Employment Lw

Employment Contract in Cambodia

Employment contracts should comply with Cambodian laws and market norms. When hiring workers in Cambodia, it is common to draft concise, strongly worded written employment contracts. The duration of these contracts can be fixed or indefinite.

Cambodian employment contracts are best written in English and Khmer. All references to wages and remuneration shall be expressed in Cambodian Riel (KHR).

Fixed employment contracts have a duration of up to two years, while indefinite contracts have an unspecified duration.

Fixed Term

Indefinite

Working Hours in Cambodia

In Cambodia, the standard working day is eight hours. Generally, Cambodians work no more than 48 hours per week.

Employers should not require employees to work more than nine hours a day. By law, employees are not allowed to work more than two hours of overtime per day.

Overtime pay is paid at 1.5 times the employee's regular hourly wage. If overtime is worked at night, on Sundays or designated holidays, overtime pay will be paid at twice the employee's hourly wage.  

Employment Tax

Employers are required to pay social security tax at the rate of 0.8% of employees' monthly wages. In Cambodia, employees do not contribute to social security funds.

Health Benefits

Employees who are injured on the job are generally eligible to have related medical expenses paid by their employer.

Holiday Policy

Take a Vacation

Employees are generally entitled to 1.5 days of paid leave per year for each month they work for the company. For example, if an employee has been employed for 12 months, he or she is entitled to 18 days of holiday.

Employees who have worked for the same company for more than three years can enjoy an extra day of vacation for each year of service.

Sick Leave

In Cambodia, employees can take up to six months of sick leave as long as they have a medical certificate confirming their illness. The pay for this sick leave is as follows:

• 1st month – 100% of salary
• 2nd and 3rd month – 60% of salary
• Months 4 to 6 – Non-payment

Maternity and Paternity Leave

Maternity leave is available to female employees who have worked for their employer for at least one year. The salary is paid at half the employee's basic salary. Cambodian fathers can take advantage of one day of paid paternity leave.

Termination and Severance

Unlike in the United States, there are additional regulations protecting employees from early termination. If an employer violates these rules, employees may be entitled to significant damages. However, these protections do not apply to all types of employees.

Severance Pay

On completion of a fixed-term contract, employees are usually entitled to a severance package of at least 5% of their standard salary. Employees on indefinite contracts are entitled to 7 days' pay if they have worked for the company for 6 to 12 months. Employees are entitled to 15 days' wages per year, up to a maximum of 6 months' wages.

Probation Period and Notice Period

Cambodia allows probation periods of up to three months. During the probationary period, the employer is free to fire the employee without notice.

An employer may terminate an employee on an indefinite contract for any reason. However, for fixed-term contracts, the employer must have a valid reason for termination, such as obvious poor performance by the employee.

Employees are generally entitled to receive notice of termination at the following intervals:

• 7 days – for employees who have been employed for 6 months or less
• 15 days – for employees with 6 months to 2 years of service
• 1 month – for employees with 2 to 5 years of service
• 2 months – for employees with 5 to 10 years of service
• 3 months - applicable to employees who have worked for more than 10 years

Employees who receive a notice of termination can spend up to two days per week during the notice period looking for new employment.

Salary and Benefits

Cambodia Compensation Law

In Cambodia, an employee's minimum wage is determined by two factors: the industry in which they are employed and the collective bargaining agreement (CBA). For example, Cambodia's textile industry recently raised its minimum wage to US$170 per month.

Different industries may have their own minimum wages. Therefore, the CBA usually enacts a separate compensation law in Cambodia.

Employees who work more than 8 hours a day or 48 hours a week are eligible for overtime pay. Standard overtime pay is 1.5 times the employee's regular hourly wage. If employees work overtime at night, on Sundays or designated holidays, they are entitled to overtime pay at twice their regular hourly rate.

Cambodia Welfare Protection

All employees in Cambodia are required by law to receive statutory benefits. Employers should incorporate vacation and annual leave into their benefit management plans.

Cambodia has 19 public holidays every year. Many of these festivals are celebrated over several days. Employers should take care to include paid holidays when drafting employment contracts and inform employees of rest days.

Cambodian employees shall enjoy 1.5 days of annual leave for each month they serve the company. After three years of employment with the company, employees are entitled to an extra day off per year.

Female employees who have worked for the company for more than one year can enjoy maternity leave. Maternity leave is usually 90 days and is paid at half the employee's standard salary. Cambodian fathers can take advantage of one day of paid paternity leave.

Cambodia Welfare Management

Once an employer has a suitable benefits administration plan in place, it is its responsibility to discuss benefit allocations with employees. Employers should consider supplemental benefits as part of any compensation package. While these types of benefits are not mandated by law, they can help attract and retain high-level talent.

Most employees in Cambodia also expect to receive seniority bonuses ranging from US$2 to US$11 per month. The bonus is determined based on the employee's length of service with the company (more than one year). Bonuses are typically capped at $11 - the equivalent of 11 years of company service.

Employees in Cambodia can typically expect to receive the following supplementary benefits:

• housing subsidy
• health care allowance
• transportation subsidy
• attendance bonus

Benefits and Compensation Limitations

One of the major limitations to benefits and compensation for expanding your business is setting up a local entity. Employers are generally prohibited from hiring and paying employees without first establishing a subsidiary in Cambodia. This process can take months to complete, causing significant business delays.

With Remoly's Cambodia PEO, you can start doing business in Cambodia in just 48 hours. We are the employer of record for your employees, which means you do not need to set up a subsidiary in Cambodia. As the only Cambodian PEO with an in-house recruiting team, we can help you find, hire and develop top local and international talent.