Information on existing and/or new laws in Cambodia relevant to COVID-19 compliance issues. Useful for employers, unions, workers and managers navigating unfamiliar and complex scenarios.
What are the legal requirements on wages for workers unable to work due to government-ordered factory shutdown?
If the government orders the factory to shut down, based on Cambodian Labour Law, there is no wage requirement during this suspension, although employers are required to continue to provide accommodation if they were already providing it. (Labour Law, Arts. 71, 72)
During Covid 19, the Government issued an Instruction providing that suspended workers will receive 40% of US$190 from the employer and 20% of US$190 from the Government if they participate in required soft skills training in the Ministry of Labour and Vocational Training . However, since the Instruction was issued, soft skills training was not delivered as foreseen, so workers received only 40% of US$190 from the employer. (Instruction 014/20 on Employment Contract Suspension, Enrolment for Soft Skill Training and Suspension of NSSF Contribution Payment for the Textile, Garment, Footwear, Travel Goods and Bag Sectors Affected by Shortage of Raw Materials due to Covid-19, February 28, 2020)
On April 7, 2020, the Government issued a Press Release to provide 70$ per month in assistance to each suspended worker. This allowance is the shared cost between the government (40 US$) and the employer (30 US$). This order was effective from April 10, 2020. (Press Release of the Royal Government of Cambodia on the additional measures to ease private sector and employer and workers affected by the Covid-19, April 7, 2020, Point 1)
What are the legal requirements on wages during work stoppage/temporary shutdown (employer driven)?
Factory owners have to submit the application form for employment contract suspension to the Labour Inspection Department for factories in Phnom Penh or Provincial Departments of Labour and Vocational Training for factories in provinces.
During suspension, employers have to pay 40% of US$190, which is the minimum wage for 2020 based on Instruction No. 014 dated February 28th, 2020.
On April 7, 2020, the Royal Government of Cambodia issued a Press Release allowing employers to pay only 30 US$ per month to each suspended worker.
(Labour Law, Art. 71; Press Release, April 7, 2020, Point 1)
What are the legal limits on the duration of any suspension of labour contracts for economic reasons?
The maximum duration of a suspension for serious economic, material or other unusual difficulty is 2 months, and the Government will review the situation again after finishing this two months.
(Labour Law, Art. 71; Press Release, April 7, 2020, Point 4)
What are the legal requirements for payment of benefits (e.g. social/health insurance) by employers during work stoppage/temporary shutdown?
When factory owners suspend operations, they also must send a notice letter on suspension of NSSF contribution payments. During this employment contract suspension, workers/employees will continue to receive NSSF health care benefits and allowances.
If suspended workers attend required soft skill training courses, workers will continue to receive NSSF occupational risk benefits. However, so far, the Ministry of Labour and Vocational Training has not provided the training due to Covid preventive measures.
(Instruction No. 014/20, Point C)
What are the legal requirements for payment of bonuses during work stoppage/temporary shutdown (e.g. festive bonuses)?
There is no payment of bonuses during work suspensions.
(Labour Law, Art. 72)
What benefits does the government provide to workers (if any) during suspension in labour contracts?
During the covid-related suspensions, the Government provides suspended workers with a 40 USD per month allowance in addition to the 30 USD payment provided to workers by the employer.
(Press Release, April 7, 2020, Point 1)
What are the legal provisions regarding workers taking paid or unpaid leave during work stoppage/temporary shutdown?
In current situation, when the employer cannot operate normally, the employer will discuss the issue with the unions and the workers’ representatives.
(Labour Law, Arts. 71, 72, 166-168; Press Release, April 7, 2020, Point 1)
What are the legal requirements for Sick Leave arrangements (paid or unpaid)?
By law, workers are entitled to time off for sick leave for up to 6 months if they provide a certificate from a qualified doctor.
If sick leave is provided for under the factory’s Internal Regulations, the employer must pay for the sick leave as required by the Internal Regulations. If there are no provisions on payment of sick leave in the Internal Regulations, the employer should pay for sick leave in accordance with Ministry of Labour practice (100% pay for the first month; 60% pay for the second month; 40% pay for the third month; and no pay for months 4-6).
If the workers get sick while suspended, sick leave is not deducted during work suspension. In this respect, the employer is not obliged to pay wages during sick leave. However, workers can still access the services and benefit from the NSSF health insurance.
(Labour Law, Art. 71; Instruction 14/20; Arbitration Council Awards 26/03, 15/12(3))
What are the legal requirements for Annual Leave arrangements (paid or unpaid)?
All employees have the right to take paid annual leave. Full time workers get 1.5 days of annual leave a month. This equals 18 days per year.
If workers agree to use their remaining annual leave during the temporary suspension, they are entitled to wages during their leave.
(Labour Law, Arts. 166-168)
What are the legally permitted deferments or exemptions for statutory contributions (e.g. health/social insurance etc.) for either employer or workers?
-The employer is not obliged to pay the contribution fee to NSSF and the workers still benefit from the health insurance from NSSF
-The employer can delay the payment of workers’ seniority indemnity owing before 2019 and seniority indemnity in 2020 to 2021
(Instruction 14/20; Press Release, April 7, 2020, Point 7)
– Tax holiday between 6 months to 1 year based on the level of impacts on the enterprises.
(Announcement No. 1313 issued by the Ministry of Economics and Finance to the Tax Department)
What are the legal requirements on severance (pay and notice)?
Legal provision requirements before covid-19 crisis
The amount of severance pay owed to terminated workers depends on the type of employment contract used, fixed term contracts (FDC) or unspecified duration contracts (UDC):
Fixed Term Contract Workers (LL Art. 73) – Non-renewal upon expiration
All workers must be paid for their unused annual leave if any
FDC workers must be paid severance pay equal to at least 5% of the wages paid during the length of the contract (including overtime and bonuses). If a collective agreement specifies a higher severance pay than that required by law, this higher amount must be paid.
Fixed Term Contract Workers (LL Art. 73) – Termination prior to end date
All workers must be paid for their unused annual leave if any
(Same as above for non-renewals upon expiration)
If FDC workers are terminated before the end of their contracts, they also are entitled to damages equal to the pay that they would have received up through the expiration of their contracts. These damages can be avoided if both parties agree in writing to the termination, and this is witnessed by a Labor Inspector. Absent such an agreement, an FCD can be cancelled before its expiration only in cases of serious misconduct or acts of God.
Unspecified Duration Contract Workers (LL Arts. 89, as amended, 110)
All workers must be paid for their unused annual leave if any
UDC workers must be paid a seniority indemnity, which is calculated based on their average earnings over the twelve months prior to termination. The seniority indemnity is not required if the worker resigns or was terminated for serious misconduct, but it is required for all other terminations, including for retrenchment, illness, etc.
The amount of compensation depends on length of employment
UDC workers with 1-6 months of service should be paid 7 days’ wages and benefits. UDC workers with a full 6 months of service should be paid 7.5 days wages and benefits (1/2 the indemnity for 1 year), and workers with a full 12 months of service should be paid 15 days’ wages and benefits for each year of service.
The amounts are cumulative. For example, a worker who works for 1 year and 9 months is compensated as follows:
6 months = 7.5 days
+ 3 months = 7 days
+ 12 months = 15 days
21 months = 29.5 days
If a collective agreement specifies a higher seniority indemnity than that required by law, this higher amount must be paid.
If the employer terminates a UDC worker without a valid reason, the worker is entitled to damages. The amount of damages is determined in court, but a worker can avoid having to prove damages, and instead claim damages in an amount equal to the indemnity payment directly from the employer.
Valid reasons for termination (LL Art. 74):
Severance payments are not required if a worker was terminated for serious misconduct, or if a worker resigned from a UDC.
How severance pay (Seniority Indemnity) under UDCs is calculated?
The employer shall provide UDC workers seniority indemnity based on average wage and benefits. Workers are entitled to 15 days seniority indemnity per year, divided into two payments: 7.5 days to be paid with the June wages and 7.5 days to be paid with the December wages. New workers who have worked consecutively for one month to six months should be paid 7.5 days of seniority indemnity.
Workers, who were employed before 2019 will receive two different types of seniority indemnity: The seniority indemnity described above, plus back pay for seniority before 2019 (going back to 2008).
To accelerate the back payment, employers were required to pay:
– 15 days of basic wages with the June wage payment (covering one year of seniority)
– 15 days of basic wages with the December wage payment (covering another year of seniority)
As a result of the covid-19 crisis, the Government issued a Press Released on 7 April 2020 (Article 7) that permits factories, enterprises, and all business from all sectors to delay the 2020 seniority indemnity payments and the back pay for seniority that accrued before 2019 (going back to 2008) to be paid to workers in 2021 instead.
(Press Release, April 7, 2020)
What are the legal requirements on resumption of work after a work stoppage (including OSH or overtime provisions)?
There is no legal requirements on this as of 27 May 2020. The overtime limit is still 2 hours per day.
Legislation allows enterprises to request to suspend weekly rest days. However, the employer should get permission from the Labour Inspector before doing so. Weekly rest days should not be suspended two weeks in a row.
(Labour Law, Art. 160; Prakas 100/02)
Additional notes on public hygiene issued by the Ministry of Health on 8 February 2020
(Ministry of Health Instruction, 8 February 2020)
Additional notes on transportation outside the factory:
The Ministry of Health issued guidance for protection of covid-19 for drivers who transport more than 10 people. This includes:
If driver has Covid symptoms, he/she needs to temporarily stop driving and contact the hospital for health check.
(Ministry of Health Instruction 059, 4 April 2020)
What are the legal provisions for migrant workers and/or workers residing in dormitories during crisis?
What are the legal provisions on force majeure situations (if any) for wages, hours, benefits and/or severance?
In case of Force Majeure, employers are only required to pay last wage, accrued annual leave, and no notice is required. As of 27 May 2020, the national assembly and Senate had adopted a law on State of Emergency, but the Government had not declared a State of Emergency as of that date.
Under Labour Law, Art. 82.
The contracting parties are released from the obligation of giving prior notice under the following cases:
Under Art. 85. Definitions of Acts of God under Cambodian Labour law
“Acts of God” are not expressly defined in the Labour Law, but are generally understood to include unforeseen, unpreventable, grave events, usually involving natural disasters. The Labour Law makes reference to catastrophes, such as flooding, earthquake, or war that cause material destruction and make it impossible to resume work for a long time. It is unclear whether a global pandemic would be considered an act of God. (Labour Law, Arts. 82 and 85)
What are the legal requirements for a company that closes down permanently as a result of Covid-19?
If the employer closes down the business permanently because of covid-19, the employer needs to calculate the wages owed to workers based on legal requirements. Below are the requirements regarding termination of contracts:
During covid-19, the Government of Cambodia issued a Press Release explaining that any enterprises that close or stop operations have to follow the bankruptcy law for wages and benefits calculation.
Factory closures do not release the employer from notice and termination payment requirements. Bankruptcy and judicial liquidation are not considered acts of God. Workers’ wages, indemnity for dismissal and paid holidays have priority status in the event that the factory goes bankrupt or files for judicial liquidation.
(Labour Law Arts. 73-77, 82, 89, 90, 91, 94, 110, 120, 122 (as amended), 284; Arbitration Council Award 53/06 (no notice required for probationary workers); Prakas 313/00, 443/2018; Notice 14/02 Annex; Instructions 057/19 and 058/19; Press release issued by the royal government of Cambodia on 7 April 2020)