Resolving Labour Disputes Swiftly, Amicably

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To deepen our understanding of labour disputes in Cambodia and the process of resolving them, the B2B team sits down with Men Nimmith, the executive director of the Arbitration Council Foundation.

The Arbitration Council was launched in 2003 with the support of the International Labour Organisation (ILO), the Ministry of Labour, unions and the business community. Since its inception, the Council has heard more than 2,300 cases from a variety of industries across Cambodia, including garment and footwear, hospitality, construction, transportation, food and services, and the agriculture sectors. The process at the Arbitration Council is efficient and cost-free.

B2B: How many cases is the Council handling on average per year?

Men Nimmith: On average over the 13 year lifespan, the Council has handled 200 cases per year; in 2015 the Council handled 338 cases.

B2B: What’s your resolution rate?

Men Nimmith: The rate is very satisfactory. There isn’t really a backlog — our resolution rate stands at about 99%; the remaining 1% is cases currently being resolved within the 15 day timeframe. Our success rate is around 72%; up to 33% of the cases we handle are settled through conciliation, meaning the cases close after conciliation by the Council. Whenever we are unable to solve a case by conciliation, we continue to the arbitration process. Approximately, we achieve another 35% through successful arbitration, which means the arbitral awards are fully or substantially implemented by the parties. The remaining success cases are those disputes which are settled after the awards are issued.

B2B: What does this mean for the labour movement in Cambodia?

Men Nimmith: It means that conflicts are getting resolved very fast. The Council has 3 days to form a panel after we receive the case and, by law, the Council has to resolve disputes within 15 days after the formation of the panel. If a case is particularly complex and more time is needed, parties can agree to extend the 15-day deadline and give the panel additional time. On average, we resolve cases in 18 days.

It also means that parties have free access to an alternative mechanism for labour dispute resolution, instead of only court. Going through the Arbitration Council, significantly cuts down the time involved in reaching a solution. Parties come here, and after 18 days there is an arbitral award and they know what to do. Companies and employees have this reliable, fast and transparent independent resolution process to turn to in Cambodia. You cannot do this at court in any country in the world — the court would simply take much longer, and the process is costly and more complicated.

This kind of quick resolution helps parties go back to work faster and increases productivity. If we didn’t resolve cases with such celerity, employees would not go to work and factories would have no products to export, for example.

The Council emphasises conciliation as an important part of the labour dispute resolution process because when parties agree on a solution it is much more likely to improve the employment relationship overall. A better employment relationship generally results in better outcomes for both workers and employers.

Another tool through which the Arbitration Council exercises its authority, is the interim return to work order. This order can be made when workers go on strike and their case reaches the Arbitration Council. The Council cannot hear a labour dispute if strike action is going on. This order has a high rate of compliance. It mandates that employees or strikers return to work within 48 hours if they want the Council to resolve the dispute.

B2B: What’s the incidence of non-compliance to the Council’s resolutions?

Men Nimmith: Parties have 2 choices. They can choose the arbitral award to be binding or non-binding. At the start of a hearing the arbitration panel asks parties whether they want the binding or the non-binding option. Naturally, the binding option is chosen less frequently. If one of the parties chooses the non-binding option, the other must inevitably follow — you need 2 parties [in agreement] to make an award binding. Regardless of whether the parties choose a binding resolution or not, the Council’s arbitral award compliance rate is about 65% of all the cases arbitrated.

B2B: What are the most common topics of litigation that the council deals with? What sectors or industries are most commonly involved?

Men Nimmith: On average, around 90% of our cases pertain to the garment and footwear sector. However, that figure decreased to 77% in 2015, which means more and more cases are coming to us from other sectors. These sectors include construction, hospitality and tourism, gas companies, security, electricity, cement production, agriculture, food and services, transportation, and others. We have even received cases from radio stations.

The most common topics of labour disputes are about wages, worker dismissals, and employment contracts. Issues in these disputes can commonly be divided into two categories. On the one hand are disputes derived from an allegation of violations of the labour law (‘rights disputes’); and on the other, disputes about workers’ demands which go beyond the legal minimums and which employers cannot or will not agree to (interest disputes). A collective bargaining agreement (or CBA) reached by parties may contain many resolution to ‘interest’ claims. Alleged breaches of CBAs can also occur and cause a dispute.

B2B: Do you think cultural differences can play a role when foreign companies are involved?

Men Nimmith: Yes, I think cultural differences play a role. We can see two types of differences: social/cultural and economic. Developed countries have had stability for a long time, and are easily able to concentrate on methods to boost productivity. Employers coming from that context have different expectations from people coming from countries like Cambodia. We’ve only just gained stability for less than 20 years, and our productivity still needs improvement. So when the two groups work together, the ones coming from developed nations are often disillusioned and disappointed. Another barrier is poor communication. Often, factory owners and managers speak a different language to workers, and have to communicate through interpreters. Lack of quality communication can lead to tension between parties; the consequence of which is frustration, anger and violence. Social/cultural differences can be seen when workers change their life style from being a farmer to a city worker. There is a great deal of adaptation for such workers to go through, including faster pace of life such as walking, eating, cleaning, and more as they live in a large group with limited space and facilities.

B2B: There’s been a lot of media coverage of the struggle with minimum wage. Do you think this has influenced the rate at which people are speaking up and presenting claims to the council?

Men Nimmith: Media coverage of the minimum wage struggle has been massive. It brings the issue to the forefront of public opinion and to the attention of buyers, employers and producers. I think the effect is that there is a lot of analyses and discussions.

B2B: How does the work of the Council help better the investment climate in the Kingdom?

Men Nimmith: The Arbitration Council improves confidence in the process of conflict resolution outside the court system. Our reputation attracts parties to our services; in part because they trust us – independent researchers have assessed us over 5 years and found zero occurrences of corruption. We help parties in a conflict keep the situation peaceful, so that they can keep on working and keep on producing.

In addition, the Arbitration Council helps improve the way Cambodia is perceived by investors. In order to meet production targets, and sell your product to your buyers without interruption, you need stability in your industry and more particularly, your workplace. If you do enjoy this stability, buyers will come to you more often and this would allow you to compete more effectively with other countries and companies.

We’ve been praised by employers, employees, and industry representatives for helping the sector (and the country) save money. To give you an idea of what’s at stake: if a factory employing 10,000 people shuts down for 10 days due to strikes, the cost to the industry has been estimated to amount to half a million dollars. In this case, the Arbitration Council can step in and issue an order to make employees resume work within 48 hours. According to our estimations, the Arbitration Council has saved Cambodia around $140 million per year, while helping to keep the balance between stability of industrial relations and the right to strike.

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