Cambodia’s economy has witnessed significant growth and transformation in recent years. With a GDP of US$ 29.5 billion and a growth rate averaging around 7%, Cambodia is among the fastest-growing economies. 

One key driver of this economic growth is Cambodia's vibrant agricultural sector. Rice, rubber, and cassava are among the primary agricultural products. Cambodia’s tourism sector has also emerged as a vital contributor to economic growth, attracting millions of visitors each year. 

All these factors have actively contributed to Cambodia's emergence as a reliable destination for business expansion for those looking to tap into new customer segments and increase their revenue streams. 

But as an employer in Cambodia, you must be familiar with the labor laws of Cambodia to hire and manage talent with compliance. So, here is a detailed guide covering the essentials you must know about the employment laws in Cambodia.

Contractual Agreements

Labor relations, employment conditions, and other related matters in Cambodia are primarily governed by the Constitution and the 1997 Labor Law. 

As per the contract employment law in Cambodia, contractual agreements can take various forms as agreed upon by both the employer and employee. They can be written or verbal and must adhere to all the local regulations. If registration is necessary, it must be done at no expense to either party. 

Types of employment contracts 

In Cambodia, various employment contracts are commonly used to formalize working relationships between employers and employees. 

A few examples of such different types of employment contracts include,

Fixed-term contracts

• A written labor contract for a specified period  must include an exact termination date. 
• Under the labor law in Cambodia, fixed-term contracts cannot exceed two years (including renewals).

Indefinite-term contracts

• These contracts do not have a specified end date and can be renewed multiple times at will. 

Probationary contracts

• Probationary contracts cannot exceed three months for standard employees, two months for specialized workers, and one month for non-specialized workers.

Apprenticeship contracts

• It is a type of agreement wherein a manager of an industrial or a commercial establishment commits to delivering thorough and professional training to another individual, who, in return, agrees to work as an apprentice under mutually agreed conditions.
• Under the Cambodia labor law, these types of contracts must be in writing and cannot exceed two years.

Obligations and rights for both parties

Employers and employees must ensure compliance with all the regulations laid down in the labor laws of Cambodia. This includes following the standard working conditions, complying with minimum wage requirements, and adhering to legal termination procedures, among others.

Working Hours and Overtime 

Here is a detailed overview of working hours and overtime compensation in Cambodia.

Regular working hours

• Under the Labor Law in Cambodia, the standard working hours consist of eight hours per day, totaling 48 hours per week.

Overtime regulations and compensation

• The daily extension of working hours is limited to one hour.
• Additionally, Cambodian labor law mandates that the total number of work hours in a single day must not exceed ten.
• If employees are required to work overtime for urgent and exceptional tasks, they are entitled to an overtime compensation rate of 50%.
• The compensation rate is 100% for overtime work at night (10:00 pm to 5:00 am) or during the employee’s weekly time off.

Minimum Wage and Compensation 

The minimum wage in Cambodia is determined through a Prakas (ministerial order) issued by the Ministry in Charge of Labor, following recommendations provided by the Labor Advisory Committee. It undergoes periodic adjustments to align with changes in the cost of living and economic circumstances. 

The minimum wage rate in 2024

• As of 2024, the minimum wage rate in Cambodia is set at KHR 818,800.00 per month. 

Factors affecting wage determination

Wage determination in Cambodia is a complex process that takes into account multiple factors, such as:

• Needs of workers and their families
• Cost of living and
• Inflation, among others.

Employee Benefits and Social Security

Employee benefits and social security schemes are primarily managed by the ‘Law on Social Schemes for Persons Defined by the Provisions of the Labor Law,’ 2002.

One of the key provisions of the social security scheme is the establishment of the National Social Security Fund (NSSF). 

Statutory benefits

Old-age pension and allowance

• To qualify for old-age pension and benefits, individuals 55 or above must have been registered members of the NSSF for a minimum period of 20 years.
• They must also contribute to the NSSF for at least 60 qualifying months.
• Employees who do not qualify for an old-age pension receive an old-age allowance, which is paid as a lump sum. 

Invalidity benefits

• Any member of the NSSF who becomes disabled before the age of 55 is eligible for invalidity benefits.
• Employees must be registered with the NSSF for at least five years to avail of the invalidity benefit. 
• They must also have completed six months of contributions to the Social Security Scheme within the 12 months leading up to the onset of the incapacity. 

Survivor’s pension

• Beneficiaries can receive a survivor’s pension in the following cases: 

• The death of someone receiving old-age, invalidity, or early pension.
• The death of an NSSF member who meets pension requirements or has contributed for 180 months.

Occupational risk benefits

• Individuals with temporary disability confirmed by a doctor recognized by the NSSF are eligible for daily allowances. 
• The employer must also pay the employee’s daily wage for the first day of absence.
• Employees with a disability of at least 20% are entitled to permanent disability pensions. 

Sickness and maternity benefits

• Individuals receive 70% of their average daily earnings from the past six months as sickness benefits for a maximum of 180 days.
• Female employees in Cambodia are eligible for 70% of their average daily earnings from the past six months for 90 days as social insurance.
• Employers must also pay 50% of the employee’s gross earnings for 90 days during maternity leave.
• In addition to these benefits, a one-time payment of 400,000 riels is granted for each child, up to three children per delivery, as social assistance.

Additional perks and benefits

Funeral benefits

• If an occupational risk results in the death of the victim, the National Social Security Fund will offer funeral benefits and pensions to the victim’s survivors. 

Social Security contributions and requirements

• Employers must make Occupational Risk Contributions (ORC) equal to 0.8% of each employee’s monthly average wage.
• Employers must also contribute, collect, and remit monthly healthcare and pension contributions to the NSSF. 
• Healthcare contributions, previously split between employers and employees at 1.3% each, are now solely the employer's responsibility as of January 1, 2018.
• The pension contribution rate for the first five years is 4% of the employee’s contributory wage ( employer 2% and employees 2%).
• The contribution rate is 8% of the contributory wage from the sixth to the tenth year.
• From the 11th to the 20th year, the rate increases by 2.75%, with subsequent increases of the same percentage every ten years after that.

Vacations and Paid Time-Off

Vacations and unpaid leave policies are clearly outlined in the labor laws of Cambodia. It states that employees become eligible for paid annual leave only after they have completed one year of service.

Annual leave entitlement

• Under the Cambodia Labor Law, employees are entitled to paid annual leave at a rate of one and a half work days per month of continuous service.
• The duration of annual leave increases with seniority, adding one day for every three years of service.
• Annual leave is commonly taken during the Khmer New Year, and if it exceeds 15 days, employees can schedule the remaining days at other times during the year.

Public holidays and special leaves

The public holidays in Cambodia include:

• International New Year's Day
• Day of Victory over the Genocidal Regime
• International Women’s Rights Day
• Khmer New Year’s Day
• International Labor Day
• Birthday of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia
• Visaka Bochea Day
• Royal Ploughing Ceremony
• Birthday of Her Majesty the Queen-Mother NORODOM MONINEATH SIHANOUK of Cambodia
• Constitution Day
• Pchum Ben Day
• Mourning Day of the  Late King-Father NORODOM SIHANOUK of Cambodia
• Coronation Day of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia
• National Independence Day
• Water Festival

Special leave

• Under the labor laws of Cambodia, employees are entitled to special leave during events that may directly impact their immediate family.
• The duration of such leave is a maximum of seven days per event.

Maternity leave

• According to the Cambodia labor law, female employees are granted 90 days of maternity leave.

Termination and Severance

Let’s look at the termination procedures and severance pay regulations in Cambodia.

Grounds for termination

An employment contract can be terminated based on the following grounds,

• Mutual agreement between the employee and employer
• Stealing, misappropriation, embezzlement
• Threat and abusive language against the employer or other co-workers
• Presentation of false documents
• Non-compliance with the terms of the employment contract
• Severe violation of disciplinary, safety, and health rules
• Encouraging coworkers to commit serious offenses
• Engaging in political activities, propaganda, or demonstrations within the workplace.
• Economic reasons
• An act of God that prevents the parties from fulfilling their obligations.

Notice period and severance pay

The notice period usually varies based on an employee's service duration.

• Severance pay is calculated based on the wages earned and the contract duration.
• A collective agreement determines the specific amount of severance.
• In the absence of the same, severance pay equates to at least 5% of the total wages earned during the contract period.

Discrimination and Equal Opportunity

In addition to the Constitution, Cambodia has ratified several international human rights treaties, including the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). 

Employers are advised to ensure compliance with all laws and regulations related to anti-discrimination to prevent any legal repercussions.

Prohibitions against workplace discrimination

• Article 12 of the Labor Law of Cambodia prohibits workplace discrimination based on race, color, religion, political opinion, and birth, among other factors.

Health and Safety Regulations

• Article 229 of the Labor Law of Cambodia lays down all the steps and measurements required to maintain workplace hygiene and sanitation standards.

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FAQs

Q1: What is the probationary period in Cambodia?

A1: The probationary period in Cambodia consists of three months for regular employees, two months for specialized workers, and one month for non-specialized workers.

Q2: What is Article 67 of the Cambodia Labor Law?

A2: According to Article 67 of the Labor Law in Cambodia, a fixed-term contract must contain a precise finishing date. 

Q3: What is the termination law in Cambodia?

A3: Under Cambodian termination law, employers must give their employees a notice period in addition to severance pay. 

Q4: What are the types of employment contracts in Cambodia?

A4: Under the contract employment law in Cambodia, contractual agreements can be broadly classified into four main types. These are fixed-term, apprenticeship, probationary, and indefinite contracts.