Expand your business into Cambodia - without an entity
New Horizons provides global employment solutions for businesses wanting to hire employees and distribute payroll in Cambodia. Through our Cambodia PEO and Employer of Record, we manage your company’s payroll, benefits, and expenses in Cambodia. Additionally, we oversee HR duties, as well as employment and tax compliance.
New Horizons will act as your employees’ Employer of Record, which means you can begin doing business in Cambodia without a local entity. This not only allows your business to go to market faster, but also has the potential to save your business thousands in expansion costs.
As the only Cambodia Employer of Record & PEO with an in-house recruitment team, New Horizons will source, hire, and onboard your Cambodian workforce. We hire employees in accordance with Cambodian labor regulations and coordinate all expense claims and benefits payments. Although we act as your employees’ Employer of Record, you still maintain full autonomy and control over all employees.
Our Cambodia PEO simplifies your expansion
New Horizons enables your business to expand its operations into Cambodia – without setting up a legal subsidiary.
New Horizons ensures day-to-day guidance to help your business navigate Cambodian labor laws and regulations. We also provide mandatory monthly payroll requirements, and absorb all local employment liabilities. Partnering with our Cambodia PEO & Employer of Record is the quickest and most cost-effective way to enter the Cambodian market.
Employment & Labor Laws in Cambodia
Employment contracts in Cambodia
Employment contracts should be compliant with statutory and market norms in Cambodia. When hiring workers in Cambodia, it is customary to draft concise, strongly-worded written employment contracts. These contracts may be fixed-term in duration or indefinite.
Cambodian employment contracts should ideally be written in both English and Khmer. All references to salary and compensation should be made in Cambodian riel (KHR).
Fixed employment contracts can last up to two years in duration, whilst indefinite contracts are for an unspecified period of time.
Working hours in Cambodia
In Cambodia, a standard work day consists of eight hours. Typically, Cambodians do not work more than 48 hours per week.
Employers should not request employees to work more than nine hours per day. By law, employees are not permitted to work more than two hour’s overtime per day.
Overtime is paid at 1.5x an employee’s regular hourly wage. If overtime is conducted at night, on a Sunday, or a designated holiday, it is paid at a rate that is 2x an employee’s hourly wage.
Holidays in Cambodia
New Year’s Day
Victory over Genocide Day
International Women’s Day
International Labour Day
Visak Bochea Day
Royal Plowing Ceremony
King’s Mothers’ Birthday
Khmer New Year Holiday
Ancestors’ Day Holiday
Commemoration Day of King’s Father
King’s Coronation Day
Water Festival Ceremony
Water Festival Ceremony Holiday
Water Festival Ceremony Holiday
Employers are required to pay tax of 0.8% of the employees’ monthly wages to social security. In Cambodia, employees do not contribute to the social security fund.
Employees who are injured while working usually qualify to have their associated health care expenses paid by their employer.
Employees generally receive 1.5 day’s paid leave per year, for every month that they have worked with a company. As an example, if an employee has been employed for 12 months, they are entitled to 18 day’s vacation leave.
After an employee has worked for the same company for more than three years, they receive an extra day’s vacation for each year of service.
In Cambodia, employees are given up to six month’s sick leave, so long as they verify their illness with a doctor’s certificate. This sick leave is paid as follows:
- Month 1 – 100% of wages
- Months 2 and 3 – 60% of wages
- Months 4 to 6 – Unpaid
Maternity and paternity leave
Maternity leave is available for female employees that have been with their employer for at least one year. This is paid at a rate that is half the employee’s base salary. Fathers in Cambodia receive one day of paid paternity leave.
Termination and severance
Unlike in the United States, there are additional regulations that protect employees from early termination. If an employer violates these rules, employees may be entitled to significant damages. However, these protections do not apply to all types of employees.
After completing a fixed-term contract, employees are typically entitled to severance pay that is a minimum of 5% of their standard wages. Employees with indefinite contracts are entitled to seven day’s wages, if they have between six and 12 month’s company service. Employees are entitled to 15 day’s wages for each year of employment, up to six month’s worth of wages.
Right to notice
Cambodia allows probationary periods for up to three months. Employers are free to terminate an employee – without notice – during a probationary period.
Employees who are subject to an indefinite-term contract can be terminated by an employer for any reason. However, for fixed-term contracts, the employer must have a valid termination reason, such as significantly poor employee performance.
Employees are typically entitled to termination notices at the following intervals:
- 7 days – For employees who have worked up to 6 months
- 15 days – For employees who have worked between 6 months and 2 years
- 1 month – For employees who have worked between 2 and 5 years
- 2 months – For employees who have worked between 5 and 10 years
- 3 months – For employees who have worked more than 10 years
Employees who have received notice of termination may spend up to two days per week looking for new employment during the notice period.
Cambodia compensation and benefits
Cambodia compensation laws
In Cambodia, an employee’s minimum wage is determined by two factors: the industry in which they’re employed and any collective bargaining agreements (CBA’s). As an example, Cambodia’s textiles industries have recently raised their minimum wage to $170 per month.
Different industries are likely to have their own minimum wage. As such, CBA’s will generally specify separate compensation laws in Cambodia.
For any employees that work more than eight hours per day or 48 hours per week, they are eligible for overtime payments. Standard overtime rates are 1.5x an employee’s regular hourly wage. If an employee works overtime at night, on a Sunday, or a designated holiday, they are entitled to overtime rates that 2x their regular hourly wage.
Minimum Wage Country Comparison Chart
(Per month in USD)
Guaranteed benefits in Cambodia
All employees in Cambodia are required by law to receive statutory benefits. Employers should include time off for holidays and annual vacations in their benefit management plan.
There are 19 annual public holidays in Cambodia. Many of these holidays are celebrated over multiple days. When drafting an employment contract, employers should be mindful to include paid holidays and inform employees as to their days off.
Employees in Cambodia should receive 1.5 day’s annual leave for each month’s company service. Once an employee has been with a company for three years, they are entitled to an additional day off each year.
Maternity leave is available to female employees that have been with a company for at least one year. Maternity leave is typically for a period of 90 days, with payment half the rate of an employee’s standard salary. Fathers in Cambodia receive one day’s paid paternity leave.
Cambodia benefit management
After an employer has drafted a suitable benefit management plan, it is incumbent on them to discuss the distribution of benefits with their employees. Employers should consider supplemental benefits as part of any compensation packages. Whilst these types of benefits are not mandated by law, they can help to attract and retain high-level talent.
Most employees in Cambodia will also expect a seniority bonus of between $2-11 per month. This bonus is determined by the duration of an employee’s company service, beyond a period of one year. Bonuses are generally capped at $11 – which corresponds to 11 year’s company service.
Employees in Cambodia will often expect the following supplemental benefits:
- Housing allowances
- Health care allowances
- Transportation allowances
- Attendance bonuses
Benefits and compensation restrictions
For expanding businesses, one of the major restrictions to benefits and compensation involves setting up a local entity. Employers are generally prohibited from hiring and paying employees without first establishing a subsidiary in Cambodia. This process can take months to complete, which causes significant business delays.
With New Horizons’ Cambodia PEO, you can begin operating in Cambodia in as little as 48 hours. We act as your employees’ Employer of Record, which means there’s no need to establish a subsidiary in Cambodia. And as the only Cambodia PEO with an in-house recruitment team, we can help you source, hire, and onboard top local and international talent.