Global PEO Services (GPS) helps companies hire employees in Cambodia without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Cambodia, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Cambodia labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Cambodia. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Cambodia - Country Overview
Cambodia or the Kingdom of Cambodia is located on the south of the Indochina Peninsula and borders the Gulf of Thailand. The country’s GDP is $59 billion (PPP) which grew at an annual rate of 6.9% in 2016 and the rate has been nearly 7% during most of the last decade. Foreign trade is critical to the economy of Cambodia as the combined value of imports and exports equals 125% of its GDP. The country’s export trading mainly revolves around footwear, textiles, vehicles, fish, and natural rubber.
Parliamentary System, Constitutional Monarchy, Unitary State
Other Major Cities
Ta Khmau, Battambang, Serei Saophoan, Siem Reap
Employment Contracts in Cambodia
Employment contracts in Cambodia can be for a fixed or indefinite term. Fixed contracts need to be in writing while indefinite contracts may be verbal or written. The 3 main elements of a fixed period contract are:
- A contract in writing
- Specifies start and expiry dates, and
- The duration including renewals is not more than 2 years.
When any of these elements is missing, a contract is deemed to be for an indefinite period.
Providing written employment contracts is a common practice in Cambodia, in Khmer, which specifies the conditions relating to employee’s compensation, benefits, and dismissal. In Cambodia, the offer letter and employment contract should specify the salary and compensation amounts in Riel instead of foreign currency.
Working Hours in Cambodia
The general work schedule in Cambodia comprises 8 hours per day, and the workweek cannot be more than 48 hours. Employees are not expected to work more than 9 hours, and they should not work longer than 2 hours of overtime daily.
Compensation for overtime is at 1.5 times the regular rate, and when performed at night, on a holiday or Sunday, at 2 times the regular rate.
Employee Leave in Cambodia
Cambodia observes the following 19 public holidays:
- International New Year Day
- Victory Over Genocide Day
- Meak Bochea Day
- International Woman’s Day
- Khmer New Year (3 Days)
- International Labor Day
- King Birthday (3 Days)
- Visak Bochea Day
- Royal Plowing Ceremony
- Children’s Day
- King Mother’s Birthday
- Constitutional Day
- Phum Ben Day (3 Days)
- The commemoration of Former King Norodom Sihanouk
- Paris Peace Agreement Day
- King’s Coronation Day
- Independence Day
- Water Festival (3 Days)
- International Human Rights Day.
Mostly, employees are entitled to 1½ days of paid leave annually for every month of work. After completing every 3 years of service, employees get an additional vacation day per year.
Female employees who have completed minimum 1 year of work for their employers are eligible for 90 days of leave at 50% of their regular salary.
Employees are usually entitled to sick leave for up to 6 months, and are compensated as follows:
- 100% of remuneration for the 1st month of sick leave
- 60% of remuneration for the 2nd and 3rd months of sick leave
- Unpaid leaves from the 4th until the 6th month.
Employee Benefits in Cambodia
National Social Security Fund
The Social Security plans are under the management of the National Social Security Fund (NSSF), which is the public establishment that provides benefits to the following:
- Workers whom the provisions of the Labor Law declare eligible if they work in the territory of the Kingdom of Cambodia to provide service or benefit to one or more employers
- Those public workers, state workers and every other who is not covered under the laws that benefit civil servants and diplomats, as well as temporary public officials
- Trainees and apprentices attending a rehabilitation center
- Self-employed professionals, and
- Occasional or seasonal workers
Employers and employees listed above need to pay a mandatory contribution to NSSF.
The pension benefits that the NSSF provides include old age pension with allowance, survivors’ pensions and allowance, and invalidity pension. NSSF members aged 55 years are eligible to old age pension if they fulfill the following conditions:
- To be registered with NSSF for a minimum period of 20 years
- To pay contributions for at least 60 qualifying months towards Social Security Schemes for a minimum period of 10 years, up to the date of the eligibility.
All the NSSF members who have fulfilled such conditions can request a pension even before the age of 55 if they can prove that they have lost their earning capacity. Every 55 or more years old NSSF member who has made at least 60 contributions to Social Security Schemes and has completed all wage-related works, but has not fulfilled other important conditions to qualify for old age pension is eligible for old age allowance which is paid as a lump sum.
Occupational Risk Coverage
An employee meeting with an accident is considered to be an employment-related injury, if it happens at work or during working hours, regardless of the person who was at fault. Equally, accidents that occur with workers during their direct commute from their residence to the workplace are also considered to be employment injury.
An occupational disease also comes under the purview of occupational risk. The Health and Social Security Ministers issue a Joint list identifying the occupational disease list with a list of employment that involves physical work, exposure to toxic substances and other employment performed under hazardous conditions.
Benefits for occupational risk are as follows:
- Medical services for occupational risk caused by injury due to employment injury or an accident while commuting or occupational diseases whether the accident stops the work or not
- Daily allowance on account of employment injury or occupational diseases or commuting accident that cause temporary disability
- Allowance for injury or disability on account of a commuting accident or occupational disease that led to permanent disability
- Survivors’ pension and funeral benefits.
The daily allowances to a temporarily injured employee are provided only till the employee recovers from the injury. The daily wage of the worker to compensate for the first day of absence is payable by the employer.