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

July 2, 2019

Labor Law Updates in Cambodia—Q1 and Q2 2019

Subscribe to Updates

Following major developments in Cambodian labor law in 2018 and early 2019, in the past six months Cambodia’s Ministry of Labor and Vocational Training (MLVT) has continued to make substantial clarifications and revisions to employment law in Cambodia that employers should be aware of. The changes fall into three categories:

1.  Foreign Workers and Employment Contracts

On March 29, 2019, the MLVT enacted its Notification on the Registration of Foreign Employment Contracts. This allows employers to submit Khmer-language translations of their company’s employment contracts when applying for work permits for foreign employees. Both fixed duration contracts (FDCs) and undefined duration contracts (UDCs) will be accepted. These regulations replace the previous rules, which required an employer to submit a contract that followed an MLVT template, and deemed an FDC the only contract type valid for a work permit.

Finally, the notification specifies that if the contract expires or is amended, the employer must submit an updated agreement.

2.  Fixed Duration Contracts and Renewals

On March 17, 2019, the MLVT enacted its Instruction on Determination of Type of Employment Contracts. This sets the maximum duration of an initial FDC for a local or foreign employee at two years. The contract can be renewed one or more times so long as the total duration of the renewals does not exceed an additional two years, after which it will be deemed a UDC.

If an employee reaches the maximum duration for an FDC and the employer wants to continue the employment on an FDC basis, a one-month break must be inserted between the expiration of the FDC and the start of a new one.

3.  Seniority Payments

The Instruction on Payment of New Seniority Indemnity Each Year from 2019, which was enacted on June 10, 2019, stipulates that seniority be counted once every six months (a “semester”). Employees who have worked for at least one month and who work until the end of a semester are entitled to seniority payments equaling seven and a half days of average wages and other benefits each semester, for a total of fifteen days’ ongoing seniority payments per year. The payments for each semester are to be made during the second payment period for June and December, respectively; this occurs between the 1st and 7th of the following month.

The MLVT issued two other instructions to lay out the process for paying seniority back payments. The calculation of the back payments only includes actual wages, not bonuses.

In the non-garment sector, employers must make back payments (which accrue at 15 days per year) starting in December 2021 at a rate of three days per semester. In the garment sector (including textiles and footwear), back payments are due at a rate of 15 days per semester, and the maximum seniority back payment amount cannot exceed 6 months of average net wages. In calculating the daily average basic net wage, employers must treat a month as 26 working days.

On April 11, 2019, a Ministry of Economy and Finance circular clarified that seniority payments are not to be included in a Cambodian employee’s taxable salary; however, they will be included in a foreign employee’s taxable salary. In either case, seniority payments can be included in a company’s tax-deductible expenses.

For more information on these developments, or on any aspect of labor and employment in Cambodia, please contact our Cambodia office at [email protected] or +855 23 964 210.

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

July 7, 2025
On June 20, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 19116 to clarify when board members and company directors must receive salaries and pay payroll taxes. Board members and company directors who are not considered employees are subject to a withholding tax. This category consists of people who complete services for a nonresident individual and people who perform independent work for a company in Cambodia. Board members and company directors who are considered employees, including those appointed by a foreign head office to temporarily manage a company in Cambodia, must pay payroll taxes on any salary they receive, regardless of whether they are paid by a local or foreign branch of the company. The above obligations apply regardless of whether the person has a work permit. Board members and company directors are exempt from paying payroll tax if they: Are not present and not performing a regular management role at the company despite being registered on the company’s statutes or patent tax card; Participate only in board meetings and occasional shareholder meetings; and Do not receive a salary from a company in Cambodia. Overall, this instruction provides an important clarification regarding the tax obligations of board members and company directors. Companies should pay attention to the classification of their board members and directors and be mindful of the exemption.   This article was written with the assistance of Tilleke & Gibbins interns Amelia Gemma Erickson and Amrin Keat.
Read More
July 7, 2025
On June 27, 2025, Thailand issued the new Ministerial Regulation Prescribing the Criteria and Rates for Receiving Unemployment Benefits (No. 2) B.E. 2568 (2025), which amended a similarly named ministerial regulation by boosting the rate of social security benefits to alleviate hardships for employees who are terminated. The new ministerial regulation took effect the following day. Under this new ministerial regulation, eligible terminated employees are entitled to receive unemployment benefits under the Social Security Fund (SSF) for a maximum of 180 days per year, at the rate of 60% of the employee’s monthly wages at the time of termination, up from 50% previously. However, the maximum wage used as the basis for calculating the benefit remains capped at THB 15,000 per month. Therefore, the maximum unemployment benefit that an employee can receive from the SSF is now THB 9,000 (up from THB 7,500) per month for a period of up to six months. To qualify for the unemployment benefits from the SSF, employees must be registered with the Social Security Office and must have contributed to the SSF for at least six months within the 15 months prior to the start date of the relevant unemployment period. This new ministerial regulation was enacted to increase the amount of financial support provided to insured persons in the case of termination, as part of the government’s objective of alleviating economic hardship under current economic and social conditions in Thailand. For more details on unemployment benefits in Thailand, or on any aspect of employment law in the country, please contact Pimvimol (June) Vipamaneerut at [email protected], Dusita Khanijou at [email protected], Ketnut Pukahuta at [email protected], or Chomanut Arif at [email protected].
Read More
July 4, 2025
On July 1, 2025, new minimum daily wage rates for Bangkok and certain business types nationwide were published in the Government Gazette, taking effect on the same day. The daily minimum wage rate for Bangkok has been increased to THB 400 per day, while the minimum wage rates for other provinces remain unchanged from the rates that took effect on January 1, 2025. However, daily minimum wage rates have also been increased to THB 400 nationwide for type 2, type 3, and type 4 hotels under the Hotel Act and for entertainment establishments under the Entertainment Place Act. This THB 400 rate applies to all businesses that meet the criteria, even if the province’s general rate is lower. The new minimum wage rates supersede any lower wages agreed upon in existing employment contracts or conditions of employment that were in force before this announcement came into effect. As a result, these employees must be paid their wages at the newly prescribed rate for work performed from July 1, 2025, onward.
Read More
June 30, 2025
On March 4, 2025, Cambodia’s Ministry of Labor and Vocational Training (MLVT) issued Prakas No. 073/25 on Procedures for Resolving Individual Labor Disputes, replacing Prakas No. 318 on the same topic from 2001 and introducing significant changes to how individual labor disputes are filed, processed, and escalated. In addition, Prakas No. 073 outlines the roles and responsibilities of labor inspectors, the process for filing and handling complaints, and the steps for conciliation and further legal recourse, as described below. Filing a Complaint Any party to an individual labor dispute can file a complaint with the Labor Dispute Department of the MLVT or the Department of Labor at the capital or provincial level. Upon receiving a complaint, a labor inspector will review the case and may initiate either conciliation or a labor inspection. Invitation letters will be issued to the disputing parties to provide relevant information and documents. Conciliation Process Prakas No. 073 places strong emphasis on the conciliation process, introducing strict procedural rules and deadlines with clear consequences for noncompliance: If the claimant fails to provide required information within the specified deadline (or within three working days thereafter without reasonable excuse), the complaint is deemed void. If the respondent fails to attend the conciliation meeting within the deadline (or within three working days thereafter without reasonable excuse), the conciliation is considered unsuccessful, and the respondent is deemed guilty as claimed. Once all necessary information is gathered, a labor inspector will invite both parties to a joint conciliation meeting, which must be held within three weeks of the complaint being received. If the claimant fails to attend the meeting or sign the minutes without a reasonable excuse, the complaint is void. If the respondent fails to attend the meeting without a reasonable excuse, the conciliation is unsuccessful, and the respondent
Read More