Cambodia is a South East Asian country surrounded by the Gulf of Thailand, Vietnam, Laos, and Thailand. It has natural resources in hydropower, minerals and fertile land. Cambodia is a kingdom with a parliamentary constitutional monarchy. Most Cambodians (about 96.6%) speak Khmer, which is the official language and practice Buddhism. Cambodia experienced a steady average economic growth of 7 percent since 2012, with a real GDP growth rate reaching 6.9% in 2017. This growth was influenced by construction activity, high public spending and a boost in tourism.
Cambodia still largely depends on international aid from countries such as China. Services comprise the largest share of GDP at 43.5 percent. Tourism, specifically gambling and betting services, include the largest share, followed by the industry sector at 32.8 percent. This includes tourism, the garment industry, construction and rice milling, among many others. Agriculture represents the remaining 25.3 percent, producing rice, rubber, and corn, vegetables and cashews.
In Cambodia, the Labor Code defines regular or permanent employees as those who regularly go to work for an indefinite period. Every employee of Cambodian nationality needs an employment card. Employers are not permitted to hire persons who do not comply with this requirement. The contract for permanent employment may include a clause for a probation period of up to 3 months.
An employment contract may be written or oral. For fixed-term contracts, it is mandatory to form contracts in writing, whereas contracts for an undefined duration can be written or verbal. Any contractual clauses that prohibit employees from pursuing any activities after the contract expiry date are null.
A written agreement must include the remuneration and other benefits available to employees. Any written or verbal agreement that would remunerate the employee at a rate less than the guaranteed minimum wage is null and void.
The Labor Code of Cambodia prohibits restrictive covenants in employment contracts. Any clause of a contract that prohibits an employee from engaging in any activity after the expiration of the contract is null and void.
The Labor Code of Cambodia defines casual employees as individuals who are hired to perform temporary or seasonal jobs, or to perform specific work within a short timeframe. Casual workers are subject to the same rules and obligations and enjoy the same rights as regular employees, except for the clauses stipulated separately.
Temporary employment agreements are made in writing. Contracts without a precise termination date can be renewed at will as many times as possible without losing their validity, limited to a 2-year duration.
Contracts of daily or hourly workers who are hired for a short-term job and who are paid at the end of the day, the week, or a fortnight period, are considered to be contracts of fixed duration with an unspecified date.
A probationary period allows the employer to determine the professional aptitude level of the employee and for the employee to better understand the conditions of employment. The maximum probationary period depends on the type of employee:
Permanent employee – 3 months
Specialized fixed-term employee – 2 months
Non-specialized employee – 1 month
Employees are required to work for a maximum of 8 hours per day, 48 hours per week, with 1 rest day per week. It is prohibited to employ a person for more than 6 days in a week. Working hours cannot exceed 10 hours per day in case of overtime.
Employers can divide a work schedule into 3 shifts (morning, afternoon, and night) with each shift not exceeding the maximum of 8 hours daily. An employee can work for more than 1 shift per day provided that the duration of all daily work shifts does not exceed the total mandated number of working hours per day.
Employees must receive paid annual leave of 1.5 days per month, for a total of 18 days per year (increasing by 1 additional day for every 3 years of continuous service). The entitlement to annual leave becomes effective after 1 year of service. Paid holidays and sick leave do not count as paid annual leave.
Any collective agreement providing compensation in place of paid leave, or waiving the right to paid annual leave, is void. Acceptance by the employee to postpone all or part of their rights to paid leave until the termination of the employment agreement is not considered as renunciation. Postponement of this leave cannot exceed 3 consecutive years and can only apply to leave exceeding 12 days per year.
In Cambodia, employees are entitled to sick leave for up to 6 months if the sickness is certified by a licensed doctor; however, it can be extended until there is a replacement. The employer may dismiss the employee if sick leave extends beyond 6 months. The Labor Code does not have regulations on paid sick leave; however, employers may provide paid sick leave through internal work regulations. An example of sick leave pay is as follows:
100% of wages during the first month of sick leave
60% of salary during months 2 and 3 of sick leave
Unpaid leave during months 4, 5, and 6
Employees are also insured under the National Health Service. Those who have paid contributions for either 2 consecutive months or 6 months within the 12 months preceding the month of illness or non-work-related accident are entitled to benefits. Employees must also have been absent from work for at least 8 days due to medical treatment prescribed by a registered medical practitioner. The daily allowance is payable from the first day of suspension of work, and is calculated at 70% of the employee’s average daily wage. It is paid in installments for the actual period of medical leave, up to a maximum of 6 months
Female employees in Cambodia are entitled to a maternity leave of 90 days, with 50% of their wages paid by their employer. There is no restriction on whether the leave must start before or after childbirth.
It is prohibited to lay off women in the workforce during their maternity leave or at a date when the end of the notice period would coincide with the maternity leave. During leave, female employees are entitled to 50% of their wages, including perquisites, paid by the employer, as well as any other benefits in kind they were entitled to.
In addition to the 50% wage paid by the employer, female employees who are registered with the National Social Security Fund (NSSF) and have at least 9 months of contributions in the 12 months preceding leave are entitled to a maternity benefit of 70% of their reference earnings for 90 days from the NSSF.
The law does not have regulations explicitly related to paternity leave; however, it offers a provision for special paid leave of up to 7 days for events that directly affect an employee's immediate family. This leave is deducted from the annual leave. If the employee has used the entire annual leave for the year, the employer cannot deduct the special leave from the employee's annual leave for the next year.
For permanent employment contracts, the minimum notice period ranges from 7 days to 3 months, depending on the length of service. Notice period is not required for termination during probation or due to gross misconduct. During notice period, employees have a right to 2 fully paid days, at regular rates, per week to look for a new job.
For fixed-term contracts between 6 months and 1 year, the employer must give notice at least 10 days prior to the expiration date. If a fixed-term agreement is over 1 year, the organization must give notice at least 15 days before the expiration date. Failure to provide prior notice to the employee will result in the renewal of the fixed-term agreement for a duration equal to the original contract.
Cambodia's Labor Code has different concepts of severance pay for fixed-term contracts and permanent contracts.
In case of termination of fixed-term employment contracts before the expiration of their contracts, employees receive:
Unpaid wages
Payment in lieu of unused annual leave
Termination payment is worth at least 5% of the wages paid to the employee during the employment contract period, excluding bonuses
Damages worth at least the amount of wages that the employee is entitled to until the end of the employment contract
If the contract is terminated due to expiry, employees don't receive damages. Employees don't receive any termination pay or damages if they are dismissed for serious misconduct.
In case of termination of an indefinite-term contract without a valid reason and the employee did not commit serious misconduct, employees receive:
Unpaid wages
Payment in lieu of unused annual leave
Payment in lieu of prior notice if the employer fails to give proper prior notice
Seniority payment calculated as 15 days' wages and benefits per year of service, paid in 2 installments every year, limited to a maximum of 6 months' wages and benefits
Damages 7 days' wages and benefits per year of service for the remaining year, not exceeding 12 months' wages
If an employee is dismissed due to gross misconduct, seniority payment and damages are not paid. If employees are terminated due to bankruptcy or illness, damages are not paid.
The employer must pay all unpaid wages, indemnities, and unused annual leave within 48 hours of the termination date.
