Hire and manage employees in Cambodia

Complying with labor and employment laws in Cambodia

Cambodia’s labor regulations are primarily governed by the 1997 Labour Law, supplemented by ministerial Prakas and international labor standards. The framework covers essential aspects such as employment contracts, workplace safety, equal treatment, and employee protections.

For foreign companies, the mix of statutory laws, constitutional guarantees, and evolving regulations can feel complex. To avoid compliance risks, employers can turn to Rippling EOR, which ensures your business remains aligned with Cambodian employment laws while streamlining HR, payroll, and workforce management.

Employment contracts in Cambodia

In Cambodia, employment contracts are governed by the Labour Law and can be verbal or written, though written agreements are strongly recommended to avoid disputes. Employers have two primary options when it comes to types of contracts: fixed-duration contracts (FDCs) and undetermined-duration contracts (UDCs).

• Fixed-duration contracts (FDCs): These must specify an end date and cannot exceed two years in length. They may be renewed once by mutual agreement, but any renewal beyond the two-year maximum automatically converts the agreement into a UDC. Termination before the end date is only valid if both parties agree in writing before a Labour Inspector or if there is serious misconduct or force majeure.

• Undetermined-duration contracts (UDCs): These have no set termination date and can be ended by either party with prior written notice. Notice periods and compensation obligations vary depending on the circumstances, but employers must pay wages and benefits owed for the full notice period if they fail to comply.

At a minimum, employment contracts in Cambodia should cover:

• Names and addresses of both parties

• Job title and description

• Place of work

• Start date (and end date if fixed-term)

• Salary and payment details

• Working hours and leave entitlements

• Termination and notice period provisions

Employers must ensure that employment contracts comply with Cambodian labor laws, since missteps can lead to automatic conversion of a contract type or liability for damages.

Labor unions in Cambodia

Trade unions play an active role in Cambodia’s labor market, especially in industries like garment and textiles. The right to unionize is protected under the Constitution and the 2016 Trade Union Law, which allows both employees and employers to form associations. By 2019, there were thousands of registered unions and federations across the country, though unionization rates remain uneven. While overall levels are relatively low, participation in the garment sector is estimated at around 60%.

However, Cambodia’s union movement has long been divided. Independent unions, which advocate more strongly for workers’ rights, often face bureaucratic hurdles and delays in registration. In contrast, government-aligned or so-called “yellow unions” are closely tied to the ruling Cambodia People’s Party (CPP) and typically gain faster recognition. This divide has created mistrust between workers and employers, with disputes over whether certain unions truly represent employees’ interests.

Employers should note that unions must be registered with the Ministry of Labour and must meet strict requirements around membership, finances, and operations. Collective bargaining is common in unionized sectors, with negotiations often focusing on wages, working hours, and conditions. The influence of unions, therefore, varies significantly by industry, workplace, and the type of union involved.

Mitigating permanent establishment risk in Cambodia

A permanent establishment (PE) in Cambodia is a fixed place of business through which a non-resident company carries on activities in the country. Establishing a PE—such as through a branch, office, warehouse, factory, workshop, or dependent agent—can trigger corporate tax obligations on Cambodian-sourced income. Construction or service projects lasting more than six months within a 12-month period may also create a PE.

Cambodia follows broad definitions when characterizing a PE, and double tax treaties are still limited (with Singapore and China agreements signed but not yet ratified). Resident companies are taxed on their worldwide income, while non-resident firms are taxed only on Cambodian-sourced income through their PE. Once deemed to have a PE, non-residents are considered taxpayers and must register with the General Department of Taxation (GDT).

Practical ways to mitigate PE risk in Cambodia include:

• Avoid establishing a fixed place of business unless you intend to create a taxable entity

• Ensure local staff or agents do not habitually conclude contracts on behalf of the company

• Limit in-country activities to preparatory or auxiliary functions when possible

• Keep clear documentation of where key decisions and activities occur

• Consult with a Cambodian tax advisor to assess risks and remain compliant

Probationary period in Cambodia

In Cambodia, probationary periods allow both the employer and employee to assess whether the working relationship is a good fit. Employers use this period to evaluate an employee’s capacity, skills, and commitment, while employees gain insight into working conditions.

Under the Cambodian Labour Law:

• The probationary period cannot exceed three months for regular employees, two months for specialized workers, and one month for ordinary or non-specialized workers. Probation periods cannot be extended or renewed, even with mutual consent.

• Time spent in probation does not count toward severance payments under a fixed-duration contract (FDC) or seniority payments under an undetermined-duration contract (UDC).

Employers should ensure that probation terms are clearly stated in the employment contract and that performance evaluations are documented to support any termination decisions during this period.

Local laws in Cambodia

Beyond the Labour Law, employers in Cambodia must comply with several key regulations that affect daily workforce management. Understanding these rules helps foreign companies stay compliant and maintain trust with their teams:

• Data protection: Cambodia has historically lacked a GDPR-style privacy framework, but that’s about to change. On July 23, 2025, the government released a draft of its first comprehensive privacy law, the Law on Personal Data Protection (LPDP), which is expected to take effect after a two-year implementation period. Once enacted, Cambodia will join seven other ASEAN countries with nationwide data protection laws.

• Equal treatment and non-discrimination: The Cambodian Constitution and Labour Law prohibit discrimination in employment based on factors such as race, color, sex, religion, political opinion, nationality, or social origin. Employers are expected to uphold equal pay for equal work and ensure fair treatment across their workforce.

• Workplace safety and health: The Labour Law and associated Prakas (ministerial regulations) require employers to maintain safe and hygienic workplaces. This includes preventing workplace hazards, providing protective equipment when needed, and training employees on occupational safety. Employers are also subject to inspections by the Ministry of Labour and Vocational Training.

Worker classification and misclassification in Cambodia: Contractors vs. employees

When hiring in Cambodia, one of the key compliance decisions is whether to classify a worker as an employee or as an independent contractor. This choice affects everything from how taxes are paid to what benefits workers receive and the level of legal protections they enjoy.

Getting classification wrong can lead to serious consequences, so it’s important to get it right from the jump. Below, we outline the core differences between employees and contractors in Cambodia and the risks if you misclassify.

Worker classification in Cambodia: Key differences between contractors and employees

Consequences of misclassification in Cambodia

Misclassifying workers in Cambodia—treating someone as an independent contractor when they should legally be an employee—can expose employers to a range of risks:

• Back payments: Employers may have to pay contractors unpaid wages, retroactive tax withholdings, and missed social security contributions to the National Social Security Fund (NSSF).

• Fines and penalties: Authorities may impose financial penalties for noncompliance with Cambodian labor laws.

• Legal action: Misclassified workers can pursue claims through labor courts, which may result in compensation orders or additional damages against the employer.

Because the penalties can be significant, companies hiring in Cambodia should carefully assess the nature of each working relationship, document the terms clearly, and consult with local legal or HR professionals to reduce the risk of misclassification.

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Wages and payroll in Cambodia

Before hiring in Cambodia, it’s essential to understand how compensation, taxation, and payroll administration work together under local laws. Employers must not only pay staff accurately and on time but also meet specific obligations around income tax withholdings, social security contributions, and mandatory benefits like seniority pay.

Here’s an overview of key payroll considerations for Cambodia.

Minimum wage in Cambodia

In Cambodia, the statutory minimum wage for workers in the garment, textile, footwear, travel goods, and bag sectors will rise to USD 210 per month, effective January 1, 2026 (up from USD 208 in 2025).

While this rate applies specifically to these sectors, it often serves as a benchmark for other industries, though many employers set higher wages to remain competitive and attract talent.

Payroll frequency in Cambodia

Cambodian law typically requires businesses to pay salaries once per month, usually on the last working day of the month. Employers must issue payslips for each pay run that clearly break down gross earnings, deductions (including taxes and social security), and net pay. While there isn’t a standard payroll cutoff date, employers should ensure employees’ work hours are finalized before the date of payment each month.

There is also a regulation, Prakas No. 442 (2018), which mandates that wages be paid twice monthly (first half in the second week, remaining in the fourth week). However, in practice, many employers continue with monthly payroll cycles, and compliance with the semi-monthly rule is uneven.

13th month pay in Cambodia

The Cambodian Labour Law does not require employers to provide a traditional 13th month salary bonus. However, employees on undetermined-duration contracts (UDCs) are entitled to a mandatory seniority payment, which replaces the former dismissal indemnity.

Under the seniority payment regime introduced in 2019, the annual entitlement is 15 days’ wages and fringe benefits, paid in two installments—7.5 days in June and 7.5 days in December.

Employees under fixed-duration contracts (FDCs) do not receive the seniority payment.

Run payroll compliantly in Cambodia

Running payroll in Cambodia requires strict compliance with local labor, tax, and social security laws. Employers must calculate and withhold personal income tax, National Social Security Fund (NSSF) contributions, and other mandatory deductions before remitting them to the General Department of Taxation (GDT) and the NSSF.

In addition, employers must maintain detailed payroll records, issue payslips, and ensure all salary payments meet requirements under the Labour Law and relevant ministerial Prakas (regulations). Because Cambodian payroll compliance can be complex—especially with evolving rules around social security and semi-monthly wage payments—many companies choose to partner with an employer of record service like Rippling, which can handle payroll, tax filings, and benefits administration to ensure smooth, compliant operations from day one.

Employer and employee taxes in Cambodia

Understanding Cambodia’s tax system is essential for any business expanding into the country or hiring local employees. The GDT oversees all tax administration, including employer and employee contributions. Employers are responsible for withholding income tax from employee salaries, submitting monthly tax declarations, and contributing to the NSSF.

Cambodia operates under a self-assessment regime, meaning employers must accurately calculate, withhold, and remit all required taxes on time to avoid penalties. Here’s a breakdown of employment taxes and obligations in Cambodia.

Employer taxes in Cambodia

Here are the mandatory employer payroll taxes in Cambodia:

Employee taxes in Cambodia

The following contributions must be deducted from employees’ paychecks as a percentage of their income: 

Employees must also have income tax deducted from their paychecks:

Penalties for not paying taxes in Cambodia

Cambodia’s Law on Taxation sets clear penalties for late filing, underpayment, or other forms of noncompliance. Under Article 125, taxpayers are considered negligent if they underpay by 10% or fail to file or pay taxes on time. Article 126 defines serious negligence when underpayment exceeds 10%, and harsher penalties apply when the General Department of Taxation (GDT) issues a unilateral reassessment.

Penalties vary based on the severity of the offense:

• 10% for ordinary negligence, including late filing or minor underpayment

• 25% for serious negligence, when underpayment exceeds 10% of the due amount

• 40% when the GDT issues a unilateral reassessment after a lack of cooperation

In addition to these fines, interest of 1.5% per month applies to any unpaid or late-paid tax, accruing from the original due date. To avoid these penalties, employers should ensure timely filing, maintain complete documentation, and consider working with an employer of record or local tax advisor to manage tax compliance in Cambodia.

Employee benefits in Cambodia

Employee benefits in Cambodia combine legally required protections under the NSSF with optional perks that employers offer to remain competitive. Through the NSSF, employees receive core protections covering health care, occupational risks, and pensions, forming the foundation of Cambodia’s social protection system.

Many employers, particularly in urban centers and multinational sectors, go beyond these statutory requirements by offering additional allowances, insurance, and development programs. Offering a competitive benefits package can help attract and retain skilled workers while ensuring compliance with Cambodia’s labor laws.

Here’s a breakdown of both mandatory and optional employee benefits in Cambodia.

Mandatory benefits in Cambodia

All statutory employee benefits in Cambodia are administered through the NSSF, which provides protection for health care, occupational risks, and pensions. Employers are required to register their employees with the NSSF and make the appropriate contributions to maintain coverage. These contributions include:

• Health insurance: Funded entirely by employers, this NSSF scheme covers medical consultations, hospitalizations, maternity care, and preventive services. Employees can access care through public hospitals and authorized private facilities.

• Occupational risk insurance: Also funded solely by employers, this program compensates workers for work-related injuries, disabilities, or deaths and covers associated medical expenses.

• Pension scheme: Both employers and employees contribute to the pension portion of the NSSF. Currently, each party pays 2% of the employee’s monthly wage, with rates expected to increase gradually over time. The pension scheme provides retirement, disability, and survivor benefits.

Optional benefits in Cambodia

To stay competitive in Cambodia’s evolving job market, many employers offer additional perks beyond the mandatory NSSF benefits. These optional benefits help attract skilled talent, boost retention, and align with growing employee expectations—particularly in sectors like finance, manufacturing, and tech.

Common optional benefits include:

• Supplementary health insurance: Many employers extend private medical insurance to cover a wider range of treatments, private hospital access, and family dependents.

• Transportation and meal allowances: Employers often provide monthly stipends to help with commuting and daily meal expenses, especially in urban centers like Phnom Penh.

• Communication allowance: Offered to employees in roles that require frequent phone or internet use to support productivity.

• Training and development: Companies can invest in employee growth through professional courses, workshops, or tuition reimbursement programs.

• Company vehicles or housing allowances: Typically reserved for senior staff or expatriates, these benefits support mobility and relocation needs.

Working hours, overtime, and leave in Cambodia

Navigating Cambodia’s labor regulations around working hours, overtime, and employee leave is essential for staying compliant and maintaining a healthy work environment.

From understanding maximum working hours and overtime rates to managing maternity protections and special leave, employers must stay aligned with Cambodia’s legal framework to avoid disputes and foster fair, sustainable employment practices. Here’s what businesses need to know.

Standard working hours in Cambodia

Cambodia’s standard workweek is 48 hours, typically consisting of six eight-hour workdays. If an employee’s work schedule consists of split shifts, employers can set up one shift in the morning and the other in the afternoon.

Overtime laws in Cambodia

In Cambodia, overtime rates are determined based on the type of day and amount of time worked. If an employee must work overtime after their normal working day, they’ll receive overtime pay at a rate of 150% of their standard wage. However, overtime hours worked at night (between the hours of 10 pm and 5 am) or during weekly days off shall be paid at 200%.

Keep in mind that requests for overtime must be submitted to the MLVT for approval (with willful agreement from the employee), and overtime hours are limited to two per working day.

Rest period and break laws in Cambodia

Cambodian law mandates at least 24 hours of consecutive rest weekly, usually on Sunday. However, there are no relevant prakas that specify daily rest breaks or lunch periods, leaving it up to employers to determine breaks for employees. The standard is 30 minutes to one hour for every six hours worked.

Leave laws in Cambodia

The Cambodian Labour Law provides several types of leave to ensure employees can manage personal, health, and family responsibilities while maintaining job security. Below is an overview of the main leave entitlements that employers in Cambodia must provide:

• Annual leave: Employees who have completed one full year of continuous service are entitled to a minimum of 18 days of paid annual leave per year, accruing at a rate of 1.5 days per month. After three years of service, employees gain one additional day of leave for every three years worked.

• Sick leave: Employees are entitled to sick leave when they’re unable to work due to illness or injury, provided they submit a medical certificate. During the first month of certified sick leave, employees receive full pay. In the second and third months, they’re entitled to 60% of their wages, and after the third month, sick leave is typically unpaid (with a cap of up to six months total).

• Maternity leave: Female employees in Cambodia are entitled to 90 days of paid maternity leave. During this period, employees receive half of their regular wages, provided they’ve worked for the employer for at least one year. The law prohibits employers from terminating a woman’s employment during maternity leave or while she’s pregnant. Mothers who breastfeed are also entitled to one hour of paid break time each day for one year after returning to work.

• Paternity leave: Cambodia’s Labour Law does not explicitly provide for paternity leave, but male employees can request up to seven days of special leave for the birth of a child. This leave is typically paid and may be deducted from the employee’s annual leave balance if unused. If annual leave has already been exhausted, the employer may allow the employee to make up for the time by working longer hours later—up to 10 hours per day and 45 hours per week—paid at the standard hourly rate.

• Special leave: Employees may take up to seven days of paid special leave per year for personal or family-related matters, such as marriage, childbirth, illness, or the death of an immediate family member. This leave is typically deducted from the employee’s annual leave balance if unused.

• Public holidays: Cambodia has 16 paid public holidays:

  • International New Year's Day

  • Day of Victory over the Genocidal Regime

  • International Women's Day

  • Khmer New Year's Day

  • International Labor Day

  • Visaka Bochea Day

  • Birthday of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia

  • Royal Ploughing Ceremony

  • Birthday of Her Majesty the Queen-Mother NORODOM MONINEATH SIHANOUK of Cambodia

  • Pchum Ben Day

  • Constitution Day

  • Mourning Day of the Late King-Father NORODOM SIHANOUK of Cambodia

  • Coronation Day of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia

  • Water Festival

  • National Independence Day

  • Peace Day in Cambodia

• International New Year's Day

• Day of Victory over the Genocidal Regime

• International Women's Day

• Khmer New Year's Day

• International Labor Day

• Visaka Bochea Day

• Birthday of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia

• Royal Ploughing Ceremony

• Birthday of Her Majesty the Queen-Mother NORODOM MONINEATH SIHANOUK of Cambodia

• Pchum Ben Day

• Constitution Day

• Mourning Day of the Late King-Father NORODOM SIHANOUK of Cambodia

• Coronation Day of His Majesty Preah Bat Samdech Preah Boromneath NORODOM SIHAMONI, King of Cambodia

• Water Festival

• National Independence Day

• Peace Day in Cambodia

Work permits in Cambodia

When hiring foreign workers in Cambodia, it’s essential to understand the country’s visa and work authorization requirements. Employers must ensure that all foreign hires have both the correct E-type visa and a valid work permit and employment card issued by the Ministry of Labour and Vocational Training (MLVT) before they begin work.

Cambodia does not participate in regional free-movement agreements like the EU, so all non-Cambodian citizens must secure the appropriate visa and work authorization to live and work legally in the country.

Here’s what you need to know about Cambodia’s work permit system and the steps required to stay compliant.

Who needs a work visa in Cambodia?

Any foreign national must obtain a work permit and employment card to legally work in Cambodia. Unlike tourist or business visas, these permits specifically authorize employment and are typically tied to a registered Cambodian employer.

Foreigners entering Cambodia for employment usually start with an E-class visa (also known as an ordinary visa), which can later be extended for up to a year and converted into a work permit once the individual secures a job. Employers are responsible for ensuring that all foreign employees hold valid permits before they begin work—failure to do so can land your business in hot water.

How long does it take to get a work visa in Cambodia?

Processing times for Cambodian work visas and permits can vary depending on the type of visa, the applicant’s documentation, and the workload of the MLVT. Generally, E-class visa extensions (necessary for employment) take around 15-20 days to process once all documents are submitted. To avoid potential delays, it’s best to begin the visa application process as soon as the employment offer is finalized.

Types of work visas in Cambodia

Cambodia issues several categories of E-type visas for foreign nationals intending to live or work in the country. Here are the visa options available to employers interested in working with foreign candidates:

• EB visa: The most common visa type for foreign employees, valid for up to one year and renewable. It allows foreigners to live and work in Cambodia once they have obtained the necessary employment documentation.

• EG visa: Typically granted to job seekers or individuals entering Cambodia to explore employment opportunities. It’s usually issued for one, three, or six months and cannot be renewed indefinitely.

• EP visa (Proposal visa): A temporary category issued to foreigners seeking employment, internship opportunities, or volunteering positions.

Regardless of the E-type visa granted, foreign nationals must obtain a work permit and employment card from the MLVT to legally work in Cambodia.

Termination and redundancy in Cambodia

When hiring in Cambodia, it’s important to understand how to end employment relationships lawfully—though, terminations likely aren’t top of mind at the outset. The Cambodian Labour Law sets clear rules around notice, severance, and valid reasons for dismissal, which vary depending on whether the contract is fixed or indefinite.

Because employees have strong protections against unfair termination, employers must follow these steps carefully to avoid disputes or penalties. Here’s what to know about compliant termination and redundancy in Cambodia.

Does at-will employment exist in Cambodia?

The concept of at-will employment—where either the employer or employee can terminate the employment relationship at any time, for any reason, and without notice—does not exist in Cambodia. Employment relationships are governed by the Cambodian Labour Law, which requires that all terminations be based on lawful grounds and follow due process.

Employers may only dismiss employees for legitimate reasons such as poor performance, misconduct, or redundancy. In most cases, they must provide written notice and pay any severance or indemnity owed under the employee’s contract type—whether it’s a fixed-duration contract (FDC) or an undetermined-duration contract (UDC).

Notice periods in Cambodia

A notice period is the amount of time an employer or employee must provide before ending an employment relationship. This ensures that both parties have time to prepare for the transition; employers can find a replacement, and employees can plan their next steps.

Under the Cambodian Labour Law, notice periods vary depending on the type of employment contract and the employee’s length of service. For UDCs, employers must provide written notice as follows:

Employees under an FDC generally do not require notice if the contract expires naturally at the end of its term.

Severance pay in Cambodia

In Cambodia, severance pay obligations depend on the type of employment contract and the reason for termination. For employees under an FDC, if the employer ends the contract without cause before it expires, the employee is entitled to:

• Severance pay of at least 5% of total wages earned during the contract term

• Compensation for accrued annual leave and any unpaid salary

• Damages equal to the wages and benefits the employee would have received until the contract’s scheduled end date

For employees under a UDC, termination without valid cause requires payment of:

• Accrued annual leave and unpaid employee salary

• Two days of paid leave per week during the notice period to seek new employment

• Seniority indemnity payments, which compensate employees for their length of service

How to terminate employees compliantly in Cambodia

To terminate an employee in Cambodia, employers must follow the Labour Law, carefully adhering to notice, severance, and seniority pay requirements, which all vary depending on the contract type and employee’s length of service.Remaining compliant includes documenting the reasons for termination, issuing written notice, and settling outstanding payments promptly. Consulting with a legal advisor or partnering with an employer of record (EOR) can simplify the process, helping ensure every step meets Cambodia’s labor regulations and keeps your company in good standing.