Employee Handbook

1. INTRODUCTION

This handbook is drafted by KOW Lifestyle Manufacturing Co. Ltd. It contains:
o Code of Conduct
o Remuneration, Compensation & Benefits
o Factory Rules & Regulations, Disciplinary Actions
o KOW Lifestyle’s Duties and Responsibilities
This handbook is binding for KOW Lifestyle Manufacturing Co. Ltd. It provides an outline of our standards of integrity and explains our legal and ethical responsibilities towards our employees. The policies and procedures set forth in this handbook (and elsewhere) are written in broad terms and are intended to serve as guidelines for situations that employees may encounter.
We respect the rights our employees have. Therefore, we provide this handbook and a written contract to sign as evidence to every new employee when an employment relation is to be formed.

2. CODE OF CONDUCT
This Code of Conduct summarizes the standards we have set for our day-to-day operations. Our Code of Conduct is based on the ten principles of the UN Global Compact, a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.

1. Fair wages and a healthy working environmentKOW Lifestyle abides by the legally set minimum wage for the garment industry in Cambodia and pays its employees a wage that is sufficient to meet their household’s basic needs. In addition, all staff receive free lunch meals and health-, life- and accident insurance.
Working conditions comply with conditions established by national and local laws and ILO conventions. KOW Lifestyle cares about the overall well-being of its employees and provides a safe, healthy and pleasant working environment. We value an open and friendly company culture and strive to maintain an atmosphere that makes people enjoy coming to work.

2. Respecting human rights and implementing fair trade practices
a. Freedom of Association and the right to Collective Bargaining – KOW Lifestyle does not interfere with staff’s wishes to join labour unions or otherwise associate. In fact, we seek to actively involve our staff in relevant decision-making processes. Collective bargaining is used in daily operations to reach agreements in relation to labour conditions, working hours, overtime, holidays etc.
b. No Child Labour – KOW Lifestyle explicitly forbids child labour. We keep
complete and accurate records of all employees. All employees of KOW Lifestyle are over the legal minimum working age.
c. No Compulsory Labour – KOW Lifestyle employees are free to terminate their contracts without sanctions. Overtime is limited and always voluntary when it occurs.
d. Non-Discrimination and Gender Equity – KOW Lifestyle is committed to providing a working environment that is free from discrimination and harassment, in policies and company culture. All processes of hiring, remuneration, promotion and access to training are made regardless of the person’s sex, age, religion, social background, disability, nationally or ethnic origin.

3. Transparency, accountability and non-corruption.
KOW Lifestyle is compliant in its policies and transparent in its management and commercial relations; records of financial data and practices are being kept, are accessible and up-to-date. The organization finds appropriate and participatory ways to involve employees in its decision-making processes.
KOW Lifestyle strives for zero corruption in all its operations, on all levels.

4. Environment
KOW Lifestyle sources and manufactures with the aim to leave a minimal footprint on this planet. A big goal for a small company, but we make our choices in careful consideration of the impact we have on this planet. The bulk of our raw materials are biodegradable and there are no chemicals used in the process of making KOW slippers. Our zero-waste project allows us to exercise our creativity and redesign scrap materials into exciting new products.

5. Capacity Building and Empowerment
KOW Lifestyle wants its presence in Cambodia to leave a positive mark, by setting a standard as well as an example. We consider the employment relationship to be a two-way street: employment and sustainable income is provided in return for our staffs time and dedication. In addition, we take the opportunity to empower and help our staff develop and grow. This is achieved by allowing our staff to grow professionally within the company, to develop their skills through training and by expanding their knowledge of their health, body and environment.

3. EMPLOYMENT POLICIES

3.1 LABOUR CONTRACT AND PROBATION
KOW Lifestyle Manufacturing Co. Ltd provides each (new) employee with an employment contract. We aim provide only Unlimited Duration Contract (UDC an open-ended contract) to our employees in order to offer them job stability.
The probationary period for regular full-time and regular part-time employees lasts up to 3 months from date of hire. During this time, employees have the opportunity to evaluate our company as a place to work and management has its first opportunity to evaluate the employee. During this introductory period, both the employee and the company have the right to terminate employment without advance notice.
Upon satisfactory completion of the probationary period, a review will be given and benefits will apply. All employees, regardless of classification or length of service, are expected to meet and maintain company standards for job performance and behavior.

3.2 EMPLOYMENT TERMINATION
Unless dismissed on disciplinary grounds, and providing the employee has served continuously for one month or more after the probationary period, KOW Lifestyle Manufacturing Co. Ltd will provide the minimum period of notice based on the length as set out in the table below:

Length of resignation notice period
Less than 6 months: 7 days
6 months to 2 years:  15 days
More than 2 years and up to 5 years: 1 month
More than 5 years and up to 10 years: 2 months
More than 10 years: 3 months

KOW Lifestyle Manufacturing Co. Ltd. reserves the right to make a payment in lieu of notice should it wish so. In the case of gross misconduct, the employee may be dismissed without notice and without pay in lieu of notice.
Any employee who terminates employment with KOW Lifestyle shall return all files, records, keys, and any other materials that are property of the company. No final settlement of an employee’s pay will be made until all items are returned in appropriate condition. The cost of replacing non-returned items will be deducted from the employee’s final paycheck. Furthermore, any outstanding financial obligations owed to KOW Lifestyle will also be deducted from the employee’s final check.
Employee’s benefits will be affected by employment termination in the following manner. All accrued vested benefits that are due and payable at termination will be paid. Some benefits may be continued at the employee’s expense if the employee elects to do so. The employee will be notified of the benefits that may be continued and of the terms, conditions, and limitations.
According to the labor Law, if KOW Lifestyle Manufacturing Co. Ltd. decides to terminate the UDC of the employee given the minimum written notice period to employee, KOW Lifestyle Manufacturing Co. Ltd. shall pay the indemnity, last salary and other benefits to the employee.
If KOW Lifestyle Manufacturing Co. Ltd. terminates the employment contract, the employee has rights to take two days off during the notice period, on top of any open paid leave. In contrast, if an employee of KOW Lifestyle Manufacturing Co. Ltd. terminates the employment contract he or she is not entitled to that right.

The payment for the notice period does not apply for the termination during:
• Probationary period;
• Serious misconduct; and
• Force Majeure

3.3 INDEMNITY AND DAMAGES FOR UDC
If the employment contract is terminated by the employer, without serious offense by the employee, the company is required to give the dismissed worker, in addition to the prior notice stipulated in this section, the indemnity for dismissal as following:
• 3-12 months of service: Seven days of wage and fringe benefits;
• 12 months or more service: fifteen days of wage and fringe benefits for each year of service, with a maximum indemnity payment of six months of wage and fringe benefits.
• If the employee resigns he/she will be entitle only the last pay and the unused annual leave.

3.4 WORKING HOURS AND REMUNERATION

3.4.1 WORKING HOURS
A standard working week at KOW Lifestyle has 5 days (from Monday to Friday). A standard workday has 8 hours. Therefore, a standard working week contains 40 hours.
Working hours are recorded and time record files can be obtained via the Managing Director.

3.4.2 GUARANTEED WAGE/ OVERTIME COMPENSATION
KOW Lifestyle Manufacturing Co.Ltd. ensures a minimum wage for all staff in accordance with the legally set minimum wage for the according to the Cambodian government. And premiums are paid in case of overtime, which cannot exceed a maximum of 60hrs a week.
KOW Lifestyle guarantees to pay no less than (percentages below are percentage of the contract wage):
Minimum wage: 5 days a week; 8 hours per day
Overtime: From Monday to Friday, any hours beyond 8 at 150%
On Saturday, public holidays at 200%
Overtime is never mandatory, but is also not an employee’s right. Claims for overtime will not be met unless approval by the Managing Director is given.

3.4.3 WAGES
Salaries for our employees are calculated based on the education, work experience, performance and characteristics of the job. Wages are paid at the end of the month (last working day) and are transferred into the staff’s bank accounts.

3.4.4 EXCEPTION ON WORKING OURS
Leave taken cannot be compensated by the overtime compensation. (i.e. 2 days taken off, cannot be compensation by working one Saturday).

3.4.5 STANDARD WORKDAY AND OPENING HOURS
The standard workday is from 8 am to 5 pm. Employees are allowed a one-hour lunch break. Lunch breaks generally are taken between 12.00 a.m. and 1.00 p.m.

3.4.6 PART-TIME OCCUPATION
KOW Lifestyle offers the possibility of part-time employment. Employees working less than 40 hours per week are considered part-timers. They have the same rights as full-time employees under the Labor Law, with the exception of being paid a lesser wage. Part-time employees are entitled to leave, bonuses, and other benefits in proportion to their work time.

3.5 HOLIDAYS AND (UN)PAID LEAVE

3.5.1 PUBLIC HOLIDAY
Employees are granted public holidays in conformity with the government ruling (Prakas) determining the paid holidays issued every year by the Ministry of Labour and Vocational Training. We will publish these holidays on our notice board.
Work can continue on a national holiday on a voluntary basis and with overtime premium paid.
At the beginning of each calendar year, a collective bargaining agreement between KOW staff and management will determine the holidays for the upcoming year, clustering individual days off to allow the staff a longer time off for the important national holidays.

3.5.2 PAID ANNUAL LEAVE
All employees have the right to take paid annual leave. Full time employees get 1.25 days of annual leave a month (for 40h a week) according to the Cambodian Labor Law. This equals 15 days per year.
Employees have the right to use their annual leave after one year of service.
Annual leave is to be requested at least one week before the start of the leave in order not to disrupt the work process. The company will allow employee to take their annual leave when requested, unless there are particularly urgent reasons why an employee cannot take leave at that time.

3.5.3 EXTRA LEAVE FOR LONG SERVICE
KOW Lifestyle provides one extra day of leave after 3 years of continuous service as shown in the table below:
Years of service Days of leave per year (for 40h a week)
1-3 15
4-6 16
7-9 17

3.5.4 FIXED PAID LEAVE DAYS
At the beginning of each calendar year, a collective bargaining agreement between KOW staff and management will determine the holidays for the upcoming year, clustering individual days off to allow the staff a longer time off for the important national holidays.

3.5.5 SICK LEAVE
All employees are entitled to take incidental sick leave without this affecting their annual holidays. In case of structural illness, a suitable agreement will be made with the employee.

3.5.6 SPECIAL LEAVE
Employees may ask up to 7 days Special Leave for personal reasons that affect them or their immediate family. The company will allow for Special Leave in case:
o The employee is getting married;
o The employee’s wife gives birth;
o The employee’s child is getting married; or
o The employee’s husband, wife, (grand)children or (grand)parents have died or are seriously ill.
In case there are death of the employees’ immediate family member such as parents, spouse or children employees are permitted to take special leave with pay. If the ceremony is organized in Siem Reap Province, employees are permitted to take 3 days paid leave; if the ceremony is organized outside Siem Reap Province, employees are permitted to take 5 days paid leave.

3.6 MATERNITY

3.6.1 PREGNANCY
During pregnancy, female workers shall not be assigned to engage in any heavy physical labor as stipulated in Cambodian labor law or to do other work that they should avoid in pregnancy. Female workers seven months pregnant or more will not be asked to do overtime in case the need for this occurs.
Pregnant workers will be allowed leave for regular prenatal checks (up to 2 hours per visit) at a facility of their choice. They should hand in the schedule of their prenatal visits together (with a letter from the medical facility) to the Managing Director.

3.6.2 MATERNITY LEAVE
All female employees are entitled to 90 days (three calendar months) maternity leave with full pay and benefits. The maternity leave applies only to the female employees who have been in service with the company for at least one year continuously. However, female employees who have been working for company less than one year continuous service are entitled to 90 days (three calendar months) unpaid maternity leave.
Maternity Leave starts 2 weeks before the calculated date of delivery. 12 weeks after the actual date of delivery, employees are expected to return to work.

4. INSURANCE AND BENEFITS

4.1 INSURANCES
All staff at KOW Lifestyle receive health and accident insurance.

4.2 WORK RELATED ACCIDENT
In case employees are involved in a work-related accident the employee shall inform either the supervisor or the Human Resources Department within 24 hours based on the actual case. If the accident includes hospitalization, the employee shall inform the Human Resources Department accompanied with the Medical order from doctor within 48 hours.
Employees are required to give the contact details, including name, home address and telephone number of his or her family, of those to be contacted in case of work related accident.

4.3 INSURANCE AND CLAIM PROCEDURE
All employees are registered with PKMI insurance and if an employee is injured on the way to work, or whilst at work, PKMI will cover the cost. Medical expenses and lost wages for accidents caused by drunk driving or not wearing a helmet will not be covered.

4.4 LUNCH ALLOWANCE
All employees receive a free healthy lunch. Employees are entitled to use the appointed area and available kitchen and equipment for lunch. Plates, bowls and cutlery are provided. For safety, hygiene and quality reasons it is not allowed to have lunch at the production area.

4.5 OTHER ALLOWANCES
According to national law, employees are given the following monthly allowances:
– $7 transportation and housing allowance
– $10 allowance bonus

4.6 DEATH BENEFIT
This is included in the standard insurance all staff receive.

4.7 BANK ACCOUNT
In order to open a band account at ABA Bank – for the purpose of receiving KOW Lifestyle wages – a $10 deposit is required. KOW Lifestyle has provided employee with $10 for the deposit, which is to be returned upon termination of employee’s contract with KOW Lifestyle Manufacturing Ltd.

4.8 LOANS
Employees can apply for a loan with KOW Lifestyle management. Loans are repaid from wages in the agreed amounts, without payment of interest.

5. WORKSHOP RULES
KOW Lifestyle Manufacturing Ltd provides its employees a safe and healthy environment. The working area is arranged so there is enough light to work, well-ventilated and equipped with fans and air conditioner. All workers have access to fresh water and a clean bathroom. Any complaint about the dysfunction of equipment or suggestions to improve working environment should be made to the Production Manager and will be dealt with appropriately.
To safeguard the wellbeing of employees, establish and improve the operation of our company, in accordance with national laws and regulations the following set of rules has been developed. All employees should respect and live up to it. Disciplinary action will be taken against any employee disrespecting, ignoring or neglecting these rules and regulations.

5.1 RESPONSIBILITY AND COOPERATION
Staff members are first and foremost responsible for delivering quality finished goods. In additional, they are expected to be compliant and cooperative with the work of the Quality Control Manager. Cooperation is essential; all staff are encouraged to work together, ask each others for help if needed and help others out as well.

5.2 NEW EMPLOYEE ORIENTATION
Employees are expected to treat new colleagues with respect; they must feel welcome and confident and be shown the way we operate in this company.

5.3 DRIVER’S LICENSE AND HELMET
KOW Lifestyle requires all employees who travel to work by motorbike to have a valid driver’s license and wear a safety helmet. Employees who do not have a license or a helmet, should find alternative means of transportation or discuss with management what kind of assistance is possible.
All employees driving cars must have a valid driver’s license. People without valid driver’s license are not allowed to drive company cars at any time, or other cars during working hours.

5.4 ATTENDING TRAINING
Training on the job in order to learn the necessary skils is mandatory for all new staff. Additional training aimed at capacity building of staff is voluntary.

5.5 PRIVACY
We respect our employees’ privacy, and follow all national and regional rules and regulations on this. If an employee encounters personal difficulties at work or in life, we strongly encourage them to inform either our HR department or their supervisor.

5.6 WORKING HOURS
Working hours are between 8:00 and 17:00 from Monday through Friday. A one hour lunch break is taken between 12:00-13:00.

5.7 RESPONSIBLE BEHAVIOR
• During working hours, employees shall not leave their positions or meet guests and friends, obstruct others from work, cause loud noise, or do any non-working related activities at their working place. Nor is it allowed to eat on the work floor.
• All staff is expected to keep their workplace clean and tidy. No spiting or littering is allowed.
• All company’s property, including goods, machinery and tools should be handled with care. Unprofessional or irresponsible handling will be in violation of the company’s policy. Any employee involved will be held responsible for any damage caused.
• Before leaving their work station at the end of the day, employees should keep tools tidy and in place, and clean up their work space.
• All personnel shall have the right to remove themselves from imminent serious danger without seeking permission from the company.

6. DISCIPLINARY ACTIONS
If employees break factory rules, the management or team leaders will give either a verbal warning, a written warning or dismissal. No monetary penalties are used for disciplinary purpose. The warnings will be documented in the employee file. Three verbal warnings or two written warnings will lead to dismissal.
Warnings will expire after a certain time. For the different warning types, expiry terms are:
– Verbal warning: 1 year
– Written warning: 2 years
– Dismissal: not applicable
Below we have listed a number of situations that might lead to a verbal warning, written warning or dismissal. The listed situations are examples. The list is not exhaustive and can be further extended at the discretion of the management or team leaders.

6.1 MINOR MISCONDUCTS LEADING TO VERBAL WARNING
The following situations are examples of action that might lead to a verbal warning:
• Not paying attention to the instruments, or tools he/she is working with;
• Unauthorized absence, and early leave from or late arrival to work;
• Using working hours for non-work-related activities;
• Spitting, littering, smoking outside the designated areas;

6.2 MEDIUM MISCONDUCTS LEADING TO WRITTEN WARNING
Any of the following acts are examples and can cause written warning to the employee:
• Sleeping on duty;
• Neglecting tasks and duties;
• Disrupt the good order or cause discord among employees;
• Not being capable of handling criticism or critique from the QC department;
• Unintentionally disclosing business secrets or confidential information, with no major consequences.
• Deliberately disobeying reasonable instructions of superiors, bad attitude towards work, damage the company reputation.
• Continuous misconduct after two verbal warnings amount to a written warning.

6.3 SERIOUS MISCONDUCT LEADING TO DISMISSAL
Repetition of the above, and any situation listed below, including legal offences, will lead to immediate termination of the contract or to terminate within seven days of calendar day. Dismissed employees will get no compensation.
• Stealing
• Threat, abusive language or assault against the employer or other workers;
• Sexual harassment of any kind;
• Serious infractions of disciplinary, safety and health regulations;
• Deliberately damaging equipment/tools or (un-)finished products or intentionally causing a waste of (raw) materials/resources;
• Conviction by law for a crime;
• Disclosing company confidential information.
• Fraudulent acts committed at the time of recruitment, or signing, or during employment including presenting false information or documents;
• Any employee absent from work without appropriate approval for more than 6 working days may be terminated. Special consideration will be given if the employee was clearly unable to notify KOW Lifestyle during his / her absence
• Any either minor or medium misconducts accumulating in the same time of the violation, will be regarded as serious misconduct.
• Committing 2 times of medium misconduct

7. COMPLAINTS AND SUGGESTIONS

7.1 COMPLAINTS PROCEDURE
Employees can make complaints or suggestions to the Production Manager or the Managing Director. No reprisals will be taken against any employee raising questions, complaints or suggestions.

7.2 RIGHTS TO SELF-PROTECTION OF THE EMPLOYEES
Labor disputes shall preferably be resolved within the department following the procedures. Employees can request to meet the Human Resources Manager or the Managing Director in order to resolve the dispute, if his or her problem has not been resolved after following the procedure.

8. LEGAL ACCOUNTABILITY
Matters not covered in the above or labor matters that are in dispute shall be handled according to the relevant provisions of the Labor Law effective to the location of KOW Lifestyle Manufacturing Co. Ltd.