Trade Union Law: Implications for Businesses
The new Trade Union Law (“TUL”), promulgated in May 2016, represents the most significant piece of national labor legislation since the 1997 Labor Law. But what will the TUL mean for businesses operating in Cambodia? What are key provisions of the TUL and what are employers’ obligations?
Here is our quick reference guide to the Trade Union Law’s implications for businesses.
What are key changes arising from the TUL?
The following are a sample of some of the key changes brought by the TUL as compared to the Labor Law and related regulations:
- New minimum membership for unions: at least 10 workers to form local union; new minimums also set for federation and confederation unions, as well as for employers’ associations
- New union registration requirements, including regular financial reporting to maintain registration
- New procedures to call for strike, including quorum for meetings and voting thresholds
- New specified limits on workers’ membership in unions: each worker limited to joining 1 local union
- New lowered threshold for unions to obtain MRS: 30% of all workers in an enterprise for union to obtain MRS and negotiate a CBA for the entire enterprise
- New unfair labor practices
- New penalties for non-compliance with TUL
What are the expected long term and short term effects of the TUL?
Focused on regulating employers’ associations and trade unions, the expected long-term effect of the TUL is the stabilization of industrial relations, especially in labor-intensive industries.
In the short term, however, businesses may experience an increase in workplace disruption as trade unions and employers review and seek to implement the new law, including exercising their rights and pursuing their interests under the TUL.
What are the key provisions of the TUL?
One of the most significant provisions of the TUL is the new minimum membership threshold to establish trade unions. The thresholds to form unions are as follows:
| Union Level | Minimum Membership |
| Local Union | 10 workers |
| Union federation | 7 local unions |
| Union confederation | 5 union federations |
Under the TUL, workers are permitted to be members of only one union. As a result, some workplaces are expected to experience – and some are already experiencing – an upsurge of union activity as unions seek to recruit more members, establish new unions, consolidate membership with other unions, or risk dissolution or revocation of their registration. During this period, employers will be required to keep up with changes in union membership to accurately and timely deduct wages and transfer union dues.
What are other key provisions?
Another significant new provision of the TUL is the lowered minimum membership threshold for unions to obtain Most Representative Status (“MRS”). MRS is a select status that gives a union added rights and benefits, such as the right to negotiate a collective bargaining agreement (“CBA”) that is binding on all workers. Under the TUL, the threshold to obtain MRS is 30% of all workers in an enterprise; that is, a union whose membership represents 30% of all workers in an enterprise can obtain MRS. The TUL also includes provisions in the event that more than one union meets the threshold.
Similar to the effects of the minimum membership threshold to establish unions, the TUL’s provisions on MRS are also expected to result in an upsurge of union activity as unions attempt to obtain most representative status.
If a union obtains MRS, are employers obligated to negotiate a CBA?
MRS requires certification from the Ministry of Labor and Vocational Training. A certified MRS union has the right to demand an employer engage in negotiations for a CBA. Under the TUL, the employer is obligated to enter into good faith negotiations, but the employer is not obligated to agree to a CBA. “Good faith” is a legal term with a special requirements under the TUL: the employer is required to meet the MRS union, providing the union with facilities to carry out negotiations and providing relevant information to the union for the negotiation.
What are employers’ obligations under the TUL?
While the TUL addresses both professional organization of workers and employers, the expected primary practical effect will be the regulation of unions. Nonetheless, the TUL includes a number of explicit employer-specific obligations; the failure to comply with the TUL and fulfill obligations can result in the imposition of penalties.
| Employer-Specific Obligations |
| Wage deductions for union dues and transfers to union |
| Record keeping of wage deductions and transfers |
| Organization of elections for shop stewards |
| Preparation and submission of minutes of shop steward elections |
| Obtaining authorization from Labor Inspector to dismiss workers entitled to special protections |
| Maintenance of worker lists for purposes of MRS certification |
| Engagement with unions in good faith, including, in connection with negotiating CBA |
| Non-discrimination against workers in employment decisions |
| Not committing unfair labor practices, as listed in the TUL |
The new Trade Union Law brings a number of significant changes to the legal and regulatory framework for industrial relations in Cambodia. Businesses should understand their rights, be prepared to comply with their obligations and protect their interests, not only under the TUL, but also existing laws and regulations that continue to be in effect.
For further information, please contact:
Hans S. HWANG, Senior Director: T - 092 308 995; E - hans.hwang@sxhlaw.com
TENG Chesda, Associate: T - 012 543 773; E - chesda.teng@sxhlaw.com