intervene on behalf of employers and at the expense of the unions. There are also differing interpretations of what constitute legal and illegal strike -- management asserts strike legality comes only after the union has exhausted time-consuming hearings conducted one after the other by the MoLVT, AC and eventually the regular court. In some cases, management file civil and criminal lawsuits in the provincial/municipal court against workers strikes. In general, union leaders are moving targets for violent crackdowns,

criminal lawsuits and various types of harassment when they engage in union formation and facilitate the conduct of a strike even if they have complied with all the procedures required by law, e.g., strike notice, secret strike vote, etc. Unfair and ineffective dispute settlement system. According to Article 300 of the Labor Law, a dispute that is not settled by the MoLVT through conciliation can be elevated to the AC for arbitration. The AC is supposedly an independent tripartite body. However, many unions have expressed disappointment with AC decisions, which are treated by employers as non-binding if favorable to the workers. There is also the growing practice of some employers to ignore legal procedures in dispute settlement, for example, not showing up in conciliation meetings convened by MoLVT labor conciliators or hearings set by the AC hearings. When the AC hearings are finished without employer participation, they just send letters of objection to the AC awards within eight (8) days6. Based on the law, an AC award is non-binding in case one of the parties is absent in the hearing or fails to choose the arbitrator. Non-observance of due process principle in the application of discipline, suspension, termination and processing of grievances. The principle of due process is often not observed in many companies when it comes to the application of discipline, suspension and termination. The universal meaning of due process means no employee should be disciplined, suspended or terminated without basis and without giving the affected employee the opportunity to explain or defend himself/herself. Without due process, therefore, the application of discipline, suspension and termination becomes unilateral, arbitrary and one-way. The sense of workers injustice is further compounded by the absence of a system of processing worker and union grievances in many companies, and is most acutely felt in termination cases. As it is, both short-term and regular workers are routinely terminated by some companies without complying with the requirements of due notices, payment of severance pay and so on. The most worrisome is the ability of companies to terminate the services of union officials without asking clearance from the labor inspectorate of the Ministry7. Exclusion of public sector, military and informal sector under the coverage of the Labor Law. Labor standards and social protection for the public sector, military and informal sector workers are not established. The labor standards provisions of the Labor Law do not apply to them even if these sectors supposedly

In non-binding awards, the dissenting party has eight (8) days to reject the decision; the award, however, becomes valid if there is no objection from any of the parties.
7

Under the Labor Law, labor inspectors are supposed to closely and regularly inspect all workplaces with at least eight (8) workers employed. Part of the inspection system is inquiry if company plans to terminate contract with any union leader or shop steward or workers representatives, who are all legally protected even if these workers are alleged to have committed any serious misconduct. In practice, many employers do not seek permit from labor inspectors and they justify the termination of union leaders or workers representative without permit by saying that the unions engaged in illegal strike.

enjoy the freedom of association, largely as a result of the populist advocacy by political parties. Their right to collective bargaining is ignored. Social protection in all these sectors is sorely missing, particularly informal sector workers who are most vulnerable to sexual harassment and trafficking. Poor labor market realities. Short-term hiring is compounded by the realities in the labor market. On the supply side, the large informal sector is the source of flexible workers, who are often hired on a short-term basis or paid on a piece rate basis. On the demand side, many jobs are based on short-term production orders. Some investors, notably garments investors, also tend to fly away from their worker and other obligations by relocating in other countries. Low labor rights awareness. Many workers have low awareness of their rights.

DIRECTIONS FOR LABOR LAW REFORM The foregoing problems clearly point to the need for a labor law reform agenda in support of Cambodias aspirations to be an open and democratic society which respects basic labor rights. The following are possible directions for labor law reforms: On hiring and employment contracts. There should be a law requiring written contracts and making the sharing of such contracts with the employees mandatory for all employers. The written contract should be written in clear letters and in a language understood by the workers. All employees without any written contracts should be presumed regular employees who are entitled to all rights and benefits enjoyed by regular employees, including unionization. The amended law should reflect the ILO guideline No. 166, 1982 which states that fixed-duration contract shall be applied solely for obviously short-term employment requirements of the company such as substitution, occasional, seasonal or non-permanent employment. There should be an explicit statement against misuse of fixed-term hiring for regular and necessary jobs. Fixed-term employees renewed two times should be considered regular or permanent employees. There should also be a strict proviso on the extension of all statutory benefits to fixed-term employees, e.g., minimum wage, OSH, etc. Casual employment shall have a time limit of one year, broken or continuous. This means that a casual, after one year, should enjoy regular status. The law should also provide for strict regulations of probationary employment. Re-hiring of probationaries as probationaries should be stopped. Such re-hiring should be considered ground for regularization. On subcontracting. The labor law should specify that contracting based on the exigencies of business or its special requirements, e.g., production of a part which

it can not produce due to lack of technology, is recognized. However, contracting out to avoid labor obligations, subvert existing unions and CLAs should be declared a no-no. Hence, the need for the law to clarify what are the permissible conditions for contracting out. An enterprise intending to contract out certain regular services should get permit from the Ministry, inform all parties in advance, conduct consultation with the union and workers, and explain in writing the reason/s why it has to be done. The Ministrys inspectorate should be able to visit too the premises of and the working conditions in the places where work has been outsourced or to be outsourced. All no-name factories should be inspected. Union formation should be allowed in all outsourced places. There should be penalties for any abuses related to contracting or subcontracting. On compliance with and enforcement of labor standards. Reforms should focus on enforcement and compliance. There should be a law strengthening the labor inspection system with a corresponding schedule of penalties for erring employers. There should be a law codifying the various labor standards and OSH. The present law is just a statement of general principles on OSH, declaring that it is the duty of employers to guarantee clean workplaces and keep hygiene and sanitation (or more generally, the working conditions) at high levels. There is a need to affirm the legal protection for pregnant workers, with the enactment of stronger provisions against termination on account of ones pregnancy. The law should strictly require the enterprise to report to the Ministry in Charge of Labor on the accurate numbers of female workers who are pregnant and the need to insure that they are able to enjoy maternity leave with assurance of continuity of work or job security. On union registration and MRS determination. There should be a law improving and clarifying guidelines on the registration of unions, determination of bargaining agent through certification election, etc., with the employer playing the role of a passive (not active) onlooker or a by-stander. The system of determining the MRS union should be overhauled. Union election should strictly be internal to the union. The duty of the Ministry is to ensure that the exercise of the workers to freely organize and choose their union is done fairly, while the duty of the employer is ministerial, that is, to provide the Ministry with the number of rank-and-file workers (not all workers, meaning including management and supervisory). The requirement of prior notice should be abolished. On harassment of trade unions. There should be a law on unfair labor practices (ULPs), which means employers cannot bust unions or interfere in any union organizing efforts. Interference in union organizing, termination of union organizers and members, harassment of union leaders, discrimination in pay in favor of non-union workers and the like should all be considered ULP acts. The

ULP law should treat employer violations as criminal. The ULP law have a schedule of penalties to be meted on erring companies, and it should provide protection or system of redress for union organizers. The law should also forbid political parties in likewise interfering or influencing union formation. The law should require strict neutrality of the police and military. On CLAs/CBAs. There should be a law requiring employers to do good-faith bargaining; otherwise, they can be declared guilty of ULP. Good-faith bargaining means sitting down promptly with counterpart union once the MRS status has been established and conducting negotiations seriously, from beginning (determination of ground rules for bargaining) to end (signing of collective contracts). In case of deadlocks, there should be a law allowing government conciliators to come in to break the deadlocks and in national interest cases, for the Minister of Labor to rule on the deadlocks. At the same time, the Ministry, its inspectorate and conciliation staff should be more proactive in assisting the parties to come to an agreement and proceed with the CBA/CLA negotiations. On strikes and concerted activities. The Labor Law should accord respect to the workers right to strike in ULP situations (when there is real danger of a union being busted) and deadlocks (to keep the CBA/CLA negotiation moving) without waiting for the exhaustion of the so-called conciliation-AC process. Police should observe strict neutrality and should limit their role to peace keeping; the law should keep the military away from any labor strike or dispute.

On dispute settlement. The system of dispute settlement should be overhauled. The AC may be transformed into an independent Commission with the power to issue binding awards, penalize non-cooperating parties and require parties to respect the status quo ante (meaning situation before the dispute such as reinstatement of dismissed workers, which may be the cause of the dispute). Alternatively, regular labor courts, as envisioned in the Labor Law, may be established. But the point is to cure the existing weaknesses in the AC system: non-binding awards, rejections by a party of the awards within eight (8) days, and divisive character of the LAC. Arbitrators and labor judges, whether assigned to the AC or to the proposed courts should be selected based on the highest standards of professionalism and their decisions should be based on merits.

On discipline and grievances. There should be a law calling for strict observance of due process procedural and substantive in the application of discipline, suspension and termination. Due process means no arbitrary action can be taken by management without giving the worker opportunity to explain, to be heard and

10

without getting an objective basis for such action. Likewise, there should be a law requiring companies to set up a grievance machinery where employees can freely air their complaints without fear of termination or suspension. If there is failure to settle disputes at the plant level, the parties are free to raise their complaints at the Ministry and AC or courts. On exclusion of public, military and informal sectors from labor laws. There should be a law extending labor law application equally to public sector and military. There should be a special law for the protection of informal sector workers. Likewise, especial sectors such as domestic workers, mostly child laborers, need to be covered by the labor law system. Other reform measures. The system of labor inspection and the capacity of MoLVT should be strengthened. Good inspection practices can be developed based on the lessons and experiences of monitoring under the Better Factories Cambodia as well as the best practices developed in other countries. On the other hand, the MoLVT should work for a bigger inspectorate body and seek ILO technical assistance on upgrading skills of inspectors. Labor disputes involving union leaders should be considered or declared as noncriminal in nature and can not be brought before the regular courts. Thus, officers of the regular courts should be asked to dismiss summarily any such cases brought before them.

CONCLUSIONS This Report is a summary of key labor rights violations due to poor or weak labor laws and enforcement as determined by the ITUC/AP affiliates themselves in Cambodia. The task now is how to push the legal remedies or labor law reforms determined by the affiliates themselves as summarized above. The ITUC/AP affiliates are committed to meet annually or as needed to trace/monitor the countrys progress in this reform process based on the above list of key labor problems and possible labor law reforms. This task requires the sustained unity and coordination among the affiliates and non-affiliates of ITUC/AP. It is important for ITUC/AP affiliates to strategize the campaign for labor law reform and forge stronger unity around the reform program among all unions and federations in Cambodia. Part of the strategizing should include arguments on how to build up Cambodias global economic competitiveness on the basis of respect for labor rights and partnership with the unions. Most of the labor abuses are committed by employers who justify the use of cheap and exploited labor in the name of market survival and competition. There ought to be a high road to growth, development and respect for all the parties in a globalizing Cambodia.

11