Employer of Record in Cambodia

Skuad’s Cambodia EOR solution equips your company with the necessary competitive edge without having to set up a commercial entity in the country. Although the United Nations (UN) considers Cambodia an upcoming economy, it is resilient and on the path of growth with enough opportunities to make it an attractive investment destination.

Skuad’s EOR solutions make it easier to expand into the Cambodian business space without directly encountering the legal formalities. Partnering with Skuad helps companies to leverage the global infrastructure, and Skuad’s network allows the company to tap into the local Cambodian job market.  

Any company partnering with us can be assured we will do all the heavy lifting regarding contracts, payroll management, and virtual onboarding. We will further ensure your expansion process remains in compliance with the local laws while you focus on the business side of things.

Cambodia at a Glance

Estimated Population: 15.5 million (2019)

Currency: Cambodian Riel (KHR)

Capital: Phnom Penh

Officially recognized language: 19 Languages

Languages frequently used: Khmer

GDP: $76.635 billion PPP (2019)

Employment in Cambodia

The main labor and employment laws in Cambodia are the 1997 Labor Law, its first amendment in 2007, and the 2002 Law on Social Security. There are also several regulations such as royal decrees, sub-decrees, prakas, circulars, and notices issued by the Cambodian government and the Ministry of Labor.

The labor code came into effect in January 1997 and governs the relationship between employers and workers resulting from employment contracts. These laws apply to everybody employed in Cambodia, regardless of their nationality.

The labor code is an exhaustive document and consists of 396 legal articles. It comprehensively covers the employment rights of individuals employed in Cambodia in exchange for remuneration.

All employers coming under the ambit of the labor code are expected to make a declaration to the Ministry of Labor, guaranteeing to abide by the labor code when opening an enterprise or establishment. This declaration is mandatory and must be made in writing to the Ministry of Labor before the opening of the enterprise or establishment. 

The Labor Law also has room for labor disputes, and labor dispute resolution is included in the Labor Law. Labor disputes are classified as individual and collective labor disputes.‍

What Needs to be Understood Before Employing Someone in Cambodia‍

The Labor Law provides the basic legal form and scope for labor contracts in Cambodia, which cover the rights and obligations of employers and workers in a labor relationship. The employment relationship between an employer and worker is governed by an oral or written contract. There are two primary types of contracts.

• Fixed or Specific Duration Contract (FDC): A fixed or specific duration contract (FDC) has to be given in writing. Otherwise, it is treated as an undetermined or unfixed duration contract (UDC). An FDC has to be signed with consent and cannot extend beyond two years. It can be renewed but the renewal must not exceed two years either. Any violation of the rule transforms the contract to be treated as a UDC. When a contract is signed for a fixed duration of or less than two years, but the work quietly continues after the prescribed duration, the contract becomes a UDC.
• Undetermined or Unfixed Duration Contract (UDC): UDC can be created in two ways. First, by the intentional creation of a contract wherein both parties enter the contract without specifying the date. Second, by unintentional creation where an existing FDC becomes UDC.

The employment laws and policies under Cambodian law can be difficult to navigate and adhere to perfectly when expanding your business. Skuad’s EOR services can take over HR-related work for you while ensuring your expansion endeavors fall within the ambit of the local laws. Contact a Skuad expert to learn more.

Contractors vs. Full-time Employees

According to Cambodian law and depending on the nature of work, an individual can be considered a full-time employee or laborer. Both enjoy the same rights, protections, and benefits under Cambodian law. An employee is defined as someone who is employed to help a person or organization in exchange for remuneration. A laborer is someone who is under the direction of the employer and predominantly performs manual labor in return for remuneration.

On the other hand, an independent contractor works based on an arrangement in which one party (the contractor) takes the responsibility for performing a specific work, and the hiring party agrees to pay a remuneration for the accomplishment of the work. The independent contractor remains legally free and does not come under the subordination of the hiring party. They are even free to choose how the work can be carried out without direction and supervision from the hiring party. Also, the independent contractor is offered no employment protection or rights under Cambodian law.  

To fulfill your organization’s requirements, Skuad’s EOR solutions can narrow down and hire employees for you on a full-time or contractual basis. You can book a demo today to avail yourself of our tailor-made Cambodia EOR solutions.

Hiring in Cambodia

Cambodia’s economy has grown at 7.7% from 1995 to 2018 as per the World Bank, mainly because of garment exports and tourism. As Cambodia develops, it is slowly transitioning itself from a low-skilled labor-intensive growth model to a more skill-driven economy.

The Cambodian government is committed to Industry 4.0 and has newly introduced minimum wages, concentrating on changing the nature of the workforce. Cambodia has the youngest working population with an average age just below 24.  

Recruitments are mainly carried out with the help of newspapers and both online and offline job boards. With the increased presence of the internet, social media platforms such as Facebook and LinkedIn have also gained ground in Cambodia. Some of the popular job websites in Cambodia include CamHR and Bong Thom Classifieds.

Most recruitments still happen through recommendations and word of mouth. If someone has a strong personal network, their chances of finding a job are much higher. Meanwhile, some newspapers advertise open positions, and both Phnom Penh Post and The Cambodian Daily carry job classifieds regularly.    

All employers are expected to comply with the Cambodian Labor Law and employers must remain aware of local laws that govern recruiting. When hiring, salaries are usually quoted in gross figures along with benefits such as insurance, pensions, and vacations. Once the salary is agreed upon, a three-month probation period is standard and all terms and conditions are elucidated in the contract.  

Recruiting employees quickly is daunting in Cambodia but the process can be made seamless by partnering with an EOR company. An EOR service allows companies to channelize their critical resources to business expansion instead of focusing on HR-related functions. It can take care of all compliance regulations, HR, and the hiring process. Moreover, it can accelerate the hiring process with innovative tools such as virtual onboarding and e-signing of documents. 

Skuad’s unified employment platform enables seamless management of payroll, expense management, and tax filing. We strive to offer the best experience for both the client and aspiring job applicants. Consult a Skuad expert today to kick-start your expansion in Cambodia.

Probation & Termination

Probation in Cambodia 

As per the law in Cambodia, the probation period (Article 68) cannot be longer than the amount of time needed to gauge the worker’s suitability and professional worth to the employer. Specifically, the period cannot last for more than three months for regular employees, two months for specialized workers, and one month for non-specialized workers. The travel cost incurred by the probationary employee during the probationary period has to be covered by the employer.

Termination in Cambodia

Since there are two types of labor contracts, there are also two types of terminations according to Cambodian labor law.

• A labor contract of a specified duration (Article 73) will culminate at the specified ending date.
• It can also be terminated if both parties reach an agreement in the presence of the labor inspector.
• If both parties do not agree, the contract can only be canceled in the event of serious misconduct or an act of God.
• Premature termination of the contract can entitle the employee to compensation for the damages incurred (subject to conditions). 
• If a contract has a duration of more than six months, the employee must be informed about the termination or non-renewal 10 days in advance. The notice period extends to 15 days for contracts with a term of more than one year.
• If no prior notice is given, it is understood that the contract has been extended for the length of time equal to its initial duration.
• At the expiration of the contract, the employee is paid a severance fee proportional to the wages and length of the contract.

A labor contract of unspecified duration can be terminated by either of the parties. It will be carried out by providing notice before the termination. However, employees cannot be laid off without a valid reason. The notice for the termination will vary depending on the time spent by the employer in the organization. 

Skuad’s EOR solutions for Cambodia come with in-depth experience and expertise in HR. Our services allow organizations to remain compliant with local laws when carrying out actions such as termination. Besides, Skuad can take over the task of writing well-articulated labor contracts while adhering to the legal framework established by the Cambodian authorities.

EOR Solution

An EOR entity recruits, onboards, and manages employees in a full-term or contractual capacity for business establishments. By partnering with an EOR firm, your company can channelize its resources into its business priorities instead of directing it into the recruitment and other HR-related aspects. An EOR service is the best way to enter the Cambodian workspace. Skuad’s expertise and experience will allow you to remain in control of your business expansion without wasting your labor and time on handling the employment management process.‍

Outsourcing Employment through an EOR in Cambodia‍

An EOR allows a company to save on valuable resources from being directed in investments in functions such as tax management, payroll management, hiring, and other aspects specifically managed by the HR department.‍

Skuad comes with expertise in creating bespoke contracts in conjunction with local Cambodian laws. Moreover, our service also extends to practices such as amending labor contracts and expediting the hiring process with practices such as the e-signing of documents.

Types of Visas in Cambodia

To initiate and ensure the success of your expansion efforts in Cambodia, speak to a Skuad expert to book a demo.

Work Permits

All foreign nationals are supposed to get an ordinary e-visa for work purposes. Along with this, they must obtain a work permit and employment card from the Ministry of Labor and Vocational Training (MLVT). 

In September 2017, new rules on work permits came into effect. According to them, a Cambodian work permit is required for all foreign nationals who apply for six-month and one-year visa extensions. Articles 261, 264 & 265 specify that foreign nationals must own a work permit. Some other conditions to be fulfilled include the following.

• A job offer compliant with the regulations about the employment of foreign nationals.
• Legal entry into Cambodia with a valid passport
• A valid residency permit and fitness for the relevant job
• Free from any contagious diseases whatsoever

Payroll & Taxes in Cambodia

Payroll Details

To set up payroll in Cambodia, you need to be knowledgeable about the prevailing laws of the country.

Taxation in Cambodia

Income tax applies to the individual’s salary. The Cambodian prevailing income tax rates are given below.

Note: Non-residents are taxed at a flat 20% on all Cambodian-sourced income.

To boost your expansion efforts without the hassle of managing payroll and taxation as per the local laws, you can partner with Skuad. Skuad’s tailor-made payroll and taxation solutions can ensure smooth operations for your subsidiary in Cambodia.

Incorporation

Most companies that set up bases in Cambodia choose to incorporate as a limited liability company (LLC) because of the numerous benefits it offers.

The prescribed steps to set up an LLC subsidiary in Cambodia are as follows.

• Create a local bank account
• Deposit the minimum paid-up capital
• Register with the Ministry of Commerce
• Submit the Memorandum and Article of Incorporation
• Register the company name
• Register for trademarks at the Department of Intellectual Property
• Register with the tax department and obtain the tax identification number
• Make a declaration with the Ministry of Labor before opening a business
• Obtain all licenses from the respective ministries

Cambodian laws prescribe LLCs to pay at least USD 1,000 as paid-up capital along with two shareholders and one director. Shareholders and directors can be foreign and they are not expected to live in Cambodia while working for the company.

The company is expected to open a corporate bank account to pay employees and deposit the paid-up capital. Laws state the company must have a physical office, registered real estate agent, and local business name in Khmer. Also, LLCs are required to file annual tax returns and register for value-added tax (VAT).    

To handle the requirements for incorporation and make use of the growing business opportunities in Cambodia, get in touch with a Skuad expert today. 

Professional Employer Organization (PEO)

A professional employer organization (PEO) is a legal entity that practices the all-inclusive outsourcing of HR functions to an outside HR organization, including employee benefits and payroll. In a PEO, the outside HR organization becomes the professional employer of your workforce without them providing any staff.  

All day-to-day assigning and managing of tasks rests with the main employer, your organization. The scope of control of the workforce depends on the service level agreement (SLA).

With an EOR company, the external organization has partial responsibility for the HR functions. On the other hand, with a PEO, the HR organization takes complete responsibility for the HR functions. This is one of the stark differences between PEOs and EOR services.

While it may be good for the main employer to retain control over decision-making, it can be time-consuming for the organization that is trying to expand its business operations.

As an EOR service, companies can completely do away with setting up a commercial entity in a foreign country for a business expansion. Skuad can take over the hiring process and handle its complexities along with the employment documentation procedures.

Conclusion

Whenever a company decides to set up remote teams, it is expected to know the local laws and how they are likely to impact the local hiring process. Several factors, including payroll, taxation, Cambodian negotiation processes, and state laws, can become hurdles to the process of business expansion.

Nevertheless, there is an alternative to getting immersed in the legal complexities of the hiring process. By partnering with an EOR firm, the process of handling HR functions becomes much easier and streamlined. The EOR services can take care of the HR-related functions in consonance with the legal framework of Cambodia.

Our globally distributed teams and extensive experience can make it simple to hire exceptional talent from Cambodia. Further, we can also help you manage your payroll and aid your company to remain compliant with the prevailing laws and taxation rules in Cambodia using our unified Skuad employment platform.

We have built an impeccable reputation as a trusted player among the remote employment contenders in the market. We always remain eager and motivated to help companies with their expansion plans seamlessly. 

Engage with Skuad and reach out to our experts today and give your business a much-needed push for expansion in Cambodia.