employment contracts unions - camfeba news/employment contracts... · 2015-06-04 · employment...
TRANSCRIPT
Slide 1
National Workshop for Trade Unions on Employment Contracts27‐28 March 2013Imperial Garden Villa & HotelPhnom Penh Cambodia
Employer PerspectivesSandra D’AmicoVice PresidentCAMFEBA
The information prepared in this presentation was done by HRINC (Cambodia)Thanks to GMAC and CAMFEBA for their inputs and employer interpretations
Slide 2
Note to employers on objective of presentation: Context and background• Presented at a national union meeting on FDC contracts in Cambodia• Unions are putting forward proposals to change FDC contracts –restrictive and prescriptive.
• We are trying to build capacity amongst unions on understanding general environment: investment climate and how employment contract impact workers and employers already in the country • Unions are in the majority in the garment sector and we are trying to raise awareness of union proposals on other sectors as well
• To share experiences in other sectors so that unions can consider carefully the impact of their recommendations regarding FDCcontracts on other industries
• To build employer‐union dialogue• To provide some employer recommendations on how we wish to see FDC contracts work
Slide 3
Why do we have employment contracts?
• To recognize a relationship between an employer and employee – it can be verbal or written
• To have the ability to seek the type of employment (UDF or FDC) we wish to take as a potential employee – freedom of choice to work a particular contract or job or choose a particular type of employment if such employment is provided• The freedom to accept or not accept an employment offer made.
• To offer the type of employment that ensures sustainability of an enterprise and to remain competitive within the market or industry. By so doing, maintain a decent level of employment for a core set of employees.
• Employees are free to agree or accept terms and conditions • Employers are free to offer employment according to the law in line with the needs and
demands of the company. Employment should be provided within the framework of the law
• To ensure that for both employer and employee, are clear on the terms and conditions of employment and comply with the law.
• At law contracts do not have to be in writing. However, a written contract is important so that each party knows clearly what the terms of employment are. This helps prevent disputes. • An unwritten contract (Oral contract) is a underdetermined duration contract (UDC) under
Cambodian law.
Slide 4
Keeping our investment environment attractive is becoming more focused on the “soft stuff”
Infrastructure & Environment
Financial & Taxation Incentives
Labour, skills, employment
Political Stability Tax incentives Sufficient supply
Infrastructure Access to finance Quality, skills
Embassy & Banks Banking system Productivity
Stable environment Etc. Wages
Etc. Etc. Contracting, terminationprocedures
Etc. Etc. Cost
Etc. Public holidays, working hours, annual leaves
Compliance, worker rights, etc.
An increasing focus on the Human Capital Elements
Slide 5
There are many economic and environment factors that need to be considered when we consider employment contract changes
Decent work.Access.Security.
Contribution to economy.Growth &
Development.
Attracting Investor /
Employer (FDI)Education & Training –
supply of skills
Particular characteristics of industry
Productivity of workforce
Wage levels, Overtime,
Working time characteristics
Government Policies & Strategies
Entrepreneurs and Innovation
Supply and access to labour
Unions and Professional
Bodies
Slide 6
Employment contracts and their implementation affect employers in a variety of ways and how they are able to grow and provide more employment opportunities
Employer
Seniority of
Workforce Salary Levels &
Productivity
Benefits provision
Access to Social Security
Working Schedules, Time, OTAbility to
Train, retain, grow
Performance
Management
Motivation of
WorkforceWork‐life balance
Sufficient variety of work
Flexibility to service clients
Slide 7
Workers, whether professionals or skilled, also like to consider the type of employment contract they receive based on their personal circumstances: Freedom to choose to accept or reject an employment offer made
The Employee
Job Security and
Flexibility
Manage work and life balance
Feel productive and able to contribute
Income for the efforts invested
Status and general well
being
Training & Development
Career progression , challenges and life choices
Slide 8
Employment contract types MUST consider the working environment. Lets look at working time for the common employee in Cambodia
Working time impacts the need for flexible workforce and employment contracting14% of available working time is leave and holiday paid by the company or paid
extra for working
365
313
287269 269
52
26
180
269
Average per month, 22.42
0
37
73
110
146
183
219
256
292
329
365
Days per Year Weekend Days Public Holidays Annual Leave & SpecialLeave
Maternity Leave Total per year
Days P
er year
Days per year Annual Leave Days Total Available Working Days per year Average per month
14%
Slide 9
Employment contract types MUST consider the working environment. Lets look at public holidays for a female worker who needs to take maternity leave
Working time impacts the need for flexible workforce and employment contracting35.56% of working time is holidays, leave and maternity paid by the company
365
313
287269
201.75
52
26
18
67.25
201.75
Average per month, 16.81
0
37
73
110
146
183
219
256
292
329
365
Days per Year Weekend Days Public Holidays Annual Leave andSpecial Leave
Maternity Leave Total per year
Days P
er year
Working Days for Women in Cambodia who take maternity leave
Days per year Annual Leave Days Total Available Working Days per year Average per month
35.6%
Slide 10
Comments on working time: ONE ASPECT that impacts employment contract types and the need for flexible workforce arrangements• In garment sector we need to have flexible workforce for peak and lull periods
• Buyers place orders on a seasonal basis• Factories do not have any security in this regards thus lacking in the ability to
provide similar security to workers.• Workforce is dominated by women workers• Strikes have taken up a significant amount of working time and horrible losses
for the industry and profile of Cambodia manufacturing sector.• From a management perspective we face the following challenges in
manufacturing:• Difficult workforce planning and management with the available time• Increasing costs with overtime and public holidays work to make up for all the
holidays and leave allowances• High turnover of workforce• A need to have flexible workforce contingent to manage the shortfall of working
time and peak production periods• A need to provide women (in particular professionals) with flexible working times
and hours to manage family and work life• How to invest in skills development and training when the available working
time is so low and workforces are already working long hours?
Slide 11
Critical question to ask?
• How to invest in skills development and training when the available working time is so low and workforces are already working long hours?
• Why has training and skills development, a cornerstone to employment success not ever reached a priority on the worker and union agenda?
Slide 12
Types of Employment: FULL TIMEFull Time Employment
Unfixed duration Contract
• You are employed according to the full time working hours of the company
• Your contract has a start date• You are entitled to company benefits and allowances as
stimulated in contracts and policies• Upon termination you are provided severance
compensation based on length of service
Fixed duration contract • You are employed for a certain period of time working the full time hours of the company due to the need for additional human resource capacity
• Your contract has a start and end date• You get 5% payout• You are entitled to the benefits and allowances as
stipulated in the contract or provision of a particular project.
• Typically a short term employment will have a higher salary for professional positions given the absence of benefits provision such as medical or other OR the same salary and benefits.
Slide 13
Types of Employment: PART TIMEPart Time Employment
Unfixed duration Contract
• You work a particular set of hours e.g. morning or afternoon only OR 2 or 3 days per week due to the personal circumstances or needs to the company and the company can provide such employment.
• Your salary and benefits are prorated according to the part time schedule you are provided with
• NB: the labor law does not adequately cater for this situation – e.g regarding holiday rights etc. As such contracts must be carefully drafted to prevent disputes over rights and obligations of the parties
Fixed duration contract • You work a particular set of hours for a particular period of time.
Slide 14
Types of Employment: Skills Development / Market AccessApprenticeship / Internship: Skills Development Employment
Unfixed duration Contract
• Not commonly used
Fixed duration contract • Used and provides a mentor to build the capacity of the mentor
Slide 15
Some emerging trends: Mining sectorInvestor wants to comply with the law and need the following work schedule
•2 weeks work, 12 hours per day•1 week holiday•Require a 1 year contract
Government approvals and discussions
•Against the law as maximum working time is 10 per day and this will be a regular schedule even if it is for a particular period of time
Workers view
•Great working schedule and benefits•Want to sign the contract•Opportunity to work in emerging industry and pioneer new skills and learn new things
Final outcome: Investor wants assurance of legal compliance
•Hire more workers, less working hours, less benefits•Workers not happy
Slide 16
Some emerging trends: Services Sector and call centreInvestor wants to comply with the law and need the following work schedule
•4 – 6 hours working schedules 24 hours per day•Provide 6 month contracts then annual FDC contracts•Great opportunities for young graduates to get experience and study at the same time• Fantastic training opportunities for young graduates and youth
Workers view
•Great opportunities to learn and gain experience•Want to have FDC as long as their studies are in place as this is an opportunity to earn and learn
Challenges
•Risk of challenges related to FDC interpretation. Some staff have been working more than two years (although part time work)
•At the moment, workers agree but ACF rulings vs. legal advice is conflicting
Slide 17
Advantages of FDC contracts
• Workers get payout and payout considers the short term nature of work• Employers can budget accordingly with certainty• Can plan workforce accordingly with certainty
• Allows flexibility for growing the workforce in times of need • Can plan clearly• Can recruit and advertise for opportunities clearly
• Entrepreneurs can innovate and industry and innovate its diversification• Provides time (not sufficient at moment) for innovation
• Penalties for both employer and employee if contract terms not fulfilled• Contract is in writing• Clear as to roles and responsibilities
• Underemployment is a big challenge in Cambodia – how do we get the underemployed to be fully employed and successful!• FDCs are advantageous for the mass population and workforce.
• Allows to take on additional orders and opportunities for work and to innovate around diversification and business development• If innovation is successful, can grow the business and employment opportunities• If innovation is not successful, both parties have obligations and clear terms of
contract
Slide 18
Challenges for FDC are related to interpretation and therefore implementation
Renewals in the garment sector• How do they work and having a consistent understanding of terms and conditions related to renewals
Compensation in the garment sector• Compensation inclusion and inclusion in total benefits policy including social security access
• Compensation on termination by either party in the event of unsatisfactory performance on the part of the worker or simply desire to resign on the part of the worker
Seniority in the garment sector• Seniority calculations and respect towards seniority and contribution towards the company
• Unions want more security for the workers in terms of employment – not only the job security, but also seniority recognition and wages related to fixed duration contracts
Slide 19
Framework for addressing challenges: RenewalsConsider industry specific peculiarities
Today
• Max of 2 years in term• Renew as many times as possible
• Any aggregate of renewals that exceeds 2 years automatically converts the contract to a UDC ‐according to the LAC
• Conflict in interpretation and understanding so implementation is causing friction
Recommendations for discussion
• Should ideally not have a limit as restricts freedom of choice• If a limit, 4 – 6 years to be competitive with region
• Must consider other sectors• Multiple renewals essential based on mutual agreement or tailored by Prakas to industry peculiarities as they emerge
• Exploration, innovation• Social security should enable individual contributions especially for FDC holders <6months
• Additional benefits coverage according to company policy and prorated based on working time if more than 1 year continuous work
Slide 20
Framework for addressing challenges: CompensationConsider industry specific peculiarities
Today
• 5% payout at end of contract• Seniority recognition in garment sector is a challenge for employers and unions• General legal interpretation, if you pay out a contract, it is considered to be closed or ended and a new contract starts anew!
• Compensation levels unclear
Recommendations for discussion
• Maintain payout termination• Possibility to recognize seniority if more than 2 years continuous work
• Payout of contract, assumes end of contract and starting a new seniority base – this should be the case if UDCis enforced in terms of UDC payout
• If change to UDC, because FDCcontract payout already made, the following should be implemented• Termination calculations of UDCshould start at beginning of UDCcontract
• Seniority pay could be considered since the start of FDC contract
• Maternity coverage could be considered if FDC employment is more than 2 years continuous work
Slide 21
Framework for addressing challenges: SeniorityConsider industry specific peculiarities
Today
• Recognition of seniority related bonuses unclear
Recommendations for discussion
• Consider provision of relevant seniority related bonuses by sector if more than 2 year of continuous employment
• Very Important Note: In some sector FDC contracts are paid higher because of the short term nature, making blanket changes and not considering the impact on other sectors and professions could have very negative consequences for other types of workers and sectors.
Slide 22
Key Principles for Employment Contracts
• It is important to raise the rights of employers to offer different types of contract based on requirements.
• Similarly rights of workers whether to accept contract being offered or negotiate better terms. No recourse AFTER signing of contracts.
• The two types of contract for the time being in the Cambodia context must be maintained to provide business with enough flexibility to innovate, diversify, and manage sector specific needs. • Buyers place seasonal orders, therefore factories need flexibility to provide employment
opportunities as well as secure the core of employment opportunities.• Forcing a contract to become UDC violates the individual right and freedom to choose a
form of contract or employment.• Any employee should have the right to choose which contract suits their situation better• Emerging growing middle class and new working mothers – in particular related to services
and other industries• Employers should ensure equity in compensation provision base• Job security should not be at the expense of unsecured business and be a constrain to
investment attraction. • Labour law need to consider our diversifying industry and the need to start innovating.
Innovation programs can take anywhere from 3 years to 8 years of investment.
Moving forward is a question of how to address the issue of employment related benefits with respect to FDC making sure it is
fair for both parties.
Slide 23
Recommendation Framework to consider BY SECTOR and must consider salary level provided
ContinuousEmployment
FDC <6 monthscontinuous
FDC 6 months <12 months
FDC >12 months to <24 months
FDC >24 Months
Salary Considers short term nature
Considers short term nature
Considers short term nature
Industry standards
Leave Allowances No Yes but prorated based on type of work/industry need
Yes but prorated based on type of work/industry need
Yes but prorated based on type of work/industry need
Public Holiday Yes Yes Yes Yes
NSSF Contributions Individual Individual or company Individual or company Company
Seniority pay No No No Yes
Attendance bonus Based on mutual agreement orcompany offering
Based on mutual agreement orcompany offering
Based on mutual agreement orcompany offering
Yes for certain sector or job class
Travel transportation Allowances
Based on mutual agreement orcompany offering
Based on mutual agreement orcompany offering
Based on mutual agreement orcompany offering
Yes
Payout 5% ‐ as per law 5% ‐ as per law 5% ‐ as per law 5% ‐ as per law
Health Allowance No, salary should cover
No, salary should cover
No, salary should cover
Yes
Other Based on mutual agreement (CBA) orcompany offering
Based on mutual agreement (CBA) orcompany offering
Based on mutual agreement (CBA) orcompany offering
Based on mutual agreement (CBA) orcompany offering
Slide 24
Making sure our definitions are clear
• Means a person has been employed continuously for a certain period of time and the contract has not been terminated or stopped for a period of more than a month
Continuous employment
• The termination of a labor contract without valid reasons, by either party to the contract, entitles the other party to damages.
• Often this is the basis of a claim for damages by terminated workers
Valid reason for termination
• Does not accommodate a 5 day work week. As such holiday provisions result in the law result in those on 5 day work weeks getting longer holidays than those on 6 day work weeks.
• With industry diversification we need to work on different types of working schedules and weeks and corresponding benefits, termination and holidays.
Labour law based on 6 day work week
Slide 25
Thank youSandra D’AmicoVice PresidentCambodian Federation of Employers and Business [email protected]@camfeba.com(m) 012 766748
It is lonely to dance alone.We must dance together.