Hiring in Cambodia: Labor Laws, Employment Contracts & Compliance

Cambodia's Labor Law governs the employment relationship between employers and employees across all sectors of the economy. For businesses hiring in Cambodia — whether local workers or expatriate staff — understanding your obligations around employment contracts, working hours, the National Social Security Fund, and termination procedures is essential to operating compliantly and avoiding costly disputes.

Overview of Cambodia's Labor Law Framework

Cambodia's primary labor legislation is the Labor Law of 1997, supplemented by numerous prakas (ministerial regulations) issued by the Ministry of Labor and Vocational Training (MLVT). The law applies to all enterprises and establishments operating within Cambodia, with specific provisions for different sectors including manufacturing, services, and domestic work.

For foreign employers, Cambodian labor law can feel very different from home country frameworks. The law is generally employee-protective, with defined minimum entitlements for leave, overtime, and termination that cannot be contracted out. Businesses must register with the MLVT and maintain employment records in a form acceptable to labor inspectors. Non-compliance — whether intentional or due to unfamiliarity — can result in fines, back-pay orders, and labor disputes that disrupt operations.

For businesses setting up operations in Cambodia, our business consulting services provide end-to-end support with MLVT registration, employment contract drafting, and ongoing HR compliance guidance.

Employment Contracts

Cambodia's Labor Law recognizes two primary types of employment contract, and the distinction has significant consequences for termination rights and obligations:

Fixed-Duration Contracts (FDC)

A Fixed-Duration Contract specifies a defined start and end date. Under Cambodian law, FDCs may be used for work that is inherently temporary or project-based. They can be renewed, but if a worker remains employed beyond the expiry of two consecutive FDC renewals (cumulatively exceeding two years), the contract is automatically converted to an Undetermined Duration Contract by operation of law. FDCs must be in writing — verbal fixed-duration contracts are not recognized.

Undetermined Duration Contracts (UDC)

An Undetermined Duration Contract has no fixed end date and is the default employment relationship for ongoing, permanent roles. UDCs carry stronger termination protections: dismissal without just cause requires payment of severance (indemnity for dismissal) in addition to notice periods. UDCs may be verbal, but written contracts are strongly recommended and are required for foreign employees.

All employment contracts must state the nature of work, wage, working hours, and any probation period. Probation periods are limited to three months for most roles. During probation, either party may terminate without notice, but the employee retains NSSF entitlements from the first day of employment.

Working Hours and Leave Entitlements

Standard Working Hours

The standard working week under Cambodian law is 48 hours, typically structured as eight hours per day, six days per week. In industrial and commercial sectors, this is often applied as five days of nine hours and one day of three hours. Work performed in excess of standard hours is overtime and must be compensated at premium rates.

Overtime Rules

Overtime hours attract a premium of at least 150% of the standard hourly rate for daytime overtime on workdays. Overtime performed at night (10 PM to 5 AM), on rest days, or on public holidays attracts a minimum premium of 200%. Overtime is voluntary and requires employee consent. Employees may not be required to work more than two hours of overtime per day. Employers must maintain overtime records as these are commonly reviewed by labor inspectors.

Annual Leave

Employees are entitled to a minimum of 1.5 days of paid annual leave for each month of service (18 days per year) after completing one year of employment. The entitlement increases with seniority: employees with three to six years of service receive additional leave days under the MLVT's escalating leave schedule. Annual leave must be taken and cannot be waived by payment in lieu during active employment, except upon termination.

Public Holidays

Cambodia observes approximately 27 official public holidays per year — among the highest in the world. Employees required to work on public holidays must be compensated at double pay. Employers must provide official notice of applicable public holidays at the start of each year. Khmer New Year (typically three days in April) and Pchum Ben (three days in late September or October) are the most operationally significant for businesses planning production and staffing schedules.

Minimum Wage

Cambodia does not operate a universal minimum wage across all sectors. Minimum wage is determined sector by sector through an annual consultative process:

Garment, Footwear, and Travel Goods Sector

The garment sector has a legislated minimum wage determined annually by the Labor Advisory Committee. For 2024–2025, the minimum wage in the garment, footwear, and travel goods sector was USD 204 per month for workers who have completed their probation period. This is the base wage before seniority increments and allowances. Many employers in this sector also provide mandatory and voluntary allowances including attendance bonuses and transport supplements.

General Sector (Non-Garment)

For businesses outside the garment sector, there is no legislated national minimum wage, though MLVT guidance figures are periodically issued. In practice, market rates in Phnom Penh for entry-level service and administrative roles range from approximately USD 200 to USD 350 per month, while professional and managerial roles command significantly higher compensation. The absence of a formal general sector minimum wage does not reduce employer obligations around overtime, NSSF contributions, and leave entitlements.

National Social Security Fund (NSSF)

All employers with at least one employee must register with the NSSF and enroll all workers. The NSSF provides occupational risk insurance and healthcare coverage. The contribution structure is:

NSSF cards issued to enrolled employees provide access to designated healthcare providers. Employers must maintain an updated employee register with NSSF at all times, adding new employees within one month of hire and notifying departures promptly. Failure to enroll employees or remit contributions on time results in back-payment obligations plus interest penalties.

Termination Rules

Termination is one of the most legally sensitive areas of Cambodian labor law. Errors in the termination process — particularly for UDC employees — can result in significant financial liability for the employer.

Notice Periods

For UDC employees, the required notice period for termination scales with seniority. Workers with less than six months of service are entitled to seven days' notice. Workers with six months to two years are entitled to two weeks' notice. Workers with two to five years of service require one month's notice, and those with over five years require three months' notice. During the notice period, employees are entitled to two hours per day of paid leave to seek alternative employment.

Severance Pay (Indemnity for Dismissal)

Upon termination of a UDC without just cause, employers must pay indemnity for dismissal calculated at seven days of wages per year of service for the first five years, and ten days per year thereafter (capped at six months' wages). Additionally, employers must pay seniority indemnity — a separate payment accrued at 15 days of wages per year of service — upon termination regardless of cause. Both payments are calculated on the average wage over the preceding three months including regular allowances.

Wrongful Dismissal Risks

Dismissing an employee without proper documentation of the grounds, or in retaliation for union activity or protected conduct, exposes employers to wrongful dismissal claims before the Arbitration Council or courts. Employers should maintain written records of performance issues, disciplinary warnings, and the stated grounds for any dismissal. Where restructuring requires collective redundancy, a defined process involving MLVT notification applies and must be followed precisely.

Foreign Worker Regulations

Foreign nationals employed in Cambodia require a valid work permit issued by the MLVT and must hold an E-class (business) visa. The work permit application requires a valid passport, health certificate, criminal background check, and employer sponsorship letter. Work permits are renewable annually and are employer-specific — changing employers requires a new permit application.

Quota Rules

Cambodian law limits the proportion of foreign workers in any enterprise to a maximum of 10% of the total workforce. Enterprises in specialized or high-skilled sectors may apply for exemptions, but this quota is strictly enforced for lower-skilled roles. Employers should plan their workforce composition carefully when building teams in Cambodia to remain within quota limits.

Professional Employment Cards

Certain professional categories — including engineers, accountants, lawyers, and medical practitioners — require registration with the relevant Cambodian professional body in addition to a standard work permit. For example, a foreign engineer must register with the Cambodian National Council of Engineers; a foreign accountant must hold a National Accounting Council of Cambodia (NAC) practitioner certificate. These requirements apply even for short-term engagements of less than one year.

How Hanukreajea Can Help

At Hanukreajea Business Solution, our consulting team assists employers of all sizes with the full spectrum of Cambodian labor law compliance. Whether you are establishing your first operation in Cambodia or scaling an existing workforce, we help you build employment structures that are legally sound and operationally effective.

Employment Contract Drafting

We draft and review employment contracts in both English and Khmer, ensuring they comply with MLVT requirements, correctly classify contract type (FDC or UDC), and protect the employer's legitimate business interests. Bilingual contracts are best practice and essential for enforceability in Cambodian labor proceedings.

NSSF and MLVT Registration

We handle employee registration with the NSSF, maintain contribution records, and ensure monthly submissions are made accurately and on time. We also advise on MLVT enterprise registration requirements, annual labor declaration obligations, and compliance with inspection requirements.

Work Permit Processing for Foreign Employees

We manage the work permit application and renewal process for expatriate employees, coordinating health checks, documentation, and MLVT submissions. We also advise on visa compliance and the quota management obligations that affect your overall staffing plan.

HR Policy Development

We develop internal HR policies, staff handbooks, and disciplinary procedures that align with Cambodian law and your organizational culture. Well-documented HR policies are the most effective protection against labor disputes and regulatory penalties.

← Back to Blog