Cambodian employment law appears complex and confusing when looked at from outside although in some ways there are many similarities to other countries. Other factors that complicate matters include the development of labour law between the pre-independence and post-independence eras, and recent developments in Social Security. The main source of employment legislation in Cambodia is the Labour Law of 1997, amended in 2007, and the Law on Social Security of 2002. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Cambodia.
There are several key areas to be aware of within Cambodia’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
In Cambodia, employment relationships between an employer and employee can be governed either by oral or written contract. There are two types of contract – Fixed Duration Contracts (also referred to as Specific Duration Contracts), and Undetermined or Unfixed Duration Contracts. The former must be made in writing, otherwise it becomes an unfixed duration contract. Contracts made for a specific duration cannot be made for a period exceeding two years, and may be renewed within this two year limitation. After the two years, the contract becomes an undetermined duration contract.
Probationary periods must be separately accounted for within a probationary contract, which can be of a term from between 1 and 3 months.
Only under very specific circumstances may an employment contract be terminated. These are:
If one party unilaterally terminates an employment contract, the notice period set forth by employment law must be adhered to. They are as follows:
There are laws that regulate leave periods based on years of service and the type of leave requested, including:
Pension and benefits have not yet been formally implemented in a scheme for Cambodians, but it is common practice for them to be regulated internally by some companies.
Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Cambodia. For companies which intend to employ their staff directly through their incorporated Cambodian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Cambodia.
As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Cambodia.
The Shield GEO solution is an attractive alternative where
– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in Cambodia
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Cambodia
– the company needs help with tax, employment, immigration and payroll compliance in Cambodia
Shield GEO can contract directly with the company to employ and payroll their staff in Cambodia. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits. Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.