Experience • Insight • Local Knowledge • International Standards
Jan 28, 2014
Labor in Cambodia
By Max Howlett
Cambodia has a sizeable young labor pool consisting of skilled and unskilled workers. Cambodians are becoming increasingly well educated - locally and internationally - and more are studying English, Japanese, Korean, Chinese as well as other foreign languages to improve their employment opportunities.
Cost of labor is still relatively inexpensive compared with neighboring countries. There is currently a specified minimum wage of US$100 per month (effective from 01 February 2014), but this only applies to textile and footwear sectors. Wages for skilled labor are higher according to professional capabilities.
Employment in Cambodia is governed mainly by the Labor Law, promulgated in 1997, two Articles of which were amended in 2007 dealing with pay rates for overtime and night work. It is supplemented by the Civil Code (2007) and the Law on Social Security Schemes for Persons Defined by the Provisions of the Labor Law (2002) and related regulations issued by the executive.
The law governs all employment relationship created for the performance of work within the territory of the Kingdom of Cambodia, regardless of the place of making the contract or the nationality of the employer or the employee. The law, in general, applies equally among foreign and local employees except that foreigners are required to follow a quota requirement and to have a valid work permit to undertake employment in Cambodia.
The Labor Law specifies the conditions in hiring and firing as well as the minimum benefits for workers, including leave entitlements, and certain reporting requirements. The provisions of the Labor Law have a nature of public order. Any contract, agreement, policy, or internal rule that does not comply with the Labor Law provisions are ineffective, whereas any provision of more favorable benefits and entitlements to employees would be binding as such.
Probationary period is from one to three months maximum, depending on the level of skills.
There are two main types of employment contract – the unspecified duration contract (“UDC”) and the fixed duration contract (“FDC”). An FDC specifies commencement and expiration dates, lasts for two years or less, and must be in writing; otherwise, the contract will be a UDC. Each of these types has its own advantages depending on the circumstance and the needs of the hiring entity. Except in limited circumstances, the FDC cannot be terminated before its term, whereas the UDC can be terminated by notice.
Dispute Resolution Mechanism
There are two types of labor dispute – the individual dispute and the collective dispute – which warrant different procedures and steps for settlement.
Unlike other civil disputes, a labor dispute, whether collective or individual, must first go through a mediation process undertaken by the Ministry of Labor and Vocational Training. If attempts for conciliation fail, the individual labor dispute will go directly to the court while the collective labor dispute will go to arbitration first (usually carried out by the Arbitration Council). If the arbitral award is rejected by either party, the next step for a collective dispute is either to proceed to the court or to hold a strike or a lockout.
Obtaining good labor advice and having well-executed employment contracts will help businesses to prevent disputes, save time and cost, and preserve reputation.
Sciaroni & Associates has been heavily involved in the development of this important sector since its early stages and is a leading and trusted authority on labor matters. Our regular assignments include advice regarding contract terms, employment benefits, termination procedure, employment regulations and policies, among other types of work. In addition, the firm has assisted clients in mediation, arbitration, and settlement of disputes. Members of our Labor Law Practice Group have also authored textbooks of the subject for Cambodian lawyers and students.
As such, we are well placed to advise and assist you on labor related matters in Cambodia, and we have represented companies, investors, embassies, and organizations in the Kingdom of Cambodia as well as individuals over the last 17 years.
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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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