A Closer Look at Fixed-Duration Contracts and the Cambodian Garment Industry

The Allard K. Lowenstein International Human Rights Clinic at Yale Law School recently released a report titled “How Widespread Use of Fixed-Duration Contracts Threatens Cambodian Workers and the Cambodian Garment Industry.”  According to the report, the increased use of fixed-duration contracts (FDCs) in Cambodia:

  • results in increased worker insecurity;
  • threatens the enforcement of workers’ rights under domestic and international law;
  • presents obstacles to increased labor productivity;
  • jeopardizes Cambodia’s reputation as a country committed to improving conditions for workers; and
  • increases the threat of a major breakdown of industrial relations and creates a potential provocation for massive strikes.

According to FLA Board member Jim Silk, who directs the Lowenstein Clinic: “The Cambodian government has been considering amending the Labor Law to ease restrictions on fixed-duration contracts. The country’s apparel industry is already facing heightened international scrutiny because of the mass firings of workers who participated in a strike last year over low wages. One of the main competitive advantages of the Cambodian garment industry is its reputation for progress on protecting workers’ rights, so it is important to understand the human rights consequences of using FDCs and the impact that permitting their expansion could have on Cambodia’s competitiveness.” Read more at law.yale.edu.

Here is an excerpt from the report.

“Over the past several years, the Cambodian garment industry has undergone a radical transformation in the composition of its labor force. During the mid-1990s, when the Cambodian garment industry experienced its initial boom, the majority of workers were hired on a permanent basis under what Cambodian law calls “undetermined-duration contracts” (UDCs).  Now, factories hire new workers almost exclusively under short-term, temporary contracts, referred to in Cambodia as “fixed-duration contracts” (FDCs), and many workers originally hired under UDCs have faced pressure to convert their permanent contracts to FDCs. The move by Cambodian garment manufacturers to employ a regular, full-time workforce almost exclusively on short-term contracts has sparked a debate in Cambodia over the impact of the increased use of FDCs on workers’ rights and the role FDCs play in keeping the Cambodian garment industry competitive.”

According to the report, “The Cambodian garment industry is at a critical crossroads. Cambodia can either reinforce its reputation as a country committed to improving workers’ rights or implement Labor Law reforms [such as eased restrictions on the use of FDCs] that will damage both workers’ rights and the Cambodian garment industry’s reputation, as well as jeopardize industrial peace within the garment sector.”

Download the full report here to learn more.

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