February 24, 2023
Many companies have moved to Southeast Asia to benefit from the advantages of this vibrant and diverse market. The region is already a manufacturing hub for a multitude of industries—computer and automotive products in Thailand, textiles in Cambodia, and footwear and electrical goods in Vietnam, to name a few—and an increasing number of companies worldwide are reconfiguring their supply chains to include regional suppliers. A key challenge is keeping up to date with employment law trends in these jurisdictions to ensure compliance with local regulations—and avoid costly, time-consuming business interruption. Here we outline trends and recent regulatory developments in Cambodia, Thailand, and Vietnam, and consider what they mean for employers. Cambodia The Ministry of Labour and Vocational Training (MLVT) is likely to pursue a more proactive enforcement strategy in 2023. Last May, the MLVT announced companies would be required to submit a twice yearly self-declaration on labour compliance through a new online system. The self-declaration form requires companies to confirm and upload evidence of compliance, and the MLVT online system—through which the ministry can easily determine if a company is compliant –generates a report that lists all fines. Companies should comply with the self-declaration requirement and carefully review the form to understand what fines will apply for non-compliance. On 1 October 2022, regulations relating to the National Social Security Fund (NSSF) pension system came into effect, and employers and employees began making NSSF pension contributions. Over the next five years, total compulsory pension contributions will amount to 4% of an employee’s wage, half of which is paid by the employer and half deducted from the employee’s salary. The contribution wage is capped at KHR 1.2m (USD 300). Employers are currently required to pay a relatively small amount (KHR 24,000, or around USD 6). This will increase to 10.75% over