Changes in Seniority Payments Impacting Factories and Manufacturing Enterprises
The Ministry of Labour and Vocational Training (“MLVT”) has issued a Notification (No 003/21) dated 21 January 2021 on seniority payments which significantly impacts the salary payment obligations of those operating factories and manufacturing enterprises.
While a press release dated 23 December 2020 initially announced the postponement of the seniority indemnity payment to 2022 for all sectors (see our previous alert on this topic) factories and enterprises in the manufacturing sector will now be treated differently.
Reminder: This notice only applies to unspecified duration contracts (UDC) in Factories and Enterprises in the manufacturing sector.
The notification sets the payment of the seniority indemnity in factories and manufacturing establishments as follows:
| Accrued Sums | Schedule of Payments |
| Back Payment of Seniority Indemnity accrued before 2019 which is meant to be settled in the year 2020 | Quarter 1 and 3 of 2021 |
| Back Payment of Seniority Indemnity accrued before 2019 which was meant to be settled in the year 2021 | Quarter 2 and 4 of 2021 |
| Seniority indemnity accrued for year 2020 | Quarter 1 and 3 of 2021 |
| Seniority indemnity in 2021 | Quarter 2 and 4 of 2021 |
Alternative Arrangements
For some manufacturers, it may prove difficult to bear the accrued seniority indemnity payments from previous years altogether in 2021. It should therefore be borne in mind that this Notification allows manufacturers to negotiate and consult with employees and reach a different agreement on the payment schedule for settling the accrued seniority indemnity payments up to the end of year 2020.
If you have any questions or require additional information, please contact Matthew Rendall, Phirum Ol, or Shan Berg Liew at SokSiphana&associates (a member of ZICO Law).
This alert is for general information only and is not a substitute for legal advice.
