2020 22 April

Cambodia Legal Update: New Measures on Suspension of Employment Contracts and NSSF Contribution Payments in Sectors Seriously Impacted by COVID-19

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In accordance with the press release on instructions of the Royal Government of Cambodia on further measures to help the private sector and employees severely affected by Covid-19 (Round 3, 07 April 2020), the Ministry of Labor and Vocational Training (“MLVT”) issued Instruction No. 045/20, dated 17 April 2020, on suspension of employment contracts and contribution payments for the National Social Security Fund (“NSSF”) for enterprises in the garment and tourism sectors who are seriously impacted by COVID-19 (“Instruction 045/20”).

Instruction 045/20 aims to provide support for the private sector, in addition to existing mechanisms, in response to the effects of the COVID-19 pandemic, particularly for the garment sector (including production of garments, textiles, footwear, travel products and bags) and the tourism sector within the territories of Phnom Penh, Siem Reap, Preah Sihanouk, Kep and Kampot (including hotels, guesthouses, restaurants and travel agents), facing a shortage of raw materials or having no orders or no export markets or no customers for services or facing any particular difficulty leading to suspension of production activity or business temporarily. 

Below, we highlight certain key aspects of Instruction 045/20.

Requesting Employment Contract Suspension

Enterprises operating in the above-mentioned sectors, intending to suspend employment contracts, which have not provided an update of their list of employees’ contact phone number (please refer to this link for the previous legal update on this instruction) to the MLVT by the end of March 2020 are required to:

  1. Submit an application for suspension of employment contracts to the MLVT through the Labour Inspection Department for enterprises located in Phnom Penh and through the Provincial Department of Labour and Vocational Training (“DLVT”) for those located in the provinces based on standard forms provided by the MLVT (available at www.mlvt.gov.kh). The maximum period of suspension is two months and may be extended if necessary;
  2. Widely disseminate and inform all employees who will be subject to contract suspension to provide: (a) Cambodian ID card; and (b) phone number (or their relative’s contact numbers) to enable the MLVT to transfer monthly subsidy allowances for those who may be entitled;
  3. Prepare a list of suspended employees with certain required identifying information. Enterprises failing to widely disseminate and inform their employees about the required information as mentioned above or failing to obtain the required identifying information (fingerprints, Cambodian ID card and phone number) will be responsible for paying the Government’s monthly subsidy allowances; and
  4. Attach to the application for suspension of employment contracts three copies each of: (a) latest payroll before suspension of employment contracts with company’s stamp on all pages; (b) Certificate of Incorporation; (c) Tourism Licenses​ for those in the tourism sector; (d) Patent Tax Certificates; (e) NSSF Enterprise Registration Certificate (if any); and (e) bank account number of the enterprise.

After receiving the above application documents, the Labour Inspectors will review them and may visit the enterprise within two business days.

Enterprises in the above-mentioned sectors that have provided their update to the MLVT by the end of March 2020, and wishing to suspend employment contracts, must follow the procedure outlined in item (1) above through the MLVT online system: www.suspension.mlvt.gov.kh.

Further obligations

Certain further obligations also apply in the context of employment contract suspension, among others, as explained below.

For suspension in the garment sector, the employer is required to provide employees with an allowance as follows:

  • USD 10 for suspension of employment between 7-10 days;
  • USD 20 for suspension of employment between 11-20 days; and
  • USD 30 for suspension of employment between 21 days to 1 month.

For suspension in the tourism sector, employers must review the benefits entitlements of employees on a voluntary and capability basis during this suspension period and define a procedure to provide an allowance.

Implementation of employment contract suspension must follow the date and period approved by the MLVT. In case suspension ceases before the designated ending date, the enterprise must notify the MLVT at least two working days before the employees return to work.

Employees, whose employment contracts are suspended, must provide accurate personal information, such as ID card number and phone number (or relative’s contact number) to their employer for submission to the MLVT in order to receive monthly subsidy allowances via Wing Specialized Bank. The employee will receive a monthly subsidy from the government as follows:

  • USD 15 for suspension of employment between 7 days to 10 days;
  • USD 30 for suspension of employment between 11 days to 20 days; and
  • USD 40 for suspension of employment between 21 days to 1 month.

The employees will receive a message from Wing Specialized Bank of the amount of money within 10 days after suspension. Each employee can withdraw this allowance from any nearby Wing Specialized Bank location by bringing their ID card and their mobile phone with the above message within the 10 days after receiving the above-mentioned message. Otherwise, the allowance will return to the government.

Requesting for suspension of monthly contribution to NSSF

Enterprises, wishing to suspend NSSF contributions, must notify the NSSF through a formal letter on the suspension of monthly contributions to NSSF (standard form available at www.mlvt.gov.kh). During the suspension, employees remain entitled to certain health care benefits through the NSSF.

Should you need any further information or need any legal support, please reach out to 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.


Contacts

Chris Robinson

Partner, Head of Cambodia Corporate & Commercial Practice Group

chris.robinson@dfdl.com

Samnangvathana Sor

Senior Consultant, Cambodia Corporate & Commercial Practice Group

samnangvathana.sor@dfdl.com

Alex Larkin

Senior Consultant, Cambodia Corporate & Commercial Practice Group

alex.larkin@dfdl.com


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