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Investment Insights
Sep 15, 2015

Work Permits and Employment Cards for Foreigners


By Sophal YUN

This Investment Insight is based on an article published in B2B Cambodia on 9 September 2015.


There has been considerable recent public speculation with regards to the enforcement of work permit requirements relating to foreigners employed in Cambodia and there is a lack of clarity and issuance/publication of official guidance on the topic. This article highlights the key information that each foreign worker in Cambodia (current and prospective) should be aware of with respect to both work permits and the equally important yet, often overlooked, requirement of employment cards.
 
The legal framework

The Labor Law (1997), is the overarching law governing employment relationships within the territory of Cambodia. Articles 261 and 262 of the Labor Law directly address work permit and employment card requirements relating to foreigners. According to senior officials at the General Department of Immigration and the General Department of Labor, enforcement efforts by these authorities are currently focused on foreigners holding either an E visa (otherwise known as a “business visa” or “normal visa”) or a K visa (otherwise known as a “special visa”), as opposed to holders of a B visa (otherwise known as an “official visa”) and holders of a C visa (otherwise known as a “courtesy visa”).

 

What are work permits and employment cards?

This question is commonly asked by foreigners working in Cambodia, as many foreign employees have never laid eyes on either of these two documents. Given the recent crackdown by the labor and immigration authorities on non-compliance with the provisions of Articles 261 and 262 of the Labor Law, many foreign employees are anxious with respect to whether they and/or their employer are compliant with the Labor Law and the consequences of such non-compliance, as discussed below.

A work permit and an employment card are two separate documents, however, they are applied for in a single application submitted to the labor authorities. A work permit, similar to an ID card, provides official approval by the labor authorities that allows the foreign individual identified on the work permit to legally work in Cambodia. An employment card is a separate booklet, similar in appearance to a passport, and is used for the purpose of recording the employment history of a foreign worker. It should include information relating to the commencement and termination of any period of employment undertaken by the individual in Cambodia.

The application for a work permit and employment card may be made at any time, however, a foreign employee quota approval, as discussed below, is required as one of several supporting documents to the issuance of a work permit and employment card to a foreign employee. Work permits and employment cards must be annually renewed before the end of March each year.

 

Foreign employee quota

For any enterprise captured under the Labor Law, the total amount of foreigner workers it employs cannot exceed 10% of the overall number of local staff. An application for “foreign quota approval” from the Ministry of Labor  is generally submitted between the 1st of September and the 30th of November each year, prior to the following hiring year.

We note that the Minister of Labor may approve a request to exceed the above-mentioned 10% limit, at its discretion, if the enterprise requires employees with specific skills which are currently unavailable in Cambodia.

 

Legal responsibility and sanctions

It is the responsibility of an employer to assist each of its foreign employees to request and secure a work permit and an employment card. 

Under Cambodian law, both the employer and the employee are liable to be sanctioned for failing to comply with the abovementioned work permit and employment card requirements. In July 2014, a joint Prakas between the Ministry of Labor and the Ministry of Interior was issued to establish the Joint Inspection Team whose purpose it is to carry out inspections nationwide with respect to the compliance of enterprises employing foreigners. The Joint Inspection Team is comprised of officials from the General Department of Immigration and the General Department of Labor.

According to the Labor Law, an employer that hires a foreigner without an employment card may face the following sanctions for non-compliance:

  1. an approximate fine of between USD 122 to USD 180 (noting that it is  unclear whether this fine must be paid for each non-compliant individual staff member or applied as a single fine for all non-compliant staff); and
  2. imprisonment from between one to three months for subsequent non-compliance.

We are not aware of any cases where the labor authorities have enforced the above sanctions against employers. Nonetheless, employees are not exonerated from personal responsibility. During an inspection by the Joint Inspection Team, an employee may face a fine of approximately USD 125 if the Joint Inspection Team finds that such foreign employee does not possess a valid work permit. Such fine is made in accordance with the Prakas on the Provision of Public Services of the Ministry of Interior issued in March 2015.

Finally, we note that a foreigner working in Cambodia without a valid work permit is, under Cambodian law, liable for deportation. While uncommon in practice, there have been limited cases where such action was taken by the authorities.

 

Retroactive payments upon application for a work permit and employment card

Pursuant to current practice, at the time of an application for a foreign work permit and employment card, the Ministry of Labor will impose retroactive payments (tax fees) for each past year that the foreign individual is found to have undertaken employment in Cambodia without a valid work permit and employment card. We note that the existence of multiple business visas in an individual’s passport (in the absence of the individual ever holding a work permit or employee card) may be used to evidence non-compliance and a retroactive payment (tax fees) of approximately USD 100 will be imposed for each year that the individual is found to have been working without a valid work permit and employee card.

 

E Visa extensions

We understand that as a matter of practice, if a person attends the General Department of Immigration to extend his/her E visa and does not have a valid work permit, the handling officer may caution that his/her E visa may not be extended the following time unless he/she possesses a valid a work permit and employment card. However, at present, we are not aware of any extensions being denied on this ground.

 

Preparing for labor inspections

Any company employing foreign staff needs to be well prepared for  a visit by the Joint Inspection Team, and should have the following documents in order:

  • A declaration of personnel;
  • A declaration of movement of staff (history of employee hires and terminations);
  • Registration of employment contracts of each foreign staff;
  • Foreign quota approval;
  • Valid passports and appropriate visas for each foreign employee; and
  • Work permits and employment cards for each foreign employee, and entry-exit notations, if applicable.

We note that foreign employees of an enterprise may be required to present themselves during a visit by the Joint Inspection Team.

 

Independent contractors, volunteers and the unemployed

While the Labor Law does not specifically refer to independent contractors or freelancers as requiring a work permit and employment card, in practice, it is the position of the Ministry of Labor that such individuals are required to do so for the purposes of the Labor Law. The enforcement of work permit and employment card requirements with respect to retirees and volunteers, however, remains unclear. As noted above, given that the current enforcement focus of the authorities remains on E and K visa holders, it is possible that the immigration and/or labor authorities may require retirees or volunteers holding E visas to present work permits and employment cards. In such circumstances, a volunteer or retiree holding an E visa may attempt to convince the labor and/or immigration authorities that they do not fall under the scope of the Labor Law by evidencing that they are not employed or working in Cambodia despite holding an E visa.

 

Potential new E Visas

We understand that the introduction of different types of E visas is being actively considered by the relevant authorities. For the time being, however, we are not aware as to which type of any proposed new E visa is intended to be exempt from the current work permit and employment card requirements or, furthermore, as to which types of individuals such new visas are intended to apply to.

 

Sciaroni & Associates Labor Practice Group 

Sciaroni & Associates is the first professional services and investment advisory firm in Cambodia to establish a dedicated Labor Practice Group, an expert advisory team and network devoted to assisting businesses and individuals operating in Cambodia with all aspects of labor-related matters and legal compliance. The Labor Practice Group leverages its depth of experience in the region to provide the following services in accordance with international standards and best practices:

  • Labor registrations (we assist companies and individuals with their filings of applications with the labor authorities, including the declaration of enterprise, declaration of employees, foreign employee quota and employee work permits and employment cards).
  • Drafting/reviewing of employment contracts, internal work rules, consultancy/contractor agreements and other employment-related agreements and policies.
  • General legal advice and due diligence on employment related matters, including labor registration requirements, hire and termination of employees, types of employment relationships, mandatory employee entitlements and benefits, employee representation,  labor disputes and labor-related tax considerations.
  • Advice and representation with respect to labor-related dispute resolution mechanisms (negotiation, mediation, conciliation and arbitration).
     

Sciaroni & Associates is a leading professional services and investment advisory firm that has been doing business in Southeast Asia since 1993.  Based in   Cambodia  with legal offices in  Laos and Myanmar, we provide knowledgeable business insights and experienced guidance to many of the world’s leading companies, financial institutions, governments and international organizations to help maximize the value of their investments.

For more information please visit www.sa-asia.com or contact us at info@sa-asia.com.


 
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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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