The end of the year is usually a good time for companies to take stock of the employee handbooks and policies they have in place and update them for the coming year. Many jurisdictions in Asia mandate employers to establish formal work rules covering specific content such as disciplinary procedures. Is your company compliant with these requirements?
All about work rules?
Work rules are mandatory in some jurisdictions in Asia (including Japan, China, South Korea, Thailand, Taiwan and Vietnam) once the company meets the relevant employee threshold. Where work rules are mandatory, it is often the case that these rules have to be registered with the local authorities. For example, in South Korea employers who ordinarily employ 10 or more employees are required to establish rules of employment which must be registered with the Ministry of Employment and Labor. In Indonesia employers are required to establish company regulations if they employ 10 or more employees. These company regulations must be approved by the Ministry of Manpower and Transmigration. In China, all employers must establish internal rules in consultation with employees.
Many jurisdictions also have prescriptive rules on the content of mandatory work rules requiring employers to cover specific topic. For example, in Thailand work rules established by a company must set out the matters prescribed by the Labour Protection Act, including normal working days, rest days and breaks, holidays and leave procedures. The issue of such content can become complicated as multi-national companies may also in practice have standardised employee handbooks or regional or global policies which apply to all employees regardless of location. A harmonisation exercise is recommended for companies that have such policies to ensure that these policies do not conflict with any work rules that are in place, and that their work rules and policies are regionally consistent yet compliant with local laws.
Employers should consider:
1. how many workers they have, and whether the requirement to have work rules is triggered in a particular jurisdiction;
2. whether their existing work rules cover the specific content and language required in each jurisdiction;
3. whether any employee handbooks or policies (including global policies) are in place in addition to work rules and if so whether these are, in fact, binding;
4. how such handbooks or policies interrelate with the work rules;
5. whether their existing work rules, handbooks and policies have been updated to reflect current laws; and
6. whether such documentation allow enough flexibility in disciplining or terminating employees for breaches of company policies.