(A) General

Any foreign investment which is legally established under the law on the promotion and management in the Lao PDR has to comply with the provisions of the said law, which state that foreign investors shall give priority to Lao citizens in recruiting and hiring their employees. Moreover, the said law stipulates that foreign investors have an obligation to upgrade the skills of their Lao employees through such techniques as training within the Lao PDR or abroad.

In 1994, the Labour Law No. 10/90 dated 29 November, 1990 was replaced by the Labour Law of the Lao PDR, Decree No. 24/PR of the President of the Republic, dated 21 April 1994. This law applies to all workers and employers who carry on activities in any social economic sector of the Lao PDR, yet it shall not apply to Civil Servants employed in state administrative and technical service, national defence and public orders.

(B) Foreign Workers

Even though foreign investors must comply with the Lao Law to give priority to Lao citizens in employment, they may recruit foreign workers if no appropriately qualified workers are available from Lao citizens. However, the employment of foreign workers shall be limited in number and in duration and a detailed scheme shall be established for the transfer of skills to Lao workers to replace such foreign workers once the duration of their Employment Contract has been completed. The duration of employment of foreign workers shall be authorised by the Labour Administration prior to their entry to International and Foreign Aid Projects to which the special regulation shall apply.

(C) Employment Contract

An Employment Contract must be concluded in writing. However, in some cases an Employment Contract may be verbal, depending on employment conditions and the nature of work. An Employment Contract may be terminated by either party, if the Employment Contract is for an indefinite period.

In addition, an Employment Contract may be terminated by dismissal where the worker concerned lacks the required specialised skills, or where the worker is not in good health and therefore cannot continue to work, or where the employer considers it necessary to reduce the number of workers in order to improve the organisation of work within the labour unit. However, before the employer can terminate an Employment Contract because of the lack of required skills or by not being satisfied with the health of the employee, the employer shall give at least 45 days' notice together with an explanation for the grounds of termination.

(D) The General Regulation of Employment

1. Hours

The hours of work in a labour unit shall be six days per week, but not exceeding eight hours per day or forty-eight hours per week. However, hours of work must not exceed six hours per day or thirty-six hours per week in respect of workers whose occupation involves:

- direct exposure to radiation or to contagious disease;

- direct exposure to gas or smoke, having an adverse effect on health;

- direct exposure to dangerous chemicals, in particular to explosives;

- work in pits, or in underground tunnels underwater or at heights;

- work in an abnormally hot or cold environment;

- direct use of constantly vibrating machinery.

An employer may not request workers to work overtime unless receiving the prior consent of the trade union or workers' representative and of the workers concerned. Overtime shall not exceed 30 hours per month, except in exceptional situations such as a natural disaster or an unexpected event of a kind that would cause great damage.

2. Benefits

Weekly rest and official holidays

In any day within a week, a employee shall have the right to one full day of rest. The official holidays shall be stipulated by the Government.

Sick leave

Upon presentation of a medical certificate, workers remunerated on a monthly basis shall be entitled to sick leave, with full pay, for up to 30 days per year.

Annual leave

Workers who have worked for one full year shall be entitle to 15 days of annual leave. Workers performing arduous work or work which is damaging to their health, as described in clause 1 of this heading, shall be entitled to 18 days of annual leave.

3. Employment of Women and Young Persons

Women shall not be employed to perform heavy work dangerous to their health, nor to work during the night in all industrial sectors from 10 P.M. to 5 A.M. the following morning. In addition, an employer shall not employ a woman during pregnancy or during the six months following her confinement to perform any heavy duties.

4. Income Tax and Social Security

Each employer or managerial body has a duty to diligently deduct Income Tax from its workers' salaries or remuneration for payment to the national budget.

A Social Security Fund shall be established by each labour unit in the socio-economic sectors to ensure the living standard of its workers.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".