Cambodia Investment Review

Explainer: Comprehensive Guide to Employment in Cambodia: Navigating Labour Laws and Ensuring Business Success

Explainer: Comprehensive Guide to Employment in Cambodia: Navigating Labour Laws and Ensuring Business Success

Cambodia Investment Review

Are you considering expanding your workforce in Cambodia? Understanding the intricacies of employment and labour laws is vital for creating a thriving and compliant workplace. This detailed guide explores key aspects, offering insights into employment in Cambodia, including the hiring process, employee entitlements, and legal obligations.

For more information about recruitment in Cambodia, you can view our full recruitment services here, or contact us directly, and one of our expert international team will be happy to assist.

Employment in Cambodia: What is the process for hiring foreign employees in Cambodia?

In Cambodia, hiring foreign talent involves meticulous steps to ensure legal compliance and a smooth transition for both employers and employees.

Documentation Requirements:

  • Foreigners must possess a valid passport and visa.
  • No contagious diseases should be present.

Approval Process:

  • Obtain approval from the Ministry of Labour and Vocational Training (MLVT) for a foreign employee quota.
  • Apply for a Work Permit for the foreign employee.

Note: Foreign employees must possess a valid passport and visa, ensuring they are legally authorized to work within the Kingdom. This requirement safeguards the integrity of the labour market and maintains a transparent hiring process. Acquiring approval from the Ministry of Labour and Vocational Training (MLVT) for a foreign employee quota is also essential. This not only ensures adherence to regulations but also facilitates a balanced workforce, avoiding over-reliance on foreign staff.

Read more: Explainer: Work permits and visa requirements for Cambodia

Foreign businesses must adhere to the MLVT’s foreign employee quota system.

Violations may result in fines ranging from USD 630 to USD 900+

What are employee leave entitlements regarding employment in Cambodia?

Paid Leave:

Employees are entitled to 1.5 days of paid leave per month after one year of service.

Compensation for paid leave upon termination is proportional to the employee’s tenure. An overview of the main leave entitlements regarding employment in Cambodia are below:

Public Holidays:

  • Approximately 21 paid holidays per year.
  • If a public holiday falls on a weekend, employees get the next working day off.

Weekly Day-Off:

  • All employees must have at least one full day off per week.
  • Exceptions can be made with alternative arrangements if operational needs demand.

Sick Leave:

  • Sick leave entitlements with payment based on the duration of illness.
  • Certification from an authorized hospital and recognized doctor required.

Maternity Leave:

  • Expecting mothers are entitled to 90 days of maternity leave with pay after one year of continuous service.
  • 50% of normal wages and benefits during maternity leave.

Note for employers: The provision of 1.5 days of paid leave per month after a year of service incentivizes employee loyalty. This ensures a healthy work-life balance and promotes job satisfaction. Granting paid days off during festivals and ensuring a weekly day-off contribute to a positive workplace culture. These policies enhance employee morale and engagement.

Maternity leave provisions underscore the commitment to supporting employees during significant life events. The guidelines for sick leave, though not mandated by law, emphasize the importance of employee welfare and align with the Ministry of Labour’s recommendations.

What are the working hours for employment in Cambodia?

Understanding the regulations surrounding working hours is crucial for maintaining a healthy and productive workforce. Below is an overview of working hours for employment in Cambodia:

Overtime Work:

  • Normal working hours are eight hours a day and 48 hours a week.
  • Overtime must not exceed 10 hours a day, with permission from MLVT.
  • Overtime pay rates vary, with higher rates for work between 10pm and 5am.

Night Work:

  • Night work is at least 11 consecutive hours, paid at 130% of the daytime hourly wage.
  • Accommodation or transportation must be provided for night work.

Note for employers: Limiting overtime to 10 hours a day, with employee consent and MLVT permission, safeguards against burnout. The differentiated pay rates for overtime acknowledge and compensate for the additional effort.

With night work, providing accommodation or transportation not only meets legal obligations but also demonstrates a commitment to employee safety and well-being.

What do I need to know about the National Social Security Fund (NSSF) regarding employment in Cambodia?

Understanding and contributing to the NSSF is vital for both employers and employees.

Contributions. Below is an overview relevant to employment in Cambodia:

Contributions:

  • Employers contribute 0.8% of assumed wages to the Employment Injury Insurance Scheme.
  • Contribution rates vary based on salary ranges.

Benefits:

  • Medical treatment, temporary disablement, nursing, permanent disablement, constant attendance, survivor’s benefits.
  • Health Care Scheme

Ensuring health care coverage for employees:

Contributions:

  • Employers contribute 2.6% of assumed wages to the Health Care Scheme.
  • Contribution rates vary based on salary ranges.

The 0.8% contribution to the Employment Injury Insurance Scheme ensures a safety net for employees in case of work-related injuries. This aligns with Cambodia’s commitment to occupational health and safety.

Note for employers: The range of benefits provided by NSSF, from medical treatment to survivor’s benefits, enhances the overall well-being of employees. Employers contribute to a system that prioritizes the health and security of their workforce. Contributing to the Health Care Scheme showcases a commitment to comprehensive employee health care.

Employers also contributing 2.6% of assumed wages demonstrates a commitment to providing quality healthcare. This contribution model ensures all employees, regardless of salary levels, receive the necessary health coverage.

What are the types of employment contracts when considering employment in Cambodia?

In Cambodia, employment contracts come in two distinct forms: the Fixed Duration Contract (FDC) and the Undetermined Duration Contract (UDC).

Read more: Explainer: Navigating Cambodia’s 2024 Enterprise Compliance Landscape – Key Obligations and Deadlines

Fixed Duration Contract (FDC):

An FDC spans a set period, typically up to two years, with the possibility of a single extension by mutual agreement between the employer and the employee.

Undetermined Duration Contract (UDC):

A UDC, on the other hand, lacks a fixed termination date, providing flexibility and stability for both parties involved.

Which are some contract considerations I should know about regarding employment in Cambodia?

There is a difference between UDC and FDC employment contracts, which are outlined below: 

Employees under UDCs are entitled to receive seniority payments biannually. Specifically, every June and December, these employees should be compensated with 7.5 days’ worth of wages and benefits. When it comes to terminating an employment contract, understanding notice periods is crucial for maintaining fairness and compliance.

For FDCs lasting more than six months but up to and including a year, the employer is required to notify the employee about the contract’s expiration at least 10 days in advance. If the FDC extends beyond one year, the notification period increases to 15 days. Failure to provide advance notice leads to an automatic extension of the contract or its consideration as a UDC.

The notice period for UDCs is determined based on the employee’s continuous service:

  • Less than six months of service: Seven days’ notice.
  • Six months to two years of service: A 15-day notice.
  • Two to five years of service: A one-month notice.
  • Five to 10 years of service: A two-month notice.
  • More than 10 years of service: A three-month notice.

Which are some severance considerations I should know about regarding employment in Cambodia?

In cases where an employee is terminated without cause, employers must adhere to specific severance payment guidelines:

For FDC Employees:

  • Severance pay, comprising at least 5% of the salary.
  • Compensation for accrued annual leave.
  • Payment of the last unpaid salary.
  • Damages equivalent to the wage and benefits the employee would have been entitled to until the contract’s expiration.

For UDC Employees:

  • Compensation for accrued annual leave.
  • Payment of the last unpaid salary.
  • Two days of paid leave per week during the notice period while the employee actively seeks new employment.
  • Seniority payment as outlined in the employment agreement.

Understanding and adhering to these termination and severance policies ensures a fair and legally compliant process for both employers and employees in Cambodia.

Note for employers: The flexibility of FDCs and the stability of UDCs cater to different business needs. Employers can strategically use these contracts to meet specific project timelines or secure long-term talent.

Providing adequate notice periods and severance payments aligns with Cambodia’s commitment to fair employment practices. It ensures employees are treated justly, promoting a positive employer brand. Understanding and adhering to Cambodia’s labour laws is not just a legal requirement, it’s a strategic business imperative.

Quota System and Recruitment Strategies

Compliance with the foreign employee quota system is essential for avoiding fines and maintaining a diverse workforce. Strategic recruitment, considering the distribution of skills within the quota, ensures businesses can tap into the local talent pool effectively.

A comprehensive understanding of Cambodia’s labour laws is crucial for fostering a positive work environment, ensuring legal compliance, and contributing to the overall success of businesses and investors in the Kingdom. By prioritizing employee well-being and aligning with regulatory requirements, businesses can build a resilient and engaged workforce poised for growth and success, ensuring the best employment in Cambodia.

What should I know about foreign employment in Cambodia?

If you are looking to recruit foreign talent in Cambodia, or are interested in learning more about employment in Cambodia, then view our full talent acquisition services here, or our latest job opportunities on our jobs board. We have an extensive network of clients and quality candidates, coupled with a no hire no free policy and candidate match guarantee, we are the trusted provider of recruitment services in the Kingdom. Get in touch with us today! 

Disclaimer: The information provided is for informational purposes only and does not constitute legal advice. Consult with qualified legal counsel for specific situations.

This article is part of Cambodia Investment Review’s Explainer series. A collection of simple guides to everything you need to know about business and investment in Cambodia.

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