Planning to hire employees in Cambodia? Here’s a quick guide

With the rise in global hiring, Cambodia has become an attractive destination for businesses due to its skilled and growing workforce.

To hire in Cambodia, employers must obtain work permits (E-class/EB visas) and secure foreign employee quota approvals via the FWCMS portal in line with local labor laws.

For employers, managing the complexities of hiring in Cambodia can be challenging. In this scenario, an Employer of Record like Payoneer Workforce Management can help simplify employment in Cambodia. 

It can help you take care of the key aspects of engaging talent, ranging from employment contracts to payroll, taxes, benefits, and so on.

This article explains how to hire in Cambodia and outlines the key legal and practical considerations employers need to keep in mind.

How to hire in Cambodia

There are three main ways in which you can employ workers in Cambodia. Have a look:

1) Set up a legal entity in Cambodia

This option is ideally suited for companies that are looking forward to expanding in Cambodia, establishing a brick-and-mortar office, and hiring many workers. Employers can set up a local entity and hire employees in Cambodia. This also reduces the risk of non-compliance. 

However, this is a time-consuming and expensive process. Therefore, it is not feasible for small businesses or high-growth companies that are looking forward to quickly hiring talent globally. 

2) Hire contractors in Cambodia

If you are a business willing to hire talent for short-term tasks or projects, you can count on freelancers or contractors. They are in charge of their own schedule and manage their own taxes. You cannot take any disciplinary action against them. Contractors are also not entitled to benefits like regular employees, such as sick pay, holidays, bonuses, etc. 

If you misclassify employees as freelancers or contractors, you may face fines and penalties. 

3) Use an Employer of Record (EOR) in Cambodia

A convenient way to balance compliance and ease is by working with an Employer of Record (EOR). In Cambodia, an EOR acts as the legal employer, managing contracts, payroll, taxes, and HR processes while helping you maintain compliance with local laws.

Solutions like Payoneer Workforce Management also support global hiring across 160+ countries without needing you to set up a local entity, making expansion simpler.

Where to find employees in Cambodia

When hiring talent in Cambodia, it is essential to ensure that your job advertisement reaches the right candidates. 

Listed below are some ways in which you can handle recruitment in Cambodia seamlessly. 

1) Popular job boards in Cambodia

Job seekers typically prefer platforms that showcase the most recent job openings. Some of the popular job boards in Cambodia include:

• LinkedIn
• BongThom
• CamHR
• Palprek
• 9cv9
• EuroCham Cambodia
• National Employment Agency (Government job portal)

2) Work with local recruitment agencies

You can also consider hiring talent through a recruitment agency. Although this may be a costly option, it is still beneficial as agencies help manage the key aspects of recruitment and selection, thereby helping you find suitable candidates more efficiently. 

A recruitment agency can ensure clear communication with the potential candidates, especially when discussing job responsibilities, salaries, employment contracts, and so on. 

3) EOR support

An Employer of Record legally employs workers on a company’s behalf. It takes care of more than just payroll and taxes; it helps you draft employment contracts while keeping all the local labor laws in mind. 

This way, it becomes easy for you to conduct resume screening and carry out interviews, while an EOR like Payoneer Workforce Management helps you navigate the local compliance.

Onboarding employees in Cambodia

When onboarding, you have to ensure a great onboarding experience for the employees. You can follow the following steps to onboard: 

• Conduct a background check for the employee
• Determine the kind of employment contract and draft a written contract
• Register the employee with the NSSF member portal within 3 days and add all the details
• Inform MLVT about the hiring
• Issue an Employment book to the employee
• Add your employee to the payroll. Set up the employee’s bank account. Finalize the employee’s financial setup with the General Department of Taxation. 

An Employer of Record can take care of all the aspects of payment, such as social security, payroll, and other benefits, and help streamline the payment process.  

Key employment laws and requirements in Cambodia

When you engage with local talent in Cambodia, you should have a clear understanding of the statutory benefits employees are entitled to. Maintaining compliance with the employment regulations in Cambodia helps you understand the employment landscape in Cambodia better. 

Have a look at some of the key employment laws in Cambodia.

Employment contracts

There are two types of employment contracts in Cambodia. They are as mentioned below:

1. Fixed duration contract 
This type of employment contract has fixed beginning and ending dates. They are usually used for temporary roles or for project-based work that has to be completed within a stipulated time. 

This kind of contract should be in writing, and all the terms of employment shall be clearly mentioned in the employment contract. 

2. Indefinite period contract 
This kind of employment contract does not have a specific end date. It continues until the agreement is dissolved by either party. 

The contract may either be verbal or written; however, it is advisable to keep the contract written for accountability purposes. 

The termination of this kind of contract requires a valid reason and a formal notice period. 

The following points are to be included in an employment contract: 

• The employer’s name
• The employee’s name and other personal information
• The employment type
• The role for which the employee has been hired and its description
• The date of commencement and termination of the contract 
• The working hours
• Information about salary, benefits, pay scale, and method of payment 

Employment benefits

Employees in Cambodia receive a wide range of benefits that work differently from the benefits of other countries in the same region. 

Listed below are the employee benefits that you, as an employer, should know: 

• Annual leave: Employees are entitled to paid leave at the rate of one and a half working days every month. This amounts to a total of 18 paid annual leaves. 
• Social security: Cambodia has provisions for a social security scheme that aims at ensuring social security and the well-being of all employees and enhancing the welfare and livelihood of all citizens. The main branches include the pension scheme, healthcare scheme, occupational risk scheme, and unemployment scheme. 
• Sick pay: Employees are entitled to 7 days of sick leave. When employees fall sick, they are entitled to daily allowances paid by the National Social Security Fund for 6 months.     
• Maternity pay: Female employees shall get a maternity leave of 90 days, during which the employer has to pay 50% of the wage to the employees.
• Paternity pay: Cambodian employers stress the importance of a father’s role during childbirth. They allow a paid paternity leave of 7 days to employees. 
• Special leave: The country has the provision for a special leave of 7 days on account of events that affect an employee’s immediate family, like the employee’s wedding, the child’s wedding or the bereavement of the employee’s family.
• Seniority allowance: Employees who have been engaged in an indefinite period contract are entitled to a seniority allowance. Employers should pay employees 14 days’ salary as seniority indemnity per year, which shall be split into two installments of 7 days’ salary each. These payments are disbursed in June and December. 

The leave policy varies depending on the country in which you are hiring. For example, in Thailand, employees are entitled to annual leave for only 6 days per year, or in Vietnam, where employees get annual leaves of 12-16 days based on the conditions they work in. 

Working hours and holidays

The Labor Law of Cambodia establishes clear guidelines on the maximum permissible working hours in the country. The key points are listed below: 

• The maximum working hours per day for employees are 8 hours.
• Employees shall not be made to work for more than 6 days a week. Every employee should get a weekly time off for a minimum of 24 hours. 
• In case of workload or urgency, employers may require employees to work overtime, but not more than 2 hours per day. Also, employees must be compensated at 150-200% of their regular salary based on the overtime period.

Cambodia has 22 public holidays on which all workplaces remain closed. The list of public holidays is as follows: 

• International New Year’s Day
• Victory Over Genocide Day
• International Women’s Day
• Khmer New Year (3 days)
• International Workers’ Day (Labour Day)
• Visak Bochea Day
• King Norodom Sihamoni’s Birthday
• Royal Ploughing Ceremony
• Queen Mother’s Birthday
• Pchum Ben (3 days)
• Constitution Day
• Commemoration Day of the King’s Father
• Coronation Day Of King Norodom Sihamoni
• Water Festival (Bon 0m Touk) (3 days)
• Independence Day
• Peace Day

Tax obligations

The employees in Cambodia are free from income tax. However, they have to pay contributions depending on their salaries and pay salary tax. You have to withhold income tax from the employees’ salaries. 

For a clear breakdown of employment costs, use our employee cost calculator.

Termination and severance

If employers terminate an employee, they should provide valid reasons for doing so. Terminating an employee without valid justification may be considered unfair and could lead to legal consequences for the employer.

Some valid scenarios in which an employment contract may be dissolved are as follows:

1. Resignation of an employee
2. Both the employer and the employee mutually agree to dissolve the contract 
3. Termination of an employee during the probationary period
4. Termination on grounds of employee misconduct, poor performance, or absence without leave

Notice period 

Whether the employer or the employee chooses to terminate the employment, a notice period must be observed. Rules for notice period are as follows: 

• If an employment contract is dissolved while an employee is in a probation period, a notice period of 7 days should be observed. 
• After the probation period is over, the length of the notice period depends on the tenure of the employee’s service. 

The termination has to be documented in writing, and you have to cite proper reasons for the same. 

Severance pay

If an employee, who was hired for a fixed term, is terminated, the employer has to pay 5% of the total wages paid to the employee during the contract as severance pay. 

In case of the termination of an indefinite period contract, the employee is entitled to seniority allowance, which is paid twice a year- in June and in December. 

Explore Payoneer Workforce Management in Cambodia

When engaging with local talent in Cambodia, you have to adhere to the local laws and regulations with respect to salaries, taxes, and other statutory employee benefits. 

You have to make sure that everything is compliant to avoid fines and complications. However, this may be a challenging task for companies hiring in multiple foreign countries.

In this regard, an Employer of Record like Payoneer Workforce Management can help onboard international employees, manage payments, taxes, and other benefits, while helping navigate compliance with the local labor laws of Cambodia. Therefore, save the hassle of having to set up an entity and start engaging talent!

Book a demo today!

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