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New Labour Law Set to Reduce Industrial Action and Boost Business Environment

Cambodia is poised to introduce new trade union legislation, after the National Assembly[1] - the lower house of the country’s parliament voted in favour of the move on April.  Once enacted, it will introduce new rules on how trade unions are formed, run and dissolved, as well as establishing clear protocols governing industrial action.

Overall, 67 legislators representing the ruling Cambodian People’s Party (CPP) voted in favour of the upcoming legislation. It now has to be passed by the Senate, the upper house of parliament, before it is signed into law by the country’s monarch. While a date has yet to be announced for the vote on the proposed law in the Senate, its passage is being regarded as a foregone conclusion as the CPP also enjoys a majority in the upper house.

Key Elements of the Upcoming Law

Changes likely considered as improvements by trade unions, but opposed by employers

  • The minimum number for forming a union will be cut from 20 to 10 workers.
  • A union can be dissolved if more than 50% of its members agree to such dissolution, with the current threshold standing at 25%.
  • A union will be able to acquire “most representative status” and claim associated exclusive bargaining rights if it has the support of more than 30% of the workforce at any given business establishment.
  • The power to cancel a union’s registration will rest only with a court of law.

Changes opposed by Trade Unions but likely to be welcomed by business associations

  • Unions will be required to declare their finances and other related matters.
  • A union can be dissolved due to infractions by any one of its leaders.
  • For a strike to be deemed legal, it must be agreed to by an absolute majority through a secret ballot. Those voting should represent more than 50% of the total membership of the union.

The draft law, which has been under process since 2008, was approved by the cabinet on 13 November 2015 before then being forwarded to the National Assembly. Prior to the vote, a CPP spokesperson acknowledged that the proposed law was “not 100% perfect”, but no further changes were being considered for the draft legislation.[2]

While trade unions have opposed the draft law on the grounds that it is seen as failing to protect their right to form associations and to strike, industry associations and employers have criticised the proposed law as being too lenient. Despite the reservations expressed by business owners, the impending legislation is expected to have far-reaching consequences for Cambodia’s industrial sector, particularly its garment industry which is highly unionised and prone to frequent strikes and factory shutdowns. The new law, once enacted, will make it more difficult for unions to stage frequent strikes and may allay the concern of any investors troubled by the country’s recent labour problems.

[1]  The Cambodia Daily, 5 April 2016
[2]  The Cambodia Daily, 12 March 2016

Content provided by Picture: HKTDC Research
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