Georgian Draft Labor Law Clenches Business
18 April, 2013
Georgian Draft Labor Law Clenches Business
The new restrictions incorporated in Georgian draft labor code clenches business tighter than the western law, which may trigger unemployment and shadow deals.
The new paragraphs introduced to the new labor code bill, undergoing parliamentary procedures at the moment, should be streamlined by the coming second hearing lest may affect Georgian economy instead of boosting its growth, business associations operating in Georgia chime in line since past week.
American Chamber of Commerce in Georgia (AmCham) representing over 150 large, medium
and small companies, as well as Association of Georgian Businessmen and Association of Georgian Employers, fully support the idea of amending the code to make it fair and balanced so as prevent discrimination of employees but not on the expense of business. They indicate substantial shortcomings that government must urgently streamline before the second parliamentary hearing.
Namely, according to new paragraphs companies must pay any kind of the over-time work, or the work performed beyond 40 working hours per week, but the draft code does not envisage specifics of certain business activities [like security services, medical facilities, factories, air traffic control, etc.] based on shift work and flexible working schedule.
“In specific types of jobs, the number of hours worked per week is more than 40 and the hours worked the next week may be much less than 40. Some companies have a 2 week on / 2 week off schedule which is appreciated by the employees. It must be legal for a company to contract employees for more than 40 hours a week based on mutual agreement and governed by the requirements for equivalent rest time,” AmCham recommendations say. Transparency International Georgia indicating on setbacks in the draft law, suggests adopting differentiated payment terms.
Another point that business finds highly unrealistic is that the draft obliges every company to enter a written contract for any labor relationship lasting more than 3 months. It means that small and medium enterprises will have an enormous legal and administrative burden to contract each and every employee that works for 3 months or more. Businessmen ask for one year term contracts to be allowed as the best world practice suggests and that insures stability to employees and for better financial and administrative planning for companies. If employers cannot hire employees for one-year defined terms, they will address this risk by reducing their existing work force, and by being much more conservative in hiring new employees that will end in increased unemployment. Some companies may go on informal shadow contracts that will lead to tax elusion and less income-tax-based revenues in the state budget.
The draft code does not allow companies to include a mutually agreed provision in their employment contracts which would prohibit employees’ to use confidential knowledge and information gained during the job for a defined period after leaving it, and providing sensitive information to competitors. Meantime it is a very standard provision in European and American employment agreements, AmCham reminds and accentuates that the said shortcomings make Georgian labor law stricter than in the US and EU where employees’ rights are far more institutionalized and recognized than they have ever been in Georgia, and the economies are much more developed. If not addressed, these provisions and gaps in the draft labor code will have reverse consequences of the intent of the draft, businessmen warn.
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