Cambodia’s labor market has evolved dramatically over the past couple of decades. It’s also rules-dense and designed to protect the rights of employees and prevent exploitation. When you don’t understand the local language and you’re not keeping up with Khmer politics, this poses an immense risk management problem.
If you’re on the point of setting up a Cambodian branch, here are some of the biggest issues you’ll be contending with within the country’s labor framework.
1. Employment Contracts
In Cambodia, most employment contracts are bilingual, appearing in Khmer and English. However, in the event of conflict, the Khmer version of the contract will usually take precedence. There are two types of employment contracts in Cambodia that are recognized as legal:
- Fixed Duration Contracts (FDCs) – Designed for temporary work, these are valid for up to two years and are fully renewable.
- Unspecified Duration Contracts (UDCs) – Designed for ongoing employment. These contracts come with stronger termination protections.
Each contract must contain a range of essential provisions, including job title, working hours, workplace, wages, benefits, and termination conditions. Probationary clauses may also be incorporated for up to three months for regular employees.
Your EOR will standardize your contract templates and ensure that the English and Khmer versions align, providing you with protection if any conflicts arise later.
2. Working Hours and Overtime
Under Cambodian labor law, the standard working week is 48 hours a week, split into eight-hour days. Any additional hours must be paid at the prevailing overtime rate. Changes to the law also mean that overtime must be voluntary and each worker can work no more than two hours per day.
Regulations also set overtime pay at 150% of a staff member’s usual wage. Any work done on non-workdays or during the night must be paid at 200% of normal wages.
3. Minimum Wage
Cambodia doesn’t have a universal minimum wage system. The statutory minimum wage only applies to four industries, including the garment, textile, travel goods, and footwear industries. As of 2025, this is $208 USD per month for regular employees and $206 for workers who’re on probation.
Other sectors have no minimum wage, but the reality on the ground is that these sectors tend to have much higher wages, especially in services and technology. Your EOR will brief you on the current market norms for your industry, helping you to attract leading talent and avoid falling foul of any sector-specific regulations.
4. Employee Benefits
Cambodia does provide statutory benefits to protect employees against exploitation. Most benefits are mandatory, with discretionary benefits mainly confined to industries such as Phnom Penh’s tech market. Examples of discretionary benefits might include life insurance and private health insurance.
Today, the most important benefits to bear in mind are:
- Annual Leave – 18 working days per year after a year of service, increasing by an extra day after every three-year period of continuous service.
- Public Holiday Time – Cambodia boasts more than 20 public holidays every year, but the list is revised annually via royal decree. Employees who work on a public holiday must receive 200% of their usual hourly rate.
- Sick Leave – No statutory sick pay, but the law allows for contract suspension without termination for six months for serious illnesses, proven via a medical certificate.
- Maternity Leave – Expectant mothers are entitled to 90 days of maternity leave, with pay linked to seniority and your company’s policy.
5. Payroll Tax or Social Contributions
Cambodia’s social security framework is centered on the National Social Security Fund (NSSF). All employers are required to register each new hire with them within a few days of hiring. Additionally, a certain portion of each employee’s wages must be withheld and remitted to the NSSF.
Current monthly contributions are:
- Occupational Risk Cover – 0.8% of gross wages.
- Healthcare – Approximately 1.3% of gross wages from the employer and employee. In many cases, though, the full 2.6% burden does fall on employers, making local guidance essential.
- Pension – Phased coverage. Employers contribute 2% of gross wages for the first five years, followed by 4% during the second five-year period, and rising thereafter. Employees pay the same proportion to the NSSF’s pension scheme.
It’s this web of phasing and rules that can quickly lead to confusion and payroll inaccuracies. Your EOR will configure all NSSF contributions according to the latest regulations set by the Ministry of Economy and Finance.
6. Termination and Severance Pay
Termination procedures in Cambodia must be handled with extreme care because they change based on the type of employment contract.
Employees under an FDC are entitled to unpaid wages and unused leave. Plus, they may be entitled to severance pay equal to 5% of all wages paid throughout the length of their contract. If terminated without a valid reason, they may also be entitled to damages.
In the case of workers under a UDC contract, employees are also entitled to unpaid wages and unused leave. They’re also entitled to ongoing seniority payments, which are essentially a replacement for the “indemnity for dismissal” model. Likewise, if termination is considered to be unfair, they may be entitled to damages.
The termination and severance regime has been amended several times in recent years, which is why so many foreign operations rely on local experts.
7. Foreign Workers
Cambodia utilizes a quota system for foreign workers to protect the opportunities of domestic workers. The default position in Cambodian law is that a company’s workforce may be no more than 10% non-domestic, with a split of 6% skilled workers, 3% office staff, and 1% unskilled workers.
Furthermore, employers are required to apply annually to the Ministry of Labour and Vocational Training (MLVT) for a foreign employee quota to hire foreigners legally. Any non-national working for a company based in Cambodia must obtain an E-class (business) visa, a work permit, and an employment card from the Foreign Workers Centralized Management System (FWCMS).
If you don’t comply with the rules, you could be fined up to $12,600 USD for every foreign worker without a valid permit. There’s even the potential for imprisonment or deportation for repeat offenders.