2020 02 September

Cambodia Labour Update – August 2020

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Special Conditions on the Employment of Foreign Nationals

The Ministry of Labour and Vocational Training (“MLVT”) issued Prakas No. 277/20 concerning Special Conditions on the Employment of Foreign Nationals on 14 August 2020 (“Prakas 277”) to permit hiring foreign nationals in excess of the foreign employee quota cap (10% of the total number of Cambodian employees) under the Labour Law.

Based on Prakas 277, owners or directors of enterprises/establishments governed by the scope of Article 1 of the Labour Law who need to hire employees, but could not find suitably qualified Cambodian nationals or sufficient numbers thereof for a given workplace, type of work or any shift, may file a request to hire foreign nationals under special conditions in excess of 10% of the total number of Cambodian employees.

In order to employ foreign nationals under these special conditions, enterprise/establishment owners or directors must:

  1. submit a request to employ foreign nationals to the Minister of the MLVT accompanied with written employment contracts for each such foreign employee;
  2. fill in the respective applications requesting foreign employee work permits through the Foreign Workers Centralized Management System (“FWCMS”) through this website: https://fwcms.mlvt.gov.kh/;
  3. pay the official fees for the issuance of such foreign employee work permits as stipulated in the Inter-Ministerial Prakas of the MLVT and the Ministry of Economy and Finance; and
  4. submit valid visas/residence permits.

As a written employment contract for each requested foreign employee is required to be submitted to the MLVT, it is not entirely clear whether requested foreign employees may be hired by enterprise/establishment before the additional quota approval is issued by the MLVT.

Owners or directors of enterprises/establishments found in violation of this Prakas will be subject to penalties in accordance with Article 16 of the Labour Law.  

The MLVT’s Clarification on Payments in Lieu of Prior Notice and Damages upon Termination of Unfixed Duration Contracts

The MLVT issued a written clarification on 14 August 2020 (“Clarification”) to clarify misinterpretations of Letter No. 295 dated 19 June 2020 from the Department of Labour Inspection. The Clarification addresses the following points with respect to termination of unfixed duration contracts (“UDCs”):

1. Termination of a UDC is subject to prior written notice being issued by the party intending to terminate the contract to the affected employee, subject to certain exceptions as stated in Article 82 of the Labour Law. Based on Article 75 of the Labour Law, the minimum prior notice periods are:

  • seven days, if an employee’s length of continuous service is less than six months;
  • 15 days, if an employee’s length of continuous service is from six months to two years;
  • one month, if an employee’s length of continuous service is more than two years and up to five years;
  • two months, if an employee’s length of continuous service is more than five years and up to ten years; and
  • three months, if an employee’s length of continuous service exceeds ten years.

In the event that the employer properly serves the prior notice, the employer is not obliged to provide “payment in lieu of prior notice” upon termination of the employment contract. Payment in lieu of prior notice is not applicable in the case of factory/enterprise closures due to a runaway employer as such cases are governed by separate regulations.

2. An employee is entitled to “damages” under Article 91 of the Labour Law in the event that the employer terminates the employment contract without valid reasons, or selectively terminates the employee when not forming part of a collective termination (e.g. mass layoff) process and such termination affects the honor and dignity of the employee or causes misunderstanding in the eyes of the public or other employees as to the terminated employee. The employee is not entitled to damage where there is a reduction in production output for economic reasons or when a factory/enterprise is facing bankruptcy and needs to partially or totally suspend its operations for the sake of business continuity.

3. Based on the global difficulties resulting from the COVID-19 outbreak, and following Article 87 (new) and Article 91 (new) of the Labour Law, “valid reasons” for the termination of employment contracts will be deemed in the event of:

  • total cancellation of purchase orders, cancellation of purchase orders of any particular product resulting in the complete cessation of any operation, suspension of acceptance of delivery of finished products and non-payment by trademark owners (factories and enterprises must provide sufficient evidence of this);
  • complete closure of factories/enterprises following and in spite of good faith efforts having been made to maintain business continuity through legitimate mechanisms including suspension of employment contracts and/or collective termination; or 
  • bankruptcy.

The MLVT urges all relevant stakeholders to carefully review Articles 82, 87 (new) and 91 (new) of the Labour Law to avoid misleading or incorrect interpretations.

In this respect, we recommend that careful analysis be undertaken when an employer is contemplating the termination of a given employee’s employment contract. 

New Government Official Fees issued by the Ministry of Labour and Vocational Training

Following the initial enactment of Joint Prakas No. 1009 dated 28 December 2012 and later amendments by Joint Prakas No. 714 dated 19 July 2018 on official government fees, the MLVT and the Ministry of Economic and Finance issued another Joint Prakas No. 335 dated 27 March 2020 on new official government fees (“New Prakas”). The New Prakas replaced and superseded its forerunners and was intended to lay down the framework for new official government labour compliance services and a separation of responsibilities to be implemented at the MLVT and the Municipal/Provincial Department of Labour and Vocational Training (“DLVT”) from 1 April 2020 onward.

This New Prakas introduced significant changes compared to the previous Prakas including:

  1. a clear separation of public service providers under the MLVT (Central Administration) and DLVT based on the number of employees, specific sectors and location of the enterprise/establishment; and
  2. new and updated public services, fees, processing time and validity of compliance documents in relation to suspension of employment contracts, work on weekly days-off/paid public holidays, declaration of movement of personnel, validity of physical check-up of local employees and others.

Below are the key highlights from the New Prakas:

A. Public Services Provided by the MLVT

No. Description Official Fee (Riels)

Processing Time (Working Days)

Validity
1 Physical Check-up for local employees (at the MLVT) 20,000 7 days 1 year
2 Physical Check-up for foreign employees (at the MLVT) 100,000 7 days 1 year
3 Certification on Physical Check-ups for local/foreign employees 20,000 3 days 1 year
4 Enterprise Opening Registration 120,000 1 day Permanent
5 For various enterprises including: (1) enterprises employing more than 100 employees; (2) exporting enterprises; (3) casino operations; (4) special economic zone; (5) resorts; (6) hotels from three stars’ classification; (7) private recruitment agency; (8) airlines; (9) cruise/ship companies; (10) head office of finance institutions; (11) head office of real estate development companies; or (12) civil society organizations:
5.1 Enterprise Book Registration 80,000 7 days Permanent
5.2 Registration of Payroll Book/approval of E-payroll 80,000 7 days Permanent
5.3 Internal Work Rules Registration 600,000 60 days Permanent
5.4 Approval of Employment Contract Suspension 480,000 7 days 2 months
5.5 Approval on Overtime Work 100,000 7 days 2 months
5.6 Approval for Overtime Work on Weekly Days-off and Paid Public Holidays 100,000 7 days 1 month
5.7 Regular labour inspection (once per year for enterprises under sectors of garment, textile, footwear, travel and bag products and similar products) 1,000,000 14 days 1 year
5.8 Regular labour inspection (once per year for enterprises other the sectors of garment, textile, footwear, travel and bag products and similar products) 400,000 14 days 1 year
5.9 Issuing Recognition Letter for Shop Steward Election 250,000 7 days 2 years
5.10 Approval on the Use of Child Labour between 12-15 years’ of age or between 15-18 years’ of age 800,000 7 days 1 year
5.11 Apprenticeship Application 5,000 3 days 1 year
5.12 Issuing Work Book for Local Employees 20,000 20 days Permanent
5.13 Registration on Declaration of Movement of Personnel “IN” or “OUT” 4,000 20 days Permanent
5.14 Issuing Work Permit to Foreign Employee 520,000 20 days 1 year
5.15 Issuing Quota Approval for the Employment of Foreign Employee 200,000 20 days 1 year
5.16 Registration of Foreign Employee’s Employment Contract 40,000 15 days N/A

 

B. Public Services Provided by the DLVT

The fees for public services provided by the DLVT are different for: (1) enterprises employing 1 to 7 employees (“Enterprise A”); and (2) enterprises employing from 8 to 100 employees, resorts, hotels with grade lower than three stars’ classification, branches of finance institutions, branches of real estate development companies or civil society organizations (“Enterprise B”).

No. Description

Official Fee

(Riels)

 

Processing Time

(Working Days)

Validity
Enterprise A Enterprise B
1 Enterprise Book Registration 60,000 60,000 7 days Permanent
2 Registration of Payroll Book/approval of E-payroll 80,000 80,000 7 days Permanent
3 Approval of Suspension of Employment Contracts 240,000 240,000 7 days 2 months
4 Approval on Overtime Work 100,000 100,000 7 days 2 months
5 Approval on Work on Weekly Days-off / Paid Public Holidays 100,000 100,000 7 days 1 month
6 Registration of Internal Work Rules N/A 600,000 60 days Permanent
7 Issuing Recognition Letter for Shop Steward Election N/A 80,000 7 days 2 years
8 Regular labour inspection (once per year) N/A 200,000 14 days 1 year
9 Approval on the Use of Child Labour between 12-15 years’ of age or between 15-18 years’ of age 200,000 600,000 7 days 1 year
10 Apprenticeship Applications N/A 5,000 3 days 1 year
11 Issuing Work Book for Local Employee N/A 20,000 20 days Permanent
12 Registration on Declaration of Movement of Personnel “IN” or “OUT” N/A 4,000 20 days Permanent

The above official fees and public services are expected to be changed given the online system for labour registration recently introduced by the MLVT

Should you need any further information or need any legal support, please contact us at: labor.kh@dfdl.com.

 

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situation.

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