2018 17 July

Cambodia Legal Update: Law On Minimum Wage dated 6 July 2018 (“Law on Minimum Wage”)

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The Law on Minimum Wage was promulgated on 6 July 2018 and now guarantees a minimum wage for employees covered by the provisions of the Labour Law. A tripartite National Council on Minimum Wage (“NCMW”), comprised of the government, employer representatives, and employee representatives, will be established to study, research and provide recommendations on the determination of minimum wages and other benefits for persons covered by the Labour Law. Subject to the discretion of the NCMW, key factors in determining the minimum wage include social considerations (such as inflation rates and living expenses); and (2) economic considerations (such as productivity, competition, job market status and profitability of a particular industry). The discussions on minimum wages by the NCMW must be undertaken annually (unless decided otherwise by the NCMW) and in accordance with the procedures set out in this new law.
 
Based on the NCMW’s recommendation, the minimum wage will be determined by a Prakas issued by the Ministry of Labour and Vocational Training (“MLVT”) and must take effect from 1 January of the subsequent year. The MLVT may prioritize implementation of the minimum wage based on economic activity, industry sector or region.

Any agreement, whether written or verbal, providing a minimum wage lower than the level determined by the MLVT will be null and void.
Further, failure to provide a minimum wage, as stipulated in the MLVT’s Prakas, may subject an employer to a fine of up to KHR 40,000,000 (approximately equivalent to USD 10,000). Additionally, any employer that pays less than the minimum wage to its employees must pay back the full amount to such employees, including any interest payable at the rate set by applicable law.
 
So far, the MLVT has yet to issue the Prakas on the minimum wage for each sector (except for employees in the textile, garment and footwear manufacturing sectors).

We will keep you updated on all material new developments in relation to this new law. In the meantime, if you require further information or advice on this law, please do not hesitate to 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 situations.


DFDL Contacts

Chris Robinson
Partner, Head of Cambodia Corporate & Commercial Practice Group
chris.robinson@dfdl.com

Sinoun Sous
Consultant, Cambodia Corporate & Commercial Practice Group
sinoun.sous@dfdl.com


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