Practice Area Articles


February 05, 2024

By Paul Hastings Professional

Back to International Employment Law



Remuneration of foreign workers

The Law on Foreign Exchange Management No. 15/NA of 7 July 2022, as well as rules surrounding foreign currency, continue to regulate the use of foreign currency in Laos. Generally, all payments, save for some exceptions, must be in Lao Kip (LAK). Last year, the Laos prime minister issued the Order on the Implementation of Foreign Exchange Management, which came into force in July 2023. The order introduces substantial flexibility into the Laos regulatory framework for corporations or organizations that are required to hire foreign experts or labourers. In such a case, foreign currency can be used to pay salaries or wages — a significant development in the country’s rules for the employment of foreign workers.

Increase to the minimum wage

In August 2023, Laos’s Prime Minister’s Office increased the minimum wage for all workers in Laos. This increase is a continuation of the stepped increases in the minimum wage that began in mid-2022. The recent development increased the minimum monthly wage from LAK 1.3 million to LAK 1.6 million, in accordance with an agreement reached in the Government’s ordinary session in July 2023. The new minimum wage rate came into effect on 1 October 2023. This is the third minimum wage increase in Laos since June 2022. Two of the main factors responsible for this heightened frequency of minimum wage increases are the depreciation of the Lao Kip against foreign currencies and inflation. These stepped increases also show the Government’s proactive approach toward addressing the cost-of-living crisis in Laos and its effect on low-wage workers.

Detailed application of eligibility for the minimum wage

The legislation setting out the increased minimum wage provides that this minimum salary applies to remunerating employees “new to the market” (i.e., “unskilled workers” who have not received any training, lack specialized expertise, and hold no professional qualifications). The minimum salary applies only to workers who work for no more than twenty-six days per month, adhere to a six-day workweek, and contribute eight hours of service daily (e.g., for workers who exceed the above conditions, the minimum salary will not suffice). Also, the instruction provides that the minimum salary of LAK 1.6 million does not include additional forms of payment (e.g., overtime remuneration, net pension contributions, annual allowances, provisions for sustenance and lodging, or other allowances as may be agreed between the employee and the employer). Employees with professional qualifications and work experience, along with a tenure of at least nine months with the company, are entitled to a salary or wage exceeding the minimum salary threshold by prescribing it in the internal regulations or the employment contract. Employees who perform tasks that pose health hazards must be paid at least 15% above the minimum wage.

With thanks to Joel Akins and Dino Santaniello of Tilleke & Gibbins for their invaluable collaboration on this update.



Discussions regarding proposed increase to minimum wage

The last minimum wage increase was enacted in April 2018, when the Government increased the minimum salary from LAK 900,000 (approx. USD 90) to LAK 1.1 million (approx. USD 110). COVID-19 has had a significant impact on the country, and the dependence of the country on imports has made consumer goods more expensive due to supply difficulties during the outbreak. Concerns have been raised that the current minimum salary does not match the cost of living.

The local population suffers from the rising price of consumer goods, and while the country is not prone to protests or large-scale social movements, the local population expects some action from the Government. This includes raising the minimum salary, which is considered to be too low. 

The Government has started talks about a potential increase to the minimum wage but to date, no specific action has been taken. Employers are not obligated to increase salary rates until the Government issues the relevant regulations. This may take some time, and it is difficult at this stage to foresee when such an increase may occur. However, there may be updates shortly as the discussions on the topic are ongoing. It may be difficult for the Government to balance the concerns about wages being too low with the economic reality of local employers who have also suffered severely from the impact of COVID-19.




Hygiene and safety measures during the COVID-19 outbreak period

On 11 May 2020, the National Taskforce Committee for COVID-19 Prevention and Control issued Instructions No. 071 on Adjusting the Conditions and Measures for the Operations of Business Units during the COVID-19 Outbreak (the "Instructions") to assist the country's business units in resuming their operations and controlling their sanitary conditions, thereby preventing further economic loss.

The Instructions address all types of business units in Laos and give special attention to important projects (i.e., factories) that have many workers and risk spreading the virus on a large scale.

In particular, the Instructions provide the following six conditions to be observed throughout the outbreak:

  • Working areas must not be narrowed and must accommodate social distance measures.
  • Canteens must be spacious and allow good hygiene. Utensils must not be shared. One meter must be observed between each seat. There must be a separate room in which suspected positive COVID-19 cases can be placed.
  • Clean water, masks, and places to wash hands with sufficient soap and gel must be provided.
  • There must be an employee who monitors staff entering and leaving the working areas.
  • Employees must dispose of their trash properly.
  • The National Task Force's inspections should be facilitated.

In addition, the Instructions require the following five measures to be implemented:

  • Temperature check in the morning and evening. If an employee presents symptoms (temperature of 37.5°C, cough, or difficulty breathing), a record of this must be made, and he/she must be isolated, and consult with the emergency number on what must be done accordingly.
  • Provision of masks.
  • Social distancing of at least one meter. Activities that cannot ensure such social distancing must be prohibited.
  • Monitor people not employed by but working with the legal entity.
  • Clean working areas, canteens, toilets, dormitories, and warehouses/storerooms every day.


Import of foreign labour

As a measure to limit the spread of COVID-19, Laos' borders with its neighbouring countries and international checkpoints (e.g., airports) have been closed unless there are certain reasons for them to be opened. Given this limitation and the growing risk of economic loss, the local authorities have urgently put in place procedures to allow the importation of foreign labour to be requested in Laos. According to these procedures, employers willing to import foreign labour during the COVID-19 outbreak must apply for and obtain business visas from the Ministry of Foreign Affairs, Consular Department, for the foreign workers to enter Laos. In addition, the employers must inform the relevant ad hoc taskforce committee under the Ministry of Foreign Affairs, of the foreign workers' estimated travel times, travel vehicles, checkpoints to enter, places for quarantine, countries transited, and reasons for the need of importing foreign labour to Laos. While the local authorities drafted the policy due to COVID-19, given its prolonged outbreak, employers have tended to consider it as a norm for hiring foreign labourers in the country.




Decree on Occupational Safety and Health

The Government of Laos recently issued a Decree on Occupational Safety and Health, which reiterates a number of mandatory rules set out under the Law on Labor. These include requirements for:

  • a health inspection and a safety risk assessment to be performed once a year;
  • training on health and safety measures once a year;
  • entities with more than 50 employees to have a doctor on site;
  • a mandatory first aid kit for companies of any size; and
  • at least one first aid worker, who has received proper training from a certified structure, and a Safety and Health Unit comprised of a representative of the employer, a representative of the employees, and a person designated to be in charge of safety and health issues.

The Decree also provides a number of additional rights to employees that were not previously stipulated, such as:

  • the right to ask their employer to establish good working conditions in terms of health and safety measures;
  • the right to ask their employer to provide them with a suitable position when they return from treatment after an occupational accident;
  • the right to receive information to help prevent practices that may lead to dangerous situations;
  • the right to refuse to undertake work that may be considered too dangerous to the health and life of employees; and
  • the right to report an employer to the labor authorities, if they do not follow adhere to relevant labor laws and regulations, and/or if there are any relevant occupational and/or safety issues.
With thanks to Dino Santaniello, Eric Minh Huu Huynh, Joel Akins and Zach Robinson of Tilleke & Gibbins for their invaluable collaboration on this update.

For More Information

Image: Suzanne Horne
Suzanne Horne

Partner, Employment Law Department

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Aashna Parekh

Associate, Employment Law Department

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