Out of Court Dispute Resolution

The number of investors expressing an interest in starting businesses in Lao PDR has been increasing in recent years as the government of Lao PDR has continuously focused on providing regulatory changes in favor of both domestic and foreign investments. These investment policies have created many opportunities for new investors and competitors as well as increasing employment in Lao PDR. As a result of higher levels of employment, the government of Lao PDR has adopted the Prime Minister’s Decree on Labour Dispute Resolution No.76 dated 28 February 2018 (the “Decree”) to simplify out-of-court methods of resolving labour disputes under the Labour Law with the aim of protecting the rights and interests of both employees and employers and making issues arising out of, or relating to, employment efficiently resolvable.

The Decree expands the descriptions of the two categories of labour disputes, namely those constituting a ‘Regulatory Dispute’ and an ‘Interest Dispute’, which in each case may be an ‘individual’ or ‘collective’ dispute.

Regulatory Disputes are disputes resulting from either an employer or employee who fails to comply with the labour law, the internal regulations of a labour unit, the individual or collective employment contracts pertaining to the employer and other labour related legislation. This may include breaches such as overtime work exceeding that provided for by law or payment of wages lower than the minimum wage as determined by the government.

An Interest Dispute is a dispute arising from either party having not responded to a request for new rights and/or interests by the other party, for example, working hours, wages or labour welfare arrangements.

The Decree also provides more clarification on the following out-of-court labour dispute resolution methods: ‘Compromise’, ‘Administrative Resolution’ and ‘Resolution by the Committee for Labour Dispute Resolution’.

It is required under the Decree that a procedure for compromise is provided for in the internal regulations of a labour unit. A resolution via compromise shall be reached within fifteen (15) days from the date of receipt of a written request by either disputing party for an individual dispute, and within thirty (30) days for a collective dispute. Compromise also covers a ‘collective negotiation’ process of which a potential outcome is the production of a collective employment agreement. If the disputing parties are unable to come to agreement by compromise, either party may bring the dispute for resolution by Administrative Resolution.

Administrative Resolution proceedings are decentralized to the offices of Labour and Social Welfare from the local to ministerial level. The authority of the relevant office depends on amount of employees of the relevant employer. In cases in which compromise and Administrative Resolution have failed in the lower levels (e.g. village level), for instance, the dispute will be referred upwards to the District Offices of Labour and Social Welfare to conduct additional Administrative Resolution proceedings.

A mediator is appointed by each office for Administrative Resolution proceedings. The timeframe of each level of Administrative Resolution proceedings shall not exceed fifteen (15) days from the date of receipt of a written request by either disputing party.

Resolution of labour disputes by the Committee for Labour Dispute Resolution is specific for resolution of Interest Disputes. The Committee for Labour Dispute Resolution is set up at central and provincial level with appointed members being representatives from the Labour Management Authority, the Employee Representative Organization and the Employer Representative Organization.

The Decree became effective on 29 March 2018.

If you would like more information or our assistance with respect to out-of-court labour dispute resolution proceedings in Lao PDR, please contact the Arion Legal team at enquiries@arionlegal.com.