EuroChamber position paper on “revised labour law” implementation
SocietyUlaanbaatar /MONTSAME/. EuroChamber
Mongolia’s held an urgent and highly constructive meeting with the Minister of
Labour and Social Protection, Ms. Ariunzaya A, and the Director General of the
Employment Policy and implementation and Coordination Department, Mr. S. Dambii
on December 28th.
The attendees from EuroChamber
side were Mr. Tomas Bravenec, Executive Director of EuroChamber, the working
group Co-Chairs Ms. Tuvshinjargal M., HR Director of MSM Group and Ms.
Ganchimeg B., HR Director of Orano Group/Badrakh Energy, and Ms. Khishigjargal B.,
Policy officer of EuroChamber.
EuroChamber formed a new Working
Group “Revised Labour Law” in October last year, based on increasing interest
of our members in the impact of the thoroughly updated Labour law. The Working
Group attracted strong participation by leading companies, as well as received
thankfull professional input from PWC Mongolia and the Mongolian Mining
Association. The resulting Position Paper contains detailed analysis of key
impacts and several recommendations, including:
1. The introduction of 14
on-14-off days roster plus a week of quarantine imposes significant increase of
salary cost for the affected companies (esp. mining, construction and others).
It forces employers to hire an additional 25% of employees, which will be in
high demand at the same industry sector, thus creating a bubble of demand. This
will add to the shortage of Labour force on the market, adding to the financial
burden for the companies due to additional employment need.
2. Employing a temporary or
contractual employee costs more than full-time employees, which makes it
difficult for the companies to hire and/or retain the right personnel. Along
with the shortage of Labour force (explained in point 1 above), and due to the
expected salary increase pressures, this will decrease the competitiveness of
companies and the sector as a whole.
3. There were several
un-clarities, contradictions and some unpractical proposals in the law
regarding: * calculations of working and commuting hours, issues with overtime
calculation, which result in unrealistic increase of average salary; * the
employment regulations for fixed term.; * other issues reg. calculations of the
average salary and the complications in calculating vacation days. This, in
combinations with absent implementation guidelines, creates legal and
potentially compliance risk for all employers.
4. The Position Paper proposes to
postpone effective date of some provisions and/or for the Government to be
flexible on implementing the Revised Labour Law parts where the related
Implementation Guidelines are not finalized and approved by the Ministry of
Labour and Social Protection and to allow sufficient period for preparation for
companies to adjust accordingly. Out of the 26 planned Implementation
Guidelines, only 4 were published and approved and 22 are pending.
The Position Paper is available
exclusively to the members of EuroChamber.
The topics covered in the meeting
with Minister A. Ariunzaya were:
• The “Revised Labour Law” are
expected to increase total Labour related cost by 30-40%, i.e. increasing total
production cost by about 10%, thus threatening to decrease competitiveness of
Mongolian mining and other effected industries (e.g. construction), potentially
leading to further decrease of FDI/ investors interest in those sectors.
• On the other hand, several employee groups will be affected by 25-40% salary income decrease, having negative impact both on employees and the ability of companies to keep their skilled employees.
• While the law will be valid from
1.1.2022, 22 out of the 26 Implementation Guidelines are yet to be finalized by
the Ministry, which is creating uncertainties for the companies to implement
the new law. According to the Minister, it is expected that all guidelines will
be adopted before Tsagaan Sar 2022.
During our meeting with the
Minister Ariunzaya we have agreed on the following:
1. The Ministry will consider
carefully EuroChamber’s Position Paper and recommendations during the process
of making the Implementation Guidelines
2. The Ministry of Labour and
Social Protection will organize an explanatory trainings on the “Revised Labour
Law” for EuroChamber’s member companies in January-February 2022
3. EuroChamber highlighted to the
Minister that the absence of clear implementation guidelines at the time of
validity of the amended law creates potential compliance and legal risks for
companies, and we asked that the Ministry of Labour and Social Protection and
other Government agencies would be lenient until there is sufficient clarity
and training available.
Please stay tuned for any new
updates on this important topics from EuroChamber, we will post expected
training session dates before mid-January 2022.
Therefore, if you want to deliver
your comments and suggestions, please do not hesitate to contact us by:
policy@eurochamber.mn and/or +976 99660240.
EuroChamber Mongolia