LATEST NEWS

MY BUSINESS IN ASIA

Labor Law in Cambodia

Cambodia’s Labor Law provides relatively high protection for workers. It contains provisions relating to working hours, salary entitlements, rest breaks and leave entitlements, amongst others.
 
Labor Contracts
 
In Cambodia there are two types of employment contracts: (i) fixed duration contracts; and (ii) unlimited duration contracts.  Each of those is characterized by the following features:
 
Fixed Duration Contracts:

  • This type of contract must contain a precise end date and cannot be for a period longer than 2 years.
  • If the original period is less than 2 years, the contract may be renewed one or more time, provided the total time period does not exceed 2 years.
  • If the contract exceeds 2 years, it will automatically be considered a contract of unlimited duration.
  • If the employment contract is terminated earlier by the employer, then the employee is entitled to damages in the amount of the remuneration that the employee would have received had the contract run for its full term.
  • At the end of a fixed duration contract, the employee is entitled to a severance payment equal to 5% of the total wages paid during the contract plus the value of any unused annual leave.
 
Unlimited Duration Contract:
  • This is a contract with either no fixed end date or where the total duration exceeds 2 years.
  • This type of contract may be terminated by either party by giving 7 days to 3 months’ notice (depending on the seniority of the employee).
  • Upon termination the employee is entitled to a severance payment ranging from 7 days to 6 months’ salary (depending on the seniority of the employee) and any unused annual leave.
  • The contract may contain a probation period of 1 to 3 months, depending on the type of employment.
 
Foreign Employees
 
Under Cambodian law the maximum number of foreign employees is 10% of the company’s workforce in Cambodia. A company may apply to the Ministry of Labor to increase this limit.
 
In order to be lawfully employed in Cambodia, foreigners must:
  • obtain a labor book and work permit issued by the Ministry of Labor;
  • have entered Cambodia legally;
  • have obtained a business visa either prior to arriving in Cambodia or at the airport;
  • be of good character;
  • have the relevant qualifications for the job; and
  • have no contagious diseases.
 
A work permit is valid for 1 year and may be extended for further one-year periods, provided that any such extension does not exceed the term of the foreigner’s business visa.