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July 29, 2020

Cambodia: Employers have gained positive insights from COVID-19 pandemic

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Taylor Vinters – International Employment Law Update

The Cambodian Government, like many other countries, tightened its border controls and shut down certain businesses to prevent the spread of COVID-19. Whilst many of these businesses are now reopening and more international travelers are now entering Cambodia, the COVID-19 pandemic is still having a significant impact on Cambodia’s economy, which is heavily dependent on international trade and tourism.

In particular, the garment and footwear and hospitality industries have been hit hardest by the fall in international orders and lack of international tourists; resulting in high numbers of suspended and laid off employees.

There have been challenges for employers during this difficult time; however, it has also provided an opportunity to gain some insight into several matters:

  • Responsiveness of authorities: During the COVID-19 pandemic the Government took a number of decisive actions to support the private sector and employees, including: providing tax exemptions and tax relief for certain industries; providing salary support for employees in the garment, footwear, and tourism sectors; providing flexibility on the duration of employee suspensions; and eliminating certain statutory payments. This has helped some companies remain in business and allowed employees to retain their jobs whilst they have been unable to work.
  • Practical implications for fixed term and permanent employment contracts: Cambodian law allows employment under fixed term contracts or permanent contracts of undetermined duration. Both types of contract can be terminated for force majeure reasons. Short of force majeure, a permanent contact allows an employer significantly greater flexibility to reduce its workforce based on economic conditions, and usually with lower severance costs. Going forward employers may give this more consideration.
  • Use of online services: During the pandemic the Department of Intellectual Property Rights began accepting online submissions for affidavits of use/non-use and renewals. The Ministry of Commerce (MOC), the General Department of Taxation (GDT) and the Ministry of Labour and Vocational Training (MOL) launched a new business registration website whereby companies could register at each of the three ministries at the same time. Previously, while the MOC had an online registration procedure, it was necessary to submit separate physical applications at the GDT and the MOL. In general, there has been an increased reliance by companies on certain online services, such as online banking and payment services; it is likely this will continue to increase, as companies become more self-sufficient and autonomous. It is expected overtime, we will see a greater shift towards more flexible working trends and online-based businesses in order to generally increase efficiency and productivity levels within the workforce.

Comment

The global pandemic has clearly had an impact on the way that businesses will operate going forward, and will revolutionise the way that employees work and whether they need to be at their employer’s premises at all to carry out their duties. There will be certain considerations for employers in respect of their employees’ employment contracts to ensure greater protection for their businesses in the event of force majeure events in the future.

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