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Draft Labor Law 2015

25 May 2015

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About the Legislative Working Group Our Projects:

Established in November 2007 as an advocate for certain legal and

business practice matters, as well as to provide the membership of the

BCM with information on legislation in Mongolia, and consists of leading

law firms and in-house legal counsel operating in Mongolia or with

business related thereto

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SEFIL

2012 Minerals Law

2013 Minerals Policy

2013 Investment Law

2014 Amendments

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The Draft Labor Law

November 11, 1924 – First Peoples Congress adopted a non-capitalist path of

development

November 25, 1924 – First Constitution Enacted at 4:15p.m.

February 14, 1925 – “Rule on Workforce and Pay” – applied to both public and private

sector.

1930, 1933 and 1934 – further revisions

•1930 – labor contract called “workforce contract” and collective contract called “social

contract”. Introduced social insurance.

•Article 37, 1933, Article 64 1934 laws – labor disputes to be resolved by a labor body.

Introduced health/safety, role and actions of trade unions.

1940 – Mongolia’s second constitution

•Defined the right to work as an honorable duty

1941 Labor Law

•introduced the term “labor contract” (indefinite term focus),

•increased the power of trade unions

•introduced limited mechanisms for termination of a labor contract, and for disciplinary

measures.

•Working hours – 6 for hazardous/toxic, 8 hours for others, probationary period,

overtime.

•Social insurance developed by a few sectors (e.g. coal mining – 9%).

1960 – Mongolia’s third constitution

July 3, 1973 – MPR’s Labor Law

•Largest but only regulated the public sector (citizens in State industries, offices and

organizations).

•Included prohibitions from executing work not indicated in the contract, retention and

reinstatement of job positions, compulsory consent of trade union in case of

termination of an employment contract, prohibitions on dismissals during annual leave,

sick leave, etc., clauses for the improvement of workers’ education and professional

skills.

January 13, 1992 – Mongolia’s 4th and current constitution

•Based on path of free market and capitalist economy

•Right to free choice of employment, favorable conditions of work, remuneration, rest

and private enterprise. (Article 16.4)

•“It is a sacred duty for every citizen to work. . .” (Article 17.2)

Most pre-1992 laws were amended not long after the adoption of the new

Constitution. But not the Labor Law.

1999 – Labor Law

•Changes were based on a desire to: (1) restrict as much as possible direct

intervention of the State in the regulation of social relations related to employment

agreements and to increase the independence of contracting parties, and (2)

maintain human rights and guarantees as set forth in the Constitution.

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Some Focus Points

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Committee to Promote Cooperation in the Work Place

Business entities and organizations with more than 10 employees must establish a Committee to

Promote Cooperation in the Workplace.

•Equal numbers of employer and employee representatives (appointed by TU or meeting of all

employees).

Powers of the Committee include:

•Advise the management of a business entity or organization on developing the organization’s policies.

•Receive and resolve comments and requests concerning labor relations arising at business entities

and organizations.

•Exchange and consult concerning the employer’s decision to be made on labor and social issues.

•Consult on performance evaluations and gender issues.

•Mediate individual labor disputes.

The model rules for the Committee shall be approved by the National Tripartite Consultative

Committee on Labor and Society.

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Wage Regulation

The National Tripartite Consultative Committee on Labor and Society shall approve the following

procedures with regard to wages

•National occupational classification and descriptions

•Guidelines for job evaluations

•Guidelines for setting labor norms

•Procedures for setting the average wage.

The Employer shall approve and enforce the following internal rules in line with the laws and collective

agreements and collective bargaining

•A list of jobs and positions

•Job descriptions

•Labor norms

•Wage procedure

Equal wages shall be paid to employees who perform the same or similar jobs or who perform different

jobs with equal evaluation.

Higher rate shall be applied for work requiring specialization, knowledge, or a profession, as well as for

one with special conditions.

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Internal Policies

Employer shall set, solely and in mutual agreement with an employee or

representatives of an employee, internal norms in conformity with legislation on

labor relation matters.

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Labor Hire Restrictions

An employer may recruit employees through a workforce supply service

provider in the following cases:

•Temporary jobs lasting for 6 months or less

•Not to exceed 10% of the total employees of an employer

•For non-core activities only

If the above conditions are not met the law will deem the workers to be the

employees of the company.

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Rosters

Law prescribes a mandatory 14/14 roster for hazardous and risky workplaces

•“Risky” is left to subjective definition of State Inspector

•Normal roster hours negotiated between employees and employers in Mongolia

include: 30/10, 28/14, 14/7. Generally accepted standards include 21.5 working

days per month, 260 working days per year, or a minimum ratio of 3 days off for

every 7 consecutive working days (e.g. 21 day roster = 9 days break).

Consequences of State Interference:

•Significantly decrease employees pay as they will only be working 6 months out

of the year.

•Safety concerns as employees will seek secondary employment during the time

off which may lead to fatigue and a dulling of their skills.

•Increase overhead and create reductions in productivity – create more jobs.

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Roster (continued)

Possible 12 week roster for normal working conditions but then limits the work hours to an

average of 40 hours per week, with overtime being limited to 8 hours per week maximum.

Consequences of State Interference:

1) Employer

•a company may only ask an employee to work 48 hours a week which will lead to the

employer having to increase the number of employees which will increase costs and

overhead.

2) Employee

•Significantly reduce employees’ ability to earn overtime pay that will lead to decreasing

employee take home salaries in work environments in which overtime is both routine and

accepted by the employer and employees

•Lead to increased downtime of employees while at remote work sites which might potentially

lead to health and safety concerns (e.g. increased alcohol consumption, depression,

boredom, etc.)

•Lost flexibility in assigning work hours most conductive to their particular business context,

potentially raising overall operating costs and driving down productivity.

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Roster (continued)

Further limits roster hours by guaranteeing employees no less than 1

day of leave for every week of work roster (fatigue days vs. roster work

days)

•Paid or unpaid?

•Potential to raise costs and reduce salary: If applied to 14/14, the

employee would work 7 days, get the 8th day off and then work the

following 6 days – effectively meaning that they are working 13 days a

month rather than 21 (with limited overtime and increased downtime).

Further requires that all travel time shall be included in the hours worked

•Limits productivity and increases employers’ costs. Where to where?

Further requires consultation with the Trade Union or Employee

Representatives to approve the duration of the roster, work and rest time

and allowance for working on roster.

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Night Shift

•Night shift is from 10pm until 6am

•Now prescribes 20% additional pay

•If 2/3 of working hours of a shift worker occur during nighttime hours then the

entire hours are considered as night shift

•An employee may not work more than 8 night shift hours

Consequences of State Interference:

•12 hour work shifts destroyed (8/8/8), number of employees and costs

increased while salaries reduced, 16 hours of idle time at remote locations

•Will impact hospitals, police, power plants, rail, air, exploration/mining, etc.

•The only beneficiary is the Government who can report increased numbers in

jobs at the cost of both employers and employees.

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Fixed Term Agreements

Fixed term agreement may only be used for

•Apprentice/intern

•Seasonal jobs

•Temporary replacements of employees

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Research and

Analysis

Public Comment

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THANK YOU