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Employment in Cambodia

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.

Key points on employment 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.

  1. Contracts

    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.

  2. Probation Periods

    Probationary periods must be separately accounted for within a probationary contract, which can be of a term from between 1 and 3 months.

  3. Termination Procedures

    Only under very specific circumstances may an employment contract be terminated. These are:

    1. When the contract has expired or is otherwise completed
    2. With both parties’ consent
    3. In the event of serious and/or willful misconduct
    4. At the will of each party.

    If one party unilaterally terminates an employment contract, the notice period set forth by employment law must be adhered to. They are as follows:

    • Contracts less than 6 months: 7 days notice required
    • Contracts more than 6 months: 10 days notice required
    • Contracts more than 1 year: 15 days notice required
    • Employee service between 2-5 years: 1 month notice required
    • Employee service between 5-10 years: 2 months notice required
    • Employee service more than 10 years: 3 months notice required

     

  4. Statutory Leave

    There are laws that regulate leave periods based on years of service and the type of leave requested, including:

    1. Annual Leave: A minimum of eighteen days leave with pay is stipulated by law. There is also paid leave for public holidays on New Years Day, Victory Day, Khmer New Year, King’s Birthday and various other holidays.
    1. Maternity Leave: Female employees are entitled to not less than 90 days at half their regular wage. Some companies allow workers to have a monthly medical check up during their pregnancy by using their annual leave, for up to 5 pre-natal check ups.
    1. Sick Leave: For illness certified by a doctor, the employee is generally entitled to up to 6 months’ sick leave with full pay. Employers are entitled to dismiss workers after more than 6 months sick leave.
  5. Pension & Benefits

    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.

Outsourcing Employment Through a GEO Employer of Record Service

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.

 

 

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