Planning to employ in Cambodia? Expanding operations or bringing on local staff for a new office, it pays to know the law. Cambodia’s labor legislation is directed primarily by the Labor Law of 1997 (amended in 2007 and 2018), which provides for rights and obligations of both employers and workers. If you are a multinational company, a proper understanding of the legal hiring regulations under law in Cambodia can save you from compliance issues and ensure smooth HR practices.
This legal handbook sums up essential elements of Cambodian employment laws that international businesses need to understand.
1. Employment Contracts: Written or Verbal
Cambodia validates both oral and written employment contracts. Still, written agreements are greatly advisable, particularly for fixed-term agreements, as they specify in detail the terms of employment, wages, duties, and ending terms. All contracts should adhere to the country’s labor law and should be translated into Khmer unless the two-language version is employed.
Two main types of employment contracts exist:
- Fixed Duration Contracts (FDCs) – renewable up to a maximum of two years.
- Undetermined Duration Contracts (UDCs) – these are used when an employee continues working beyond the FDC duration or without a specified end date.
2. Registration with Authorities
Employers have to be registered with the Ministry of Labor and Vocational Training (MLVT). Moreover, every employee has to be reported to the labor administration, and the payroll accounts have to be kept accurate. At least eight employees must be employed by companies, and they also have to prepare internal regulations to be submitted to the MLVT for approval.
This procedure constitutes an essential element of the hiring regulations under law in Cambodia and guarantees both parties’ transparency and accountability.
3. Overtime Policy and Working Hours
The Cambodian law sets the standard working week at 48 hours, usually spread over eight hours a day on six days. Any activity over these working hours counts as overtime and should be paid accordingly:
- 1.5 times the standard rate on standard working days,
- 2 times the ordinary rate for work done on weekly rest days or public holidays.
Employers are tasked with ensuring observance of these restrictions to avoid charges and industrial unrest.
4. Minimum Wage and Payment of Salaries
The minimum wage mainly targets laborers in the garment, textile, and footwear industries, but most employers adopt the same requirements. Salaries have to be remitted at least biweekly and in Cambodian Riel (KHR) unless otherwise specified under a foreign currency.
Staff also qualify for:
- Annual seniority payments,
- Bonuses (according to internal policy),
- Overtime payment,
- Allowances for paid leaves.
These privileges are regulated strictly under hiring rules under law in Cambodia, and noncompliance can lead to legal penalties.
5. Holidays and Leave
Workers in Cambodia are also provided with different types of leave:
- Annual Leave: 1.5 days of leave for each month of service.
- Sick Leave: Provided on production of a medical certificate.
- Maternity Leave: 90 days of paid leave for female workers.
- Public Holidays: The country observes numerous public holidays, and work on these days requires double pay.
Employers must carefully track and manage leave to stay compliant with Cambodian labor standards.
6. Termination and Severance
Terminating an employee in Cambodia depends on the type of employment contract:
- FDCs may be terminated at expiration or earlier with proper notice or compensation.
- UDCs need justifiable grounds for dismissal, reasonable notice periods, and severance pay, except in cases of serious misconduct on the part of the employee.
Notice periods vary between 7 and 90 days, depending on the length of service. Severance pay is paid according to the period of tenure and remuneration, as specified under the labor law.
7. Foreign Employees: Work Permits and Quotas
Foreign employees hired by employers are required to adhere to the work permit system. Every foreign worker has to have a work permit and an employment card issued by the MLVT. The proportion of foreign workers cannot be over 10% of the total number of employees (3% office staff, 6% skilled workers, and 1% unskilled workers), subject to special permission.
This quota policy is a significant component of hiring regulations under law in Cambodia, which guarantees priority to local jobs while having access to international expertise.
8. Trade Unions and Worker Representation
Cambodia also promotes the right of workers to unionize and bargain collectively. Registered trade unions can represent employees during negotiations and conflicts, and employers are obligated to uphold union-related rights and refrain from any anti-union discrimination.
9. Health and Safety Compliance
Employers are required to provide a safe and healthy work environment. This entails proper ventilation, sanitation, lighting, and protective gear, particularly in industries like construction, manufacturing, and mining. The MLVT conducts regular inspections of workplaces in order to enforce such standards.
10. Youth Employment Regulations
The legal minimum age for work is 15, though light work can be permitted from age 12 under very strict circumstances. Children below the age of 18 are barred from undertaking hazardous labor. Employers recruiting young employees need to comply with other protective provisions as well.
Conclusion
Recruitment in Cambodia is a process of following a comprehensive set of laws that regulate contracts, wages and salary, benefits, dismissals, and foreign workers. Missteps in these aspects can cause compliance issues and labor disputes.
Global People Strategist (GPS) assists HR, Finance, and Legal departments to remain up to date and compliant with the hiring laws of countries. With one system, GPS facilitates access to trusted data on hiring regulations under law in Cambodia to enable global businesses to efficiently and confidently manage labor compliance.
