Lao Labor Law Compliance: Common Pitfalls to Avoid
From overtime calculations to termination severance, we outline the most common mistakes international companies make in Laos.
Navigating the Lao Labor Law can be complex for international entities entering the market. While the law is comprehensive, enforcement and interpretation can vary.
Top 3 Common Compliance Mistakes
1. Overtime (OT) Calculation
Many companies incorrectly calculate OT based on the Net Salary instead of the Basic Salary. The law explicitly states that OT rates (150%, 200%, 250%) must be applied to the hourly breakdown of the basic wage.
2. Termination without Cause
Differeing from some western jurisdictions, "At-will employment" does not exist in Laos. Terminating an employee without valid grounds (as defined in Article 80) requires significant severance pay, regardless of notice period.
3. Foreign Quotas
Remember that the ratio of foreign to local employees is strictly regulated.
- Physical Labor: 15% foreigners max.
- Intellectual/Specialized: 25% foreigners max.
Solutions
To ensure you are fully compliant:
- Review your Internal Regulations.
- Audit your employment contracts.
- Consult with local experts.