This content is from: Local Insights

Macau: Updating labour laws

Law 2/2015, which was approved last April 20 2015 by the Macau Legislative Assembly, amended Article 70 of the Labour Relations Act

Frederico RatoJosé Filipe Salreta
Law 2/2015, which was approved last April 20 2015 by the Macau Legislative Assembly, amended Article 70 of the Labour Relations Act. It adjusts the maximum reference amount of monthly basic pay for compensation purposes in cases of unfair dismissal by the employer, and how this amount should be updated.

This amount is relevant for the calculation of the maximum compensation for unfair dismissal by the employer, to the extent that the latter is computed with reference to the duration of the employment relation. It is, however, limited to 12 times the employee's basic salary at the time of termination of the contract. Before the amendment, the basic salary for this purpose was legally capped at MOP14,000 ($1,800).

The revision of this provision, which was considerably out of step with the socioeconomic reality of Macau, had been under discussion, and tried to accommodate the workers' wish to end the legal limit provided with the more conservative position of employers; it agreed on amending the compensation value for unfair dismissal upwards, but did not accept removing an indemnity ceiling.

With the revision of the law, the maximum sum of compensation for unfair dismissal of the employee rose from MOP168,000 to MOP240,000, as a result of the increase in the reference amount of the maximum monthly basic pay of MOP14,000 to 20,000.

In addition to increasing the reference value for calculating the indemnity for unfair dismissal to a maximum of MOP20,000 (unless a higher value was agreed between employer and employee), the update of said reference value should now occur every two years. This is in contrast to the previous legal wording, which only dictated the update of the reference value in accordance with the 'evolution of economic development'.

However, pressure to change the labour law will persist, particularly with regard to the limitation of the multiplier for the purposes of compensation for unfair dismissal (at present 12 times the basic salary, regardless of the duration of the employment relationship). This amendment was proposed by some deputies, but never discussed by social consultation bodies.

The updating of the labour law runs in parallel to the discussion on the minimum wage project (for now limited to cleaning and security workers in the property management area). This issue has been under protracted debate in the Macau Legislative Assembly and heralded by the new Government as a pioneering minimum wage diploma for all labour activities, the latter with a possible implementation date of 2016 or 2017.

The changes in the labour regime, coupled with the increasing pressure from the media and public opinion, have also brought to light the need for the Legislative Assembly or the Government to exercise legislative initiative and effectively regulate the right to strike and the freedom of trade union association. Both are enshrined in the Macau Basic Law but have not, to date, been locally regulated.

Frederico Rato and José Filipe Salreta

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