Cambodia

7 Chapter Labor

    • Working Environment

      Cambodia has a total population of  about 14 million and the working population [15~64 age] is 64.1%.

      In 2008, 72.3% of working population is engage in primary industry such as agriculture, forestry and fishing, 8.5% is engage in secondary industry such as manufacturing and construction  and 19.2% is engage in tertiary industry such as service industry.

       

      In 1998

      In 2008

      Increase or decrease

      Primary industry

      77.5%

      72.3%

      -5.2

      Secondary industry

      4.2%

      8.5%

      +4.3

      Tertiary industry

      18.3%

      19.2%

      +0.9

      In 2008, the annual average wage of an employee is 1,600 US dollar, and added value for each is 5,000 US dollar. According to ADB statistics, GNI per person increases by 50 US dollar each year. Salary level depends on position and industry.

      Salary level of clothing industry in Cambodia

      KESAR level

      Position

      Monthly Average Wage [US dollar]

      Level 1

      Director

      1,602

      Level 2

      Executive officer in charge

      1,013

      Level 3

      Department manager

      609

      Level 4

      Senior manager

      435

      Level 5

      Supervisor

      324

      Level 6

      Administrator

      174

      Level 7

      Staff [skilled workers]

      91

      Level 8

      Experienced worker [Assistant]

      85

      Level 9

      Worker

      73

      Level 10

      Unskilled worker

      50

       

      The labor union was under the jurisdiction of the government before 1990 and free activities were not permitted. In 1996, the public labor union was made and during 1997, labor act was enforced and workers compensation insurance system was introduced a year after.

      Employee and employer of Cambodia can make a labor union under the purpose of moral concern, material interest or learning and rights protection without discrimination. To register a labor union, more than 8 workers should join and more than 3 representative committee members should be appointed. Employer can make a management association.

      534 labor unions, 12 labor union associations and regional unions were registered in 2004 to 2006. In addition, 244 labor unions were registered in 2007.

      There are two types of labor dispute, individual labor dispute and collective labor dispute. Individual labor dispute happens between employer and more than one employee of a specific company while collective labor dispute happens between more than one company employer and a certain number of employees. In general, disputes are being conducted by way of labor strikes.

      Some of the main reasons of labor dispute are inappropriate payment of wage, forced overtime work and illegal dismissal.

       Number of individual labor dispute from 2004 to 2006

      Year

      Labor dispute

       

      Arbitrated

      Not mediated

      Invalid

      2004

      88

       

      47

      33

      8

      2005

      96

       

      43

      53

      -

      2006

      80

       

      32

      46

      2

      2007

      61

       

      37

      24

      -

       Number of collective labor dispute from 2004 to 2006

      Year

      Labor dispute

       

      Arbitrated

      Not mediated

      Attached to the arbitration committee

      2004

      229

       

      157

      72

      72

      2005

      148

       

      82

      66

      66

      2006

      217

       

      142

      75

      75

      2007

      186

       

      103

      83

      83

       

      ■Labor law

      Labor law was enacted in Cambodia during 1992, and was revised in 1997. In this law, labor standards such as labor relations, employment, wage and holiday is stipulated. Cambodia labor law is applied to all workers who receive wages from employer except soldier, aviation/ shipping, judge and civil servant.

      Regular employee and non-permanent employee has the same right and obligation as labor in principle.

      Labor standard in Cambodia

      Employment agreement

      Valid verbal

      Working time

      8 hours per day

      Within 48 hours per week

      Break time

      Within 1 hour per day

      Weekly holiday

      1 day per week

      Sunday in principle

      Extra wage

      1.5 times the normal wage for overtime work.

      Twice the normal wage for late time overtime work and holiday work.

      *working time per day must not over 10 hours except in emergency cases.

      Annual paid leave

      At least 18 days paid leave per year is awarded to workers.

      Annual paid leave is increase 1 day each 3 years.

      After working for one year, you will get the right to use paid leave.

      Special leave

      7 days paid leave per year is awarded to following reason

      ・marriage of the worker himself/ herself

      ・worker’s spouse gives birth

      ・worker’s child marriage

      ・illness or death of worker’s spouse, child or parents

      Maternity leave

      Women can award 90 days leave and 50% of normal wage will be paid.

      Sick leave

      Workers have right to receive 6 months sick leave. Employer has not to pay wage except following situation.

      ・corporation has to pay full amount of wage for first month if labor submits doctor’s certificate

      ・60% of wage payment for second month and third month.

      There is no payment for forth month to sixth month leave, but the length of service is added. If a worker leave for more than 6 months, corporation may urge for dismissal according to law.

      Advance notice of dismissal

      Following are periods or Wage payment corresponding to the period

      Employment period

      Advance notice period

      ~6 months

      7 days

      7 months ~ 2 years

      15 days

      3~5 years

      1 month

      6~10 years

      2 months

      11years ~

      3 months

      Through this advance notice period, labor can get 2 days paid leave per  week to find a new job.

       

      In Cambodia, there is a limit to employ foreigners and only for following cases can be possible.

      ・Office staff

      ・Staff with advanced technology

      ・Skilled staff

      Only foreigners can be hired if the job substitution by local staff is difficult. Priority must be given to local workers for a job function in principle, so employer who want to hire foreigner should apply to ministry of labor.

      When corporation do collective dismissal, the target of labor will be decided by labor’s skill, tenure period and family presence. First, low skill qualifications will be the target and next, short tenure period will be the target. However, one year will be added to tenure period if they are married or they have child.

      Employer can sell products to employees under the following conditions.

      ・do not force to purchase

      ・do not rise profit from the sales

      ・it is distinguished from core business

      ・the price is displayed

      The payment for the wage of operators has to be divided into more than twice per month while the commission of agency or sales has to be paid within 3 months.

       

      There is a regulation to protect youth at labor law. Definition age of youth is 15 to 18 years old. It is prohibited for 18 years old and below to be engaged in underground employment. Minimum age on which one can be engaged to work is 15. However, it is possible to hire 12 to 15 years old according to the following regulations. “the work will not harm the health, safe and moral” and “the work will not affect the person in attending school or jo training”

      Labor right, equals reward payment and maternity leave for female labor are regulated under the constitution and labor law.

      Worker’s health and safety are regulated under the labor law and it is being applied for all employers except small scale business such as those under family management. Employer must keep healthy working environment, provide service to keep healthy at work, and manage the health and safety of employees. Minimum wage in Cambodia is 61 US dollar in 2012.

       

      The purpose of collective agreement is regulation and decision of employment condition between employer and employee. In case of deciding the terms of collective agreement, it must be within 3 years. In case there is no labor union in the corporation and a representative of labor will negotiate with employer, the validity period is within one year. It is possible to make collective agreement without deciding about the term. In this case, collective agreement cannot be closed for one year.

       

      Employment agreement is concluded thorugh oral or written. Employment contract form or contract end  regulated the worker’s business contents or working time. There are two types of employment contract, fixed-term employment contract and indefinite employment contract.

      When you contracted a fixed-term employment, it is necessary to satisfy the following conditions:

      Contract must be  written, contract term must be within 2 years, contract term is stated, seasonal labor, employment as supplement, employment to work which happen sudden, and employment for occurring.

      Fixed-term employment can be updated anytime but the contract must not exceed 2 years. If you will violate this regulation, this contract will be indefinite employment contract.

       

      Fixed-term employment will be ended at the maturity date which stated on employment agreement. However, in following cases it is possible to end the contract before the maturity date.

       In case where both parties of contract agree to cancel the contract

       In case where there is serious injustice by either one of the parties of the contract

       In case of  force majeure such as disaster or organization closure due to employee’s death or by public agency.

       

      The items that are  regulated under the labor law are the creation procedure and contents of labor regulation, disciplinary rule and promulgation of labor regulation. If there are 9 or more employees, the company has to create the labor regulation within three months from employment. The regulation will be validated after receiving approval from labor inspector. Labor inspector should approve within 60 days from the date of submission.

      Labor regulation include employment condition, calculation and payment of wage and allowance, working time, holiday, notice term, health and safety measure, and regulation of labor’s obligation and penalties.

       

      ■Social Security System

      Law of Social security schemes were enacted in 2002. This law is consisted with pension system such as old-aged pension, sickness allowance and survivor allowance, and labor accident insurance. This law is operated by NSSF [National Social security Fund].

      Business entity who hire 8 or more employees should register to NSSF within 45 days from establishment or the day you hire 8 or more employees. After registration, employer and employees should pay insurance fee to NSSF.

      Monthly insurance fee rate of NSSF  depends on labor’s average amount of monthly wage. Monthly wage include basic wage, overtime allowance, compensation, profit distribution and chip. Insurance fee rate of Cambodia is 0.8% but there is regulation of minimum insurance fee and maximum insurance fee.

       

      Minimum insurance fee

      Maximum insurance fee

      Basic salary amount

      200,000 Riel per month

      1,000,000 Riel per month

      Insurance fee

      1,600 Riel

      8,000 Riel

      Pension system benefits  includes old-aged pension, sickness allowance and survivor allowance. An employee who is 55 years of age and over, subscriber of NSSF and  fulfill following two conditions will have entitlement to qualification of old-age pension. The conditions are “subscribed to NSSF more than 20 years” and “having paid insurance fee at least 60 months in the last 10 years before get entitlement to qualification”.

      Subscriber of NSSF below 55 years of age and got disabled will receive sickness allowance if satisfied those two conditions “subscribed to NSSF least 5 years” and “having paid insurance fee at least 6 months in the least, 12months before get entitlement to qualification.”

      In case of death of eligible qualified person of each pension or allowance, or death of subscriber who subscribed 180 months already, the bereaved family can receive survivor pension.

       

      Health insurance in Cambodia is managed by public insurance company. Public insurance company is comprehensive insurance company which provides also insurance policy other than life insurance such as fire insurance or theft insurance. In Cambodia, there is no unemployment allowance and employment allowance.

       

      Under the labor law in Cambodia, workers accidents compensation is regulated. However there is no forced system to accumulate as insurance. The definition of “accidents related to labor” is listed below:

      ・with or without worker's negligence, in case of the accident happen during labor or within working hours

      ・regardless of place, job contents, and with or without wage, in case of accidents affecting workers' bodies.

      In case of the labor cannot work for more than 5 days by accidents affect, they have right to receive compensation from the employer.

       

      The compensation for workers accidents are below;

      ・medical care cost for labor accident such as labor illness, injury at work, accident at commuting.

      ・payment of daily allowance in case of temporary disabled by labor illness, injury at work, accident at commuting.

      ・payment of disabled pension or allowance in case of permanently disabled by labor illness, injury at work, accident at commuting.

      ・payment of funeral expenses or survivor pension

       

      ■Points to keep in mind when Japanese people are resided

      When Japanese work in Cambodia, it is necessary to get business visa. To get a visa, you will apply at the embassy of Cambodia with following documents.

      ・visa application form

      ・two ID photos taken within 2 months

      ・passport with 6 months or more remaining term from application date

      ・application fee 25 US dollar

      One month stay is possible with business visa. When extending, it is necessary to apply for temporary stay at Phnom Penh. You can choose the extending term from one month, three months, six months and one year.

      Required condition for foreigner who work in Cambodia is regulated by labor law. Foreigner should get work permit and employment card which issued by ministry of labor. To apply for work permit, it is necessary to fulfill following contents.

      ・legal entry

      ・having effective passport

      ・having effective stay permission

      ・qualified with the business and no infected with infectious diseases

      Following documents are needed to apply for work permit

      ・application form with 1,000 Riel stamp and photo

      ・documents certifying the number of Khmers and foreigners made by corporation wishing to work

      ・passport copy

      ・annual fee 100 US dollar

      ・employment agreement

      ・certification of qualification of the business issued by origin country within 6 months

       

       

      Payroll rate

      Amount of salary

      US dollar conversion

      Tax rate

      0~500,000

      0~125.0

      0%

      100,001~1,250,000

      125.0~312.5

      5%

      1,250,000~8,500,000

      312.5~2,215.0

      10%

      8,500,001~12,500,000

      2,125.0~3,123.0

      15%

      12,500,000~

      3,125.0

      20%

      Example of personal income tax [in case of receiving in Japan]

       

      Japan

      JPY

      A

      Basic salary

      6,480,000

      B

      Salary income deduction

      -1,836,000

      C [A-B]

      Amount of gross income

      4,644,000

      D

      Basic deduction

      -380,000

      E [C-D]

      Taxable income amount

      4,264,000

      F

      Income Tax Amount

      425,300

      G

      Inhabitant tax

      431,400

      H [F+G]

      Total tax

      856,700

      I [A-H]

      Amount of deduction

      5,623,300

      Example of personal income tax [in case of receiving in Cambodia]

       

      Cambodia

      JPY

      Riel

      A

      Basic salary

      6,480,000

      324,000,000

       

       

       

       

      C

      Amount of gross income

      6,480,000

      324,000,000

      D

      Basic deduction

      -0

       

      E

      Taxable income amount

      6,480,000

      324,000,000

      F

      Income Tax Amount

      1,050,000

      52,500,000

       

       

       

       

      H

      Total tax

      1,050,000

      52,500,000

      I [A-H]

      Amount of deduction

      5,430,000

      271,500,000

      Representative with annual income of 6.48 million yen will receive salary in Cambodia amounting 190,000yen less amount of deduction.

      To compensate the amount of deduction which received in Japan, perform a gross-up calculation.