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.
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)
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)
(Labour Law, Art. 71; Press Release, April 7, 2020, Point 4)
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)
(Labour Law, Art. 72)
(Press Release, April 7, 2020, Point 1)
- If workers agree to use their remaining annual leave during the temporary stoppage, they are entitled to wages during their leave.
- If workers agree to use unpaid leave during the temporary stoppage, they will not be entitled to wages during this leave except for continued provision of any accommodation and the transportation allowance. This option was rarely agreed, because workers were required to be paid under the Covid Instruction and Press Release.
(Labour Law, Arts. 71, 72, 166-168; Press Release, April 7, 2020, Point 1)
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))
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)
-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)
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
- Wages for unused leave (LL Art. 167)
All workers must be paid for their unused annual leave if any
- Outstanding wages owed, if any
- Severance Pay
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
- Wages for unused leave (LL Art. 167)
All workers must be paid for their unused annual leave if any
- Outstanding wages owed, if any
- Severance Pay
(Same as above for non-renewals upon expiration)
- Damages (LL Art. 73)
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)
- Payment in lieu of notice (if applicable)
- Wages for unused leave (LL Art. 167)
All workers must be paid for their unused annual leave if any
- Outstanding wages owed, if any
- Seniority Indemnity (Prakas 443/2018)
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.
- Damages (if applicable) (LL Arts. 91, 94, as amended)
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):
- the worker’s aptitude or behavior, or
- the operational requirements of the factory (including, e.g., layoffs due to reduced production or internal reorganization)
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)
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
- Wash hands regularly with soap and clean water or hand gel
- Avoid direct contact with people who have respiratory problems
- Avoid direct contact with animal farms or live animals, including wild animals
- Eat cooked/ boiled food, especially when consuming meat and eggs
- Close mouth and nose when sneezing or coughing by using mask, scarf or elbow
- Stay at least 1 meter away from a person with respiratory problem/symptom
- Avoid splitting in public places
(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:
- Open windows (do not use air conditioning)
- All passengers have to wear masks while travelling in the cars/vans, bus
- Clean the cars regularly with soap and alcohol at arm chairs
- All drivers must have alcohol or cleaning gel for passenger to clean their hands before getting into cars
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)
Under Labour Law, Art. 82.
The contracting parties are released from the obligation of giving prior notice under the following cases:
- For probation or an internship specified in the contract.
- For a serious offense on the part of one of the parties.
- For Acts of God that render one of the parties unable to meet their obligations.
Under Art. 85. Definitions of Acts of God under Cambodian Labour law
- The closing of the establishment by public authorities.
- Catastrophe (flooding, earthquake, war) that cause material destruction and make it impossible to resume work for a long time.
“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)
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)
