You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 6, 2018

Cambodia Labor Law Amendment Mandates Seniority Payment and Clarifies Damages for Early Termination

On July 11, 2018, Cambodia passed an amendment to the Labor Law that eliminates “indemnity for dismissal”—a local legal concept equivalent to a severance payment—for undetermined duration contracts (i.e., employment contracts without a fixed expiration date), and replaces it with an ongoing requirement for employers to pay employees a new “seniority payment.” These amendments affect undetermined duration contracts, and may also affect fixed-term contracts (i.e., employment contracts with a fixed expiration date).

Prior to the amendment, an employer was only required to pay indemnity for dismissal to an employee with an undetermined duration contract when the employer unilaterally terminated that employee for any reason other than that employee’s serious misconduct. Similar to the severance provisions of most other jurisdictions, this indemnity for dismissal was only paid at the end of the employment relationship and was based on length of employment.

After the amendment, an employer is no longer required to pay an indemnity for dismissal. However, an employer must instead pay employees a seniority payment every six months. On an annual basis, the total amount of the seniority payment is equal to 15 days of an employee’s wages and other fringe benefits, such as commissions and gratuities. As this seniority payment must be paid every six months, each installment of the seniority payment is half of the above amount.

If an employee with an undetermined duration contract is terminated for any reason other than the their own serious misconduct, and at least one month has passed since the last seniority payment without the subsequent seniority payment being paid, then the employee is entitled to a seniority payment equal to seven days of wages and fringe benefits. The amendment is silent as to whether an employee hired under a fixed term contract would be entitled to this seniority payment.

The amendment follows the existing formula under the Labor Law for calculating the daily wage of an employee for indemnity payments. The daily wage is calculated based on all wages and fringe benefits, including commissions and bonuses, that an employee received within the past 12 months of service. That said, ambiguities remain as to the exact formula for determining the daily wage as no formula is provided.

In addition to matters related to the seniority payment, the amendment also addresses damages for early termination of an employment contract. First, the amendment addresses an earlier ambiguity in the Labor Law by clarifying that if a company closes down and terminates its employees it will not be required to pay its employees any damages or compensation in lieu of prior notice under the Labor Law. Second, the amendment states that if an employee is entitled to damages, the employee can request a lump sum payment that is equal to all previous seniority payments received, plus any future seniority payments to be received under the employee’s contract, in lieu of proving the actual amount of damages. This revision is significantly pro-employee, as the Labor Law previously capped damages at six months of wages and fringe benefits.

The amendment states that the Ministry of Labor and Vocational Training will issue further additional regulations to address ambiguities in the applicable law and to more specifically clarify the implementation of the seniority payment.

Ambiguities under the new amendment that are yet to be resolved include: 

  1. whether an employee under a fixed-term contract is entitled to receive a seniority payment;
  2. whether an employee hired before this amendment is entitled to a seniority bonus for time employed before the enactment of this amendment;
  3. whether an employer can pay all employees a seniority payment at the same time or whether the employer must time the seniority payment to each employee’s specific start date; and
  4. the specific conditions under which an employer may terminate employees when closing down an enterprise without having to pay damages and compensation in lieu of prior notice. 

Regardless of any future clarification, it is clear that employers will be obliged to make the mandated seniority payments for any employees hired after the implementation of this amendment, and all companies with employees in Cambodia would be prudent to take note of this significant change in future staffing decisions.

Tilleke & Gibbins will be monitoring the developments of these new obligations. If you have any questions or require assistance assessing your labor obligations, please contact us at mailto:[email protected] or +855 23 964 210.  

RELATED INSIGHTS​ 

December 8, 2025
As Thailand transitions into an aged society, retirement policy and workplace protections for older workers have come into sharper focus. With public sentiment increasingly open to working beyond the traditional retirement age, questions about employee rights and employer obligations are more relevant than ever. In October 2025, Prime Minister Anutin Charnvirakul proposed increasing the statutory retirement age to 65 for government officers, citing Thailand’s aged-society status and the potential social and economic benefits of longer working lives. While academics and stakeholders have raised concerns about systemic impacts, public opinion remains divided, with many workers signaling a willingness to continue working beyond the current norm. Against this backdrop, it’s worth revisiting what the Labor Protection Act B.E. 2541 (1998) (LPA) requires in regard to retirement and severance pay. This article explains the current legal landscape under the LPA, with a focus on retirement and severance pay for employees over 60, recent judicial developments, and practical options for structuring postretirement engagements. Retirement as Termination Under the LPA Under the LPA, retirement—whether set by agreement between employer and employee or unilaterally stipulated by the employer—is deemed a termination of employment. As a result, employees who retire under such terms are entitled to severance pay. The law also adds a default rule: if there is no agreed or prescribed retirement age, or if the prescribed retirement age exceeds 60, an employee aged 60 or older may declare an intention to retire. The declaration takes effect 30 days after notice, and the employer must pay severance accordingly. In short, retirement triggered by agreement, the employer’s work rules, or an employee’s valid notice is treated as a termination, and statutory severance pay is owed. Hiring or Rehiring Employees Over 60 Practical issues arise when an employer’s work rules set a retirement age that does not
December 2, 2025
Investing in Mainland Southeast Asia is Tilleke & Gibbins’ essential guide for investors looking to do business in this vibrant region, whether it’s starting operations as a newly established entity or expanding into new territories or business models.
November 20, 2025
Lawyers from Tilleke & Gibbins’ labor and employment team have contributed a new Vietnam chapter to Thomson Reuters Practical Law’s Employment and Employee Benefits Global Guide. The guide provides a high-level comparative overview of employment laws and regulations across various jurisdictions around the world. Tilleke & Gibbins also contributed the Myanmar chapter of the guide. The Vietnam chapter covers a wide range of typical employment matters, such as limitations on working hours, paid leave requirements, minimum wage, and health and safety obligations. In addition, the guide provides insight on various topics of special interest to foreign investors doing business in Vietnam, including the following: Mandatory contents of a labor contract; Visas and permits required for expatriate employees; Employers’ obligations for protecting employees’ privacy and personal data; Procedural requirements for the dismissal of an employee; Employer and parent company liability. To view the latest version of the Employment and Employee Benefits Vietnam chapter, please visit the Practical Law website and enroll in the free Practical Law trial to gain full access.
November 12, 2025
Thailand has amended the Labor Protection Act to significantly expand family leave benefits and strengthen employment protections, effective December 7, 2025. The Labor Protection Act (No. 9) B.E. 2568 (2025), published in the Government Gazette on November 7, 2025, provides enhanced maternity and paternity benefits, introduces new childcare leave provisions, and extends labor protections to certain public sector contractors. Key changes introduced by the amendments are detailed below. Extended Maternity Leave Female employees are now entitled to up to 120 days of maternity leave per pregnancy, increased from 98 days. Employers must pay full wages for 60 days, increased from the current 45 days. New Childcare Leave for Health Complications Female employees who have taken maternity leave are entitled to an additional 15 days of leave to care for newborns with health complications, disabilities, or conditions that could lead to future medical risks. This leave requires a medical certificate and is compensated at 50% of the employee’s regular wage. New Paternity Leave Male employees are now entitled to 15 days of paid paternity leave to support their spouse or partner during childbirth. This new leave allowance may be taken before or within 90 days after childbirth, with employers required to pay full wages for all 15 days. Protection for Public Sector Contractors The law extends protection to individuals engaged under service contracts with government agencies, including central, regional, and local administrations, state enterprises, and public organizations. When such workers are supervised or controlled in a manner similar to employees, the contracting government agencies must provide them with rights and benefits equivalent to those under the Labor Protection Act, including remuneration, weekly holidays, public holidays, annual leave, sick leave, regulated working hours, and rest periods. New Annual Reporting Requirement All employers with 10 or more employees must now submit an