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Cambodia

Benefits & Compensation in Cambodia

What are Employee Benefits?

Employee benefits consist of various non-wage compensation provided to an employee in addition to their salary. These benefits are only sometimes monetary ones. Examples of such employee benefits are health insurance, sick leave, maternity leave, vacation, conveyance fees, pension schemes, and other benefits. These benefits are present in the labor laws of almost every country.

These employee benefits are a great way to show your concern and priority toward an employee. These benefits help retain the most talented people working in your organization. A well-designed employee benefits program can lead to more dedicated employees resulting in a more efficient workforce. Read on to learn more about employee benefits in Cambodia.

Compensation Laws in Cambodia 

In Cambodia, the relationship between employees and employers depends primarily on the Labor law ( 1997, further amended in 2021). In addition, the Ministry of labor and vocational training issues various regulations regarding compensation and benefits policy in Cambodia.

  • The minimum wage in Cambodia is KHR 818,800 or USD 200 for regular employees and KHR 810,612 or USD 198 for probationary workers. This regulation came into effect on January 1, 2023.
  • In all organizations, workers of either sex are entitled to work 8 hours per day or 48 hours per week. Every hour worked after the 48 hours will be considered overtime.
  • If an employee is needed to work overtime due to urgency required in the job, they should receive at least 150% of the regular wage for the overtime. The employees will receive 200% of their salary if they do overtime during the night hours or weekly rest days.
  • Working night shifts that include a period of 10 pm to 5 am requires the employees to receive 130% of their regular wage.
  • Workers working on public holidays will receive 200% of their regular wage.  

How to Design an Employee Benefits Program for Employees in Cambodia?

The steps for designing employee benefits in Cambodia are discussed below.

Step 1: Consider the budget and set an objective

The first step in designing an employee compensation package in Cambodia is to assess the budget to formulate the package. As businesses always look forward to making profits, the cost of these packages must have parity with the available funds. In addition, the company should also set some objectives while creating employee benefits in Cambodia. An example of such an objective is complying with national labor laws. 

Step 2: Analyze the needs of the employees

In this step, the employer studies the work ethics of the organization thoroughly. It will help in understanding the requirements of the employees. Employers should also have a look at the compensation packages of other organizations. 

Employers can perform an internal assessment to gather information on the best possible employee compensation and benefits in Cambodia. As the needs of the employees are of utmost importance, it is best to acquire knowledge from them on the necessary fringe benefits.

Step 3: Design an effective employee benefit plan

After assessing the requirements of the employees, the next step is to create the most effective compensation and benefits policy in Cambodia. These benefit plans prioritize employee requirements. 

In addition to guaranteed benefits, the compensation package should include supplemental or optional benefits that the employees can choose according to their requirements. The company should cut off the unused benefits and focus on the ones the employees are interested in.

Step 4: Make the employees aware of the benefit plan

While designing a workers’ compensation in Cambodia, the fourth stage is to make the employees aware of the new compensation package. Ensuring the requirements of the employees will often result in better productivity. 

Employers can collect feedback from employees on the new benefit plan. It will give the employer a great deal of insight into it. If the feedback is mostly negative, the employer can fix them accordingly.

Step 5: Evaluate the effectiveness of the employee benefit plan

After setting up a compensation package in Cambodia, regular assessment of the effectiveness of the employee benefits program is critical. The requirements of the employees change over time. The evaluation will inform the employer about the potential changes in the benefits required by the employees.

Types of Guaranteed Benefits in Cambodia

The workers’ compensation in Cambodia directs employers to provide several guaranteed benefits to their employees. The guaranteed benefits are

Sick leave

There are no strict directives on short-term sick leaves in the labor law of Cambodia. For long-term sick leave, there are some regulations. Sick leave may last up to six months. Sick leave of up to a month is fully paid. For the second and third months of sick leave, the employer will pay 60% of the salary. The fourth to sixth months of sick leave is without pay. 

Maternity leave / Paternity leave

According to labor law, there are provisions for maternity benefits in Cambodia. The labor code grants a maternity leave of 90 days. The leave include Sundays and Holidays. There are provisions in the labor law to extend maternity leave in the event of post-natal illness.

Only employees working for more than a year will qualify for paid maternity benefits in Cambodia. The employer will pay 50% of the regular wage along with other benefits ( if present) to such employees. In addition, during pregnancy and the first two months after childbirth, female employees will do light work only.

As for paternity leave, the employees can have a day of paid paternity leave.

Paid holidays

The labor law provides paid annual leave benefits in Cambodia after completing one year of service. The full-time workers, working 48 hours per week, get 18 days of leave for twelve months of service.

The workers who work less than 48 hours per week are entitled to 15 days of leave for the twelve months of service. For every three years of consecutive service, the annual leave will increase by one extra day. The employee is entitled to their regular wage during the annual leave.

Public holidays

Employee benefits in Cambodia include pay on public holidays. The employers pay salaries in full to the workers for public holidays on memorable days, and religious holidays. Every year, the ministry of labor sets a date for all paid national holidays in Cambodia. Cambodia celebrates around 19 public holidays.  Some of these holidays may extend up to 3 days.

If the public holiday falls on a Sunday, the employees will get the next day off. If an employer requires the service of an employee on a public holiday, they will pay 200% of the regular wage. 

Weekly time off

According to labor law, leave benefits in Cambodia also include weekly rest days. The employees will get 24 consecutive hours of rest every week. Some industries are permitted to rotate the weekly rest days of the employees if resting them on the same day jeopardizes their regular operation. In such cases, the employer should seek permission from the ministry of labor in Cambodia. 

During emergencies, weekly rest days can be suspended for a particular employee. The labor law of Cambodia prohibits women and workers under 18 years from working on weekly rest days during emergencies. 

Health insurance

Employee benefits in Cambodia include health care benefits. Any employee injured on the job is entitled to free healthcare provided by the employer.

Bonus

According to labor law, employee benefits and compensation in Cambodia include a seniority bonus paid after completing at least one year of work. This bonus ranges from USD 2 to USD 11 per month.

Employee Benefits for Expatriates

The Cambodian people working abroad can be divided into two sub-categories to understand the employee compensation policy in Cambodia. 

  • A Cambodian employee working abroad under an employer from Cambodia pays taxes on salary and fringe benefits tax. 
  • A Cambodian national working abroad under a non-Cambodian employer only pays income tax according to the laws of the country they are working in.

The employee compensation and benefits policy in Cambodia applies to foreign nationals working in Cambodia in a similar way as it applies to local employees. Foreign nationals enjoy the same benefits as locals.

How are Employee Benefits Taxed in Cambodia?

According to the law, some of the employee benefits in Cambodia are taxable. This tax is known as the Fringe Benefits Tax (FBT). The FBT is payable at a flat 20% of the value of the benefits. The taxable fringe benefits are

  • Payment of rent
  • Loans with interest less than the market value
  • Use of  motor vehicle
  • Education of children
  • Entertainment expenses
  • Domestic help
  • Life or health insurance, if the same insurance is not offered to all employees irrespective of the post they hold.

Supplemental Benefits for Employees in Cambodia

Supplemental benefits are benefits that enhance the insurance, medical, and retirement coverage of an employee. The supplementary benefits included in the compensation package in Cambodia are discussed below.

Healthcare allowances

The compensation structure in Cambodia allows only the formal sector workers to have health insurance coverage as medical benefits for employees in Cambodia. So, private organizations can provide their employees with healthcare allowance as an optional benefit.

Housing allowances

The government in Cambodia offers housing allowances only to employees in selected industries. Employers from other organizations can design Compensation and benefits policy in Cambodia so that employees can have housing allowances as optional benefits.

Transportation allowances

Transport allowances can also become an optional benefit while designing a compensation package in Cambodia.

Attendance bonuses

The Cambodian government has provisions for attendance bonuses in selected industries. Employers from other organizations can implement an attendance bonus as part of employee benefits in Cambodia.

Restrictions for Cambodia Benefits and Compensation

There are some restrictions that the employer should keep in mind while framing a compensation package in Cambodia. An organization needs to have a registered entity in the country. For that, it requires setting up a subsidiary.

In addition, there are other regulations, such as 

  • The employees are entitled to a salary at least once a month (for the case of laborers, it is twice a month). 
  • Also, failing to pay the minimum guaranteed wage may result in a fine of 61-90 days of daily wage or imprisonment between 6 days to one month.

How Can Multiplier Help in Benefits Management in Cambodia?

An organization is required to set up a subsidiary to operate in Cambodia. Multiplier offers the organization a helping hand to employ the workforce without setting up a subsidiary. It has a network of experienced professionals with in-depth knowledge of the labor law of Cambodia.

Multiplier will help your organization to create a compensation and benefits policy in Cambodia. We will help you to facilitate grants, set up employee insurance benefits, and issue ESOPs. Multiplier has a presence in several countries. For that, we can help you with testing new markets and recruiting talents at cheaper costs.

Frequently Asked Questions

No, Cambodia does not have an income tax. Instead, it has a monthly tax imposed on Cambodian residents.

The employer must pay 2.6% to the social security fund.

The maximum working hours are 8 hours per day and 48 hours per week. Any work after 48 hours is considered overtime in Cambodia.

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