Guide to employment, payroll and benefits in

Lao People's Democratic Republic

Rivermate offers complete payroll, benefits and compliance services for

Lao People's Democratic Republic

01. Overview

Last updated: 

August 19, 2021

Currency
Lao Kip
Capital
Vientiane
Ease of doing business
Language
Lao
Population
7275560
GDP growth

02. Grow your team in

Lao People's Democratic Republic

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Lao People's Democratic Republic

, particularly if you don't have established local relationships. You can hire employees in

Lao People's Democratic Republic

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Laos, officially the Lao People's Democratic Republic, is a socialist country in Southeast Asia and the region's only landlocked country. Laos is located in the center of the Indochinese Peninsula, bordered to the northwest by Myanmar and China, to the east by Vietnam, to the southeast by Cambodia, and to the west and southwest by Thailand. Present-day Laos traces its historic and cultural identity to Lan Xang, which was one of Southeast Asia's largest kingdoms from the 14th to the 18th centuries. The kingdom became a center for overland trade and prospered economically and culturally as a result of its central geographic position in Southeast Asia. Lan Xang was divided into three kingdoms after a time of internal strife: Luang Phrabang, Vientiane, and Champasak. The three territories were united in 1893 under a French protectorate to create what is now known as Laos. After a brief period of independence in 1945 following Japanese occupation, it was re-colonized by France until 1949, when it was granted autonomy. Laos gained independence in 1953, and Sisavang Vong established a constitutional monarchy. Following independence, a post-independence civil war erupted, with the communist opposition, backed by the Soviet Union, fighting the monarchy, which later fell under the control of military regimes backed by the US. The communist Pathet Lao came to power after the Vietnam War ended in 1975, putting an end to the civil war. Until the Soviet Union's collapse in 1991, Laos was reliant on military and economic assistance from the Soviet Union. Laos is a member of the ASEAN, the East Asia Summit, and La Francophonie, as well as the Asia-Pacific Trade Agreement. Laos applied to join the World Trade Organization in 1997 and was granted full membership on February 2, 2013. It is a Marxist–Leninist one-party socialist republic ruled by the Lao People's Revolutionary Party, under which non-governmental organisations have repeatedly criticized the country's human rights record, alleging torture, limitations on civil liberties, and oppression of minorities. The Lao people, who are politically and culturally dominant, account for 53.2% of the population, with the majority of them living in the lowlands. In the foothills and mountains, Mon-Khmer groups, the Hmong, and other indigenous hill tribes live. Laos' development strategies include generating electricity from rivers and selling it to its neighbors, including Thailand, China, and Vietnam, as well as a push to become a "land-linked" country, as evidenced by the construction of four new railways linking Laos and its neighbors. The World Bank has classified Laos as one of the fastest growing economies in Southeast Asia and the Pacific, with annual GDP growth averaging 7.7% since 2009.

04. Public holidays

05. Types of leave

Paid time off

Employees receive 15 days of paid annual leave after one year of continuous service, in addition to official and customary public holidays and rest periods. Employees who perform hazardous work, as defined in Article 51 of the Labor Code, are entitled to 18 days of annual leave per year. Work that is hazardous includes:Work that exposes employees to harmful radiation, communicable diseases, noxious vapors or smoke, or hazardous chemicals or materials (e.g., explosives).Working in pits, underground tunnels, under water, or at high altitudes are all options.Work in a variety of climates.Work with vibrating equipment in a direct and consistent manner.Employers set the dates of annual leave in advance or with the employee's agreement. Employees are entitled to reimbursement for unused vacation time if they are unable to take it due to circumstances beyond their control.

Public holidays

Under Article 55 of the Labour Code in Laos, employees are entitled to a paid day of rest on the following official holidays:International New YearInternational Women’s Day for female employeesThe Lao New Year FestivalInternational Labor DayNational Teachers Day, for teachers and education management onlyNon-Laos citizens are entitled to their respective national holidaysIf an official public holiday falls on a weekly rest day, which is generally Sunday, employees are entitled to another day as a substitute.The Prime Minister’s Office can announce additional public holidays. Further, employers and employees can agree to customary holidays. The following days may be considered as holidays:Buddhist All Saints’ DayLaotian National Army DayLaotian New Year (Water Festival)Birth, Enlightenment and Death of BuddhaVisakhabousa DayBuddhist Lent BeginningRice Growing DayRice Donation DayEnd of Buddhist LentBoat Racing DayThat Luang FestivalLaotian Constitution Day

Sick days

Employees who are paid on a monthly basis are entitled to 30 days of paid sick leave per year. If an employee is paid on a daily or hourly basis, per unit, or per specific work contract, they are entitled to 30 days of paid sick leave after working for at least 90 days. A medical certificate is required of all employees.Employees are also entitled to three days of personal leave per year:For the injury or death of a parent, spouse or childTo get marriedFor the birth or miscarriage of a childIf impacted by a natural disaster

Maternity leave

Employees who are women are entitled to at least 105 days of fully paid maternity leave. After the birth, at least 42 days of leave must be taken. When twins are born, maternity leave is extended to 120 days. Employees in Laos may be eligible for more time off under the country's social security system.For up to a year after the birth of a child, female employees are given one hour of rest per day to care for the child.In the event of a miscarriage, the mother is entitled to paid leave for the length of time recommended by the doctor.

Paternity leave

There is no statutory paternity leave in Laos.

Parental leave

Other than the already mentioned terms for maternity leave in Laos, there are no other provisions in the law regarding parental leave.

Other leave

06. Employment termination

Termination process

Employment contracts can be cancelled by either the employer or the employee at the conclusion of the contract period (if the contract is for a specified time). Termination is permitted if the employee has committed any of the following actions: intentionally causing harm to the employer; violating employer rules or terms of the employment contract after receiving a warning; failing to report to work for four consecutive days without justification; being sentenced to prison; and violating the rights of other employees after receiving a warning.

Notice period

Both the employer and the employee have the right to terminate an employment contract during the probationary period by providing three days notice (manual labor) or five days notice (labor) (specialized skill work).

Severance pay

Employers are required to pay employees any wages and remuneration due under the contract upon termination. Severance pay is calculated as 10% of the previous salary multiplied by the total number of months worked.

Probation period

Probation periods cannot exceed 30 days for manual labor positions and 60 days for positions requiring specialized skill. Employers must notify employees in writing no later than seven days before the probation period expires whether the employment relationship will continue or terminate.

07. Working hours

General

All employees work a typical six-day workweek of eight hours per day. Each employee is entitled to one day of relaxation every week. Six days a week for six hours is the minimum need for dangerous industries or hazardous surroundings. These vocations may involve exposure to radiation, fumes, smoke, or infectious agents; explosive chemicals or materials; prolonged exposure to underground conditions, high heights, or underwater habitats; extreme hot or cold temperatures; and vibrating equipment.

Overtime

The employer may request overtime from their employees with the approval of appropriate representation, trade unions, or a majority of the employees. These times are limited to three hours per day and 45 hours per month. The employees must earn 150 percent of their regular rate between 5 p.m. and 10 p.m., and 200 percent between 10 p.m. and 6 a.m.

08. Minimum wage

General

Monthly minimum wage is currently 1,100,000 Lao Kip (LAK). This is, however, subject to change at any time. Additionally, the state may establish minimum wages for specific occupations.

09. Employee benefits

General

Laos has a variety of healthcare programs. Employees in both the public and private sectors are covered by social security. Employees, their spouses, and their children are eligible for medical benefits under social security. Co-payments for certain treatments may be required of the individual.

The Social Security Fund supports sick benefits, but you are not required to provide employees with private health insurance. There are private health care facilities in the country, and you may choose to provide this benefit in whatever way you see fit.

The country's employment laws do not include any bonuses or additional benefits. You may include additional provisions at your discretion.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Lao People's Democratic Republic

to hire a team takes time, money, and effort. The labor law in

Lao People's Democratic Republic

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Lao People's Democratic Republic

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Lao People's Democratic Republic

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Lao People's Democratic Republic

via our Employer of Record / PEO solution.

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