Employment Issues for Thai Companies Doing Business in Laos: Resolving Labour Disputes

Employment Issues for Thai Companies Doing Business in Laos: Resolving Labour Disputes

Lao P.D.R. has long been a high-potential destination for companies from Thailand–the second largest foreign investor in Laos behind China. In the past, companies sometimes faced issues over the uncertain legal framework for resolving labour disputes in Laos. Therefore, the Lao government recently issued the Decree on Labour Dispute Resolution No. 76/GOL (the "Decree"), which precisely defines and clarifies existing mechanisms for labour dispute resolution, covering:

  1. Disputes related to the implementation of the Laos Labour Law, work rules of the labour unit in each company, provisions in the company's employment contract or collective labour agreement, or infringement of other regulations related to labour.
  2. Disputes related to benefits, such as salary, working hours, or social welfare, among other issues.

Under the Decree, the four main domestic approaches for employers and employees seeking to resolve labour disputes are compromise, administrative remedy, resolution by the Committee for Labour Dispute Resolution, or decision by the Lao People's Court.

Compromise

An employer and individual employee or group of employees may wish to resolve a labour dispute through consultation to reach a compromise. To initiate the consultation, a proposal regarding the dispute must be submitted by one party to the counterparty. Each party may appoint a representative to lead the discussions or propose a third party to act as a mediator.

A successful consultation will include in writing the results of the discussions, including how the dispute in question will be resolved, and the signatures of all parties involved. The Decree stipulates that a compromise to resolve a dispute between an employer and individual employee should be reached within 15 days from the date on which one party receives a proposal from the counterparty.

An employer may also face a dispute on a larger scale, involving a representative, or a representative organization, such as a labour union, acting on behalf of more than half of the employees in a labour unit. In this case, the representative will submit their proposal to the employer to conduct collective bargaining, such as to call for better working conditions or wages. Similarly, the employer or a representative can initiate collective bargaining with a particular labour unit if it believes that the conduct of the unit has a negative impact on the company's business activities.

A collective labour agreement will seal the collective bargaining. To be enforceable, the agreement must be signed by all parties involved, registered with the Lao Labour Administration Authority for examination, and registered with notary authorities to ensure full enforcement. According to the Decree, a compromise to resolve a dispute between an employer and a labour unit should be reached within 30 days from the date on which one party receives the counterparty's proposal.

In the event that the parties cannot reach a satisfactory compromise, they are free to use another labour dispute resolution approach. It is recommended that Thai companies include basic provisions for labour dispute resolution in their employment contracts, including forms to observe, and relevant recipients of labour dispute proposals. This may require changes to the company's articles of association (AOA), but will provide greater certainty for both the employer and the employee should a labour dispute arise.

Administrative remedy

An administrative remedy is available to employees at the village, district, provincial, and ministry levels. The process for obtaining an administrative remedy is initiated when a complaint is filed with the relevant Labour Administration Authority.

Depending on the type of employee or number of employees involved, a labour dispute may originate at one level and be escalated to higher levels. At each level, a mediator will be appointed by the relevant Labour Administration Authority to find a satisfactory solution for the employer and employee within 15 days from the date of receipt of the written claims of both parties. Most Thai employers in Laos would likely see a labour dispute at the provincial level if their employees decide to file for an administrative remedy.

Resolution by the Committee for Labour Dispute Resolution

The Decree establishes the Committee for Labour Dispute Resolution (CLDR), which is responsible for resolving disputes related to benefits. The committee operates at two levels: a central committee whose members are appointed by the Ministry of Labour and Social Welfare and a provincial committee whose members are appointed by each province's Department of Labour and Social Welfare. The CLDR will include representatives from the Labour Administration Authority, employers, and employees.

The CLDR will be tasked with reviewing labour dispute claims, requesting necessary information or seeking participation from relevant parties, arriving at a resolution, and notifying relevant parties and representatives of their resolution. A dispute that cannot be resolved at the provincial CLDR may be escalated to the central CLDR, or brought before the Lao People's Court at the request of one of the parties involved.

Decision by the Lao People's Court

If a labour dispute cannot be resolved through compromise, administrative remedy, or CLDR resolution, the matter can be brought before the Lao People's Court as a final recourse. The court's decision would be enforceable within 15 days after being issued and is considered final.

If the employer does not agree with the decision of the Lao People's Court and decides to not accept certain employees within their workplace, the employees' employment contract will be considered cancelled, with the employer being obligated to pay the employees severance and other benefits defined in the employment contract and company's internal work rules.

Working during a pending labour dispute

The Decree dedicates a section to ongoing fulfilment of an employment contract during a pending dispute, stipulating that employees should continue working during an ongoing individual or collective dispute, unless the CLDR explicitly orders the employees to cease work during the pending dispute. An exception is if the employees notice that work safety conditions have not been met, and have notified their employer about the issue previously. In such case, the employees may decide not to work and must report the issue to the Labour Administration Authority immediately.

It is important to note that the employer will be at fault if it decides to close its workplace to employees without receiving approval from the CLDR or the employees to do so. In such case, the employer will be liable for payment of the salary of the employees who were unable to work during the closing of the workplace.

However, if the employer notices that an employee or employees have behavior that may cause damage to the company's business, they may decide to restrict or prohibit access to those specific employees after consulting with the employee representative or labour union. The employer must also immediately report the issue to the Labour Administration Authority.

The new Decree for resolving labour disputes in Laos provides a promising legal framework to address contentious employment issues for investors seeking to do business in the country.


Author: Dino Santaniello, Country Head, Laos office, and Saithong Rattana, attorney-at-law, at Tilleke & Gibbins. Please send comments to Andrew Stoutley at andrew.s@tilleke.com

Series Editor: Christopher F. Bruton is Executive Director of Dataconsult Ltd, chris@dataconsult.co.th. Dataconsult's Thailand Regional Forum provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.


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