Asia-Pacific employment law bulletin 2023
Over the past year, key employment law developments were enacted in Cambodia, which impact all businesses in the country.
Under the Cambodian labour law, labour inspectors from the Ministry of Labour and Vocational Training (MLVT) are vested with power to oversee the enforcement of the Cambodian labour law and its implementation on enterprises, and to provide information and recommendations on technical issues to employers and employees.
In Cambodia, there were two types of labour inspection: ordinary inspection and special inspection. The ordinary inspection is carried out once per year with prior notice to enterprises. The special labour inspection, on the other hand, is carried out without prior notice. The special labour inspections are conducted to monitor progress in rectifying compliance issues identified in past inspection reports that have been issued in response to a complaint or information about an alleged violation of the labour law or otherwise when a labour inspector deems necessary.
Since January 2022, a self-declared labour inspection process has been introduced in addition to the special and ordinary inspections. The MLVT now requires that all enterprises conduct self-declared labour inspections to evaluate their compliance with the labour law by themselves, which can be completed online. A self-declaration must be made twice a year, in June and in December.
While there are numerous compliance matters to be addressed on the self-declaration, the followings are the key aspects covered by the self-declaration:
- internal work rules and compliance;
- general working conditions and environment, including minimum wages, seniority indemnity payments, termination payments, overtime work, discrimination, child labour, sexual harassment, protection of pregnant women, foreign employee quotas, employment books and work permits;
- occupational health and safety;
- social security; and
- employee representation.
Non-compliance with any of the specified 31 prioritized compliance matters will result in immediate administrative fines in accordance with the labour law and applicable regulations.
The implementation of this self-declaration is designed to enhance the compliance culture within an enterprise. It allows an enterprise to assess its level of compliance with the labour law and rectify any non-compliance areas prior to any physical inspection by a labour inspector.
To enhance labour inspectors’ powers, an amendment to the labour law in 2021 granted labour inspectors with the status of a judicial police officer. Under the amendment, they are empowered to examine offenses under the labour law in accordance with the provisions of the Code of Criminal Procedure. The formalities and the procedures for the empowerment as a judicial police office will be determined by a forthcoming Inter-Ministerial Prakas (official proclamation) from the Minister of Justice and the Minister of the MLVT.
Next to occupational risk and health care insurances, Cambodia now has a mandatory pension scheme, funded by employers and employees.
The Law on Social Security Schemes introduced three social security schemes for employees, specifically: (a) occupational risk insurance scheme (for work‐related accidents and occupational diseases); (b) health care insurance scheme; and (c) pension scheme. While occupational risk insurance and health care insurance were already implemented in 2008 and 2016, respectively, the implementation of the pension scheme was delayed until 2022.
In 2021 and 2022, however, several regulations were adopted to clarify the conditions, procedures, benefits and implementation date for the pension scheme. The pension scheme finally took effect in July 2022 and from October 2022 both employers and employees are required to make contribution payments to the pension scheme.
For the first five years of its implementation, employers and employees must contribute to a mandatory pension scheme at the same rate of 2% (combined total of 4%) of the contributable wage. The contributable wage ranges from the minimum obligated wage of 400,000 riels (approx. USD 100) to the highest obligated wage of 1,200,000 riels (approx. USD 300) per month. As such, the monthly contribution of 4% of the employee's contributable wage ranges from USD 4 to USD 12 per month per employee.
Benefits under the mandatory pension scheme include old age pension, disability pension, survivor’s pension and funerary grant.
What is next?
Although the Cambodian labour law states that the labour court is vested with jurisdiction over labour disputes, no such specialised labour court has actually been established at the moment. Labour disputes are currently heard by civil courts in Cambodia. However, the Ministry of Justice has recently been discussing with stakeholders the process of establishing a specialised labour court. The discussion covered a wide range of topics, including the court's human and financial resources, necessary assistance from stakeholders, including the International Labour Organizations, as well as the legal framework required to ensure the court's transparency and efficiency.
In light of the recent developments, we expect the labour court to be established soon, allowing labour disputes to be resolved in a timely, efficient and transparent process. Until then, however, the current practice continues: a labour dispute can be brought to the Cambodian labour authorities for conciliation. If not resolved, subject to certain conditions, it may be forwarded to the Arbitration Council and then to any competent civil court.
DFDL: Raksa Chan, Vansok Khem and Chris Robinson
Kathleen Healy Partner
Stephanie Chiu Counsel
Ada Chan Associate
Fan Li Associate
River He Associate