Cambodia is an economy known for its leading industries that contribute to its GDPs, such as tourism, textiles, agriculture, transport, and energy. Cambodia has a high potential among developing countries in renewable energy resources in the skilled labor sectors. This serves as a model to learn from other ASEAN countries in conducting power auctions.
While Cambodian employees are skilled, especially in industries that include services, agriculture, energy, and textiles, the Cambodian citizens focus significantly on education. In the education system in Cambodia in recent times faced many challenges. In the education system in Cambodia in recent times faced many challenges. In the recent past, the Cambodian Government has initiated significant improvements and invested considerably in vocational education, especially in rural areas, to tackle poverty and unemployment.
A few areas that typically have a higher economic activity alongside more significant business and tech hubs are Phnom Penh, Krong Siem Reap, Preah Sihanouk, Krong Battambang, and Krong Ta Khmau.
Typically with an English-Speaking talent, these cities are also known to have great colleges that include the Institute of Technology of Cambodia, Royal University of Phnom Penh, Royal University of Agriculture Cambodia, University of Health Science, and the University of Cambodia; hiring graduates from these universities are a plus. You can find more about the top universities in Cambodia and their rankings within Cambodia on Webometrics.
Although it is relatively easy to grow your business in Cambodia, employers must know Cambodia’s local tax compliances, benefits, and payroll aspects, considering a skilled and educated population pool.
Here is where Cambodia PEO or an Employer of Record can help. Multiplier as a PEO solution assumes responsibilities as your co-employers. Our team of professionals assume responsibility for all your HR operations in Cambodia – onboarding, payroll, compliance management, and employment contracts – while you focus on business matters in the country.
Why Use a Cambodia PEO?
Employment is essential when looking to expand a business and hire a remote team in Cambodia; however, a few industries call for stringent work regulations for specific categories of employees. An example of such an industry and class of employees would be laborers working for a manufacturing plant.
Cambodia’s labor codes and employment laws effectively protect employees/workers’ rights while preserving employers’ rights and legitimate interests of business expansion. Therefore, the employment law applies to all companies – national or foreign, and all the employees regardless of their citizenship.
Though understanding the labor laws are relatively straightforward, compliance is an area that requires assistance when looking for international talent.
Suppose you are starting your business or are looking to hire talent to expand your business. In that case, there is a need to understand all the details of taxes, employment contracts, compliance, and matters related to the labor code.
Cambodia PEO Costs
Usually, PEOs charge based on two pricing models – fixed and variable. A PEO based on the fixed pricing model charges a transparent fee ranging from $200 – $1000 per employee per month.
Multiplier is one such PEO solution. Our costs for Cambodia start from $200 per employee per month. The final price depends on the complexity of the employment laws of the employee’s jurisdiction.
Our prices ensure that you get the most out of your employee spending. Every employee hired through our PEO also receives HR support, benefits management, and a live dashboard to track workforce spending in real-time.
How to Hire in Cambodia
Technology is a boon in today’s generation, especially during the post-covid-19 period – when the doors have opened to global employment opportunities for employees and employers across the globe (such as virtual assistants).
With over 15 million, Cambodia is known for its skilled and educated workforce, especially in the services industry. The capital and largest city are Phnom Penh, Cambodia’s political, economic, and cultural center. The tourism sector employs 26% of the country’s workforce, translating into roughly 2.5 million jobs for Cambodians.
While entering Cambodia to expand your business and your global team is reasonably straightforward, a gray area would be aspects like the hiring process and where to hire from, the local labor law requirements, payroll, taxation, and compliance.
Partnering with a Cambodian PEO like Multiplier can help navigate these gray areas that require professional assistance such as tax and compliance. Multiplier is a global PEO and EOR, assisting global brands in gaining a competitive edge in the region. Book a demo to understand how Multiplier efficiently handles your global HR operations while you focus on the growth aspect of your business.
However, if you are looking at a DIY method, below are a few tips and certain details you may want to consider while expanding your business in Cambodia and complying with local laws.
Cambodia Employment Contracts
Employers must provide employment contracts for employees residing in Cambodia.
Employment Contracts are two types of contracts –
- Fixed Duration Contracts (also referred to as Specific Duration Contracts): must be made in writing
- Undetermined or Unfixed Duration Contracts: Contracts made for a specific duration cannot be made for a period exceeding two years and must be renewed within this two-year limitation. After two years, the contract becomes an undetermined duration contract.
The employment contract will specify compensation, benefits, work schedule, leave policies, probation period, termination guidelines, overtime pay, etc.
The contracts in Cambodia are usually made for an unfixed duration unless specified.
A workweek in Cambodia is six days per week with 8 hours per day, or 48 hours a week. The employees must get at least one full day (24 hours) off per week, i.e., a Sunday. Enterprises have the right to limit the work hour while adhering to the stipulated law.
The lunch break can last from 30 minutes to 1 hour, depending on the business requirements.
However, The maximum number of overtime is 2 hours per day. Therefore, according to the law, the maximum number of hours a person should be employed is 10 hours per day.
The labor law defines night work as work performed from 22:00 to 05:00 hours.
- Employees, children, laborers, or apprentices aged less than eighteen cannot perform night work.
- If employees finish work at night, the employer must provide them with a place to stay or cater for transport to the home of residence of the employee.
- The law is unclear as to the pay rates for night work. The current practice in the garment, shoe, and textile industries is to pay regular and overtime at night at 200% of the average daily rate.
When employed in Cambodia, the minimum monthly wage is 3,310,000 KHR as of 2021. You must also keep in mind the minimum salary includes housing, transportation, and other benefits and differs based on different areas, cities, or regions.
Learn more about the average monthly salaries in different sectors and professions on SalaryExplorer.
Employment benefits in Cambodia
Employment benefits are key if, as an employer, you are looking to retain your employees with your organization for an extended period.
Cambodian labor law recognizes two types of contract –
- Fixed Duration Contracts (also referred to as Specific Duration Contracts): Fixed duration contracts must be made in writing
- Undetermined or Unfixed Duration Contracts: Can be in writing or oral, depending on the nature of the work
Contracts made for a specific duration cannot be made for a period exceeding two years and must be renewed within this two-year limitation. After two years, the contract becomes an undetermined duration contract.
These may include benefits such as Leaves, vacation policies, maternity leaves, sick leaves, healthcare insurance, and any additional benefits you may want to provide to appreciate the time and hard work.
Leaves and Vacation
Full-time employees get 1.5 days of annual leave per month, totaling 18 days per year. According to the law, employees can use their leave after one year of service. However, many organizations allow their employees to take their leaves in the first year. If an employment contract terminates before one year, the employee is entitled to an indemnity based on the 1.5 days per month scale.
Part-time employees (those working less than 48 hours per week) must be given annual leave proportional to their work hours. So, an employee working 24 hours per week must be given at least nine days of paid leave annually.
Regular working hours
Leave per month (normal working days)
Official paid holidays and sick leave is not counted as paid annual leave.
Suppose an employee has not worked for two consecutive months. In that case, they are entitled to compensation calculated in proportion to the number of days they are physically present and worked in the enterprise at the termination of their contract.
There are 21 public holidays in Cambodia. Find the list of public holidays here.
One additional day off will be granted as the Substitution Day for any public holiday on Saturday or Sunday. If the public holiday falls on Saturday and Sunday, one additional day off will be granted as the Substitution Day only.
Maternity Leave and Childcare Leave
Maternity leave: Expectant mothers are entitled to 90-day maternity leave with pay after one year of continuous service. If the employee is an expectant mother and has not worked for one year of continuous service, she is still entitled to 90-day maternity leave without pay. Post maternity leave and during the first two months after returning to work, they are only expected to perform light work.
As an employer, you may not terminate or lay off an employee on the three grounds mentioned below:
- While she is on maternity leave
- Immediately before taking leave
During maternity leave, women are entitled to half of their wage that includes their perquisites (paid by the employer). You can calculate the maternity pay based on the employee’s average pay during the 12 months before departing on maternity leave and not on the minimum wage or basic wage.
In addition, mothers who breastfeed their children are entitled to one hour per day during working hours to do it. The one hour can be divided into two periods of thirty minutes each, that include –
- One during the morning shift and,
- The other during the afternoon shift.
The exact breastfeeding time should be agreed upon between the mother and employer. If there is no agreement, the periods shall be at the midpoint of each work shift.
Paternity leave: The statutory paternity leave in Cambodia is seven days and must be informed to the employer in writing.
Sick leave with pay
The Arbitration Council and certain Prakas have found that every business must set up internal regulations in providing sick leave to employees when they present certification from authorized and legally recognized doctors confirming their illness.
The pay scale for sick leave is as below:
Duration of sick leave
100% of the salary
60% of the salary
More than 4 months
Sick leave without pay
Each employee has a right to sick leave. The Labor Law is generally silent on sick leave, other than requiring a company to suspend a contract for up to six months in case of illness. In other words, the employer is required to hold a sick employee’s position, without pay, for at least six months.
Insurance and Social Security
Contributions to the National Social Security is as below:
Other covers are as below:
- Social insurance: 2.6% of monthly covered earnings. The minimum monthly wages used to calculate contributions are 200,000 riels. The maximum monthly earnings used to calculate contributions are 1,200,000 riels.
- Work injury: 0.8% of monthly covered earnings. The minimum monthly wages used to calculate contributions are 200,000 riels. The maximum monthly earnings used to calculate contributions are 1,200,000 riels.
- Survivor pension (social insurance): The amount varies depending on the number of survivors and their relation to the deceased. Up to 70% of the deceased’s average daily earnings are split between the eligible survivors.
- Temporary disability benefit (social insurance): 70% of the insured’s average daily earnings in the last six months is paid from the second day of incapacity until recovery. The benefit is only paid for disabilities requiring at least four days of hospitalization.
- Constant-attendance allowance: A lump sum of 50% of the insured’s average daily wage is paid if the insured requires the constant attendance of others to perform daily functions.
- Temporary disability benefit (employer liability): 100% of the employee’s net daily earnings is paid for the first day of incapacity.
- Permanent disability pension (social insurance): For an assessed degree of disability of at least 20%, the insured’s average daily earnings are paid in the last six months multiplied by 80% of the assessed degree of disability.
- Workers’ Medical Benefits Medical and rehabilitation services are provided.
Temporary: 1 – 4 days
Temporary: 4 days or more
Regular wages with the submission of a physician’s letter certified by the Ministry of Labor
Permanent: 0 – 20% incapacity
No compensation beyond that owed for temporary disability
Permanent: 20% – 50% incapacity
½ x [(annual actual earnings) x (% incapacity)] + 40% if constant care from another person required
Permanent: 50% – 100% incapacity
(annual actual earnings) x [(25%) + (1.5 x (% incapacity – 50%))] + 40% if constant care from another person required
Funeral costs of at least 90 times average daily wage + Annual Annuity as % of the employee’s salary and proportional to the number of dependents (relatives).
Extra leave for long service: Employers must give employees one additional day of leave every three years of continuous service.
Years of service
Days of leave per year
Probation period and Termination
Termination of employment contracts in Cambodia can only be done under particular circumstances that include the following reasons:
- When the contract has expired or is otherwise completed
- With both parties’ consent
- In the event of severe and/or willful misconduct
- At the will of each party
If either party (i.e., the employer or the employee) unilaterally terminates an employment contract, the preset notice period under the Cambodian Employment Law must be adhered to. The notice period stated are as below:
Less than six months
More than six months
More than one year
Between 2 – 5 years
Between 5 – 10 years
More than ten years
As per the Cambodian Labour Law, the probationary period must not be more than three months for regular employees, two months for specialized workers, and one month for non-specialized workers.
This probation period contract cannot be continued or renewed even though it is agreed between the employee and employer.
Type of worker
Duration of Probation Period
Taxes in Cambodia
Being compliant with employment law in Cambodia can be challenging because the rules are complex and subject to frequent change.
Consequently, this may place a significant burden on admin and payroll staff when they have enough to deal with in helping a company’s Cambodian operation be established.
The process is why a global PEO managed services provider can be a tremendous asset in making sense of all the regulations and ensuring seamless compliance right from the start.
The monthly cash salary of residents is taxed at the following rates –
Monthly salary (KHR*)
Tax Rate (%)
0 to 1,300,000
1,300,001 to 2,000,000
2,000,001 to 8,500,000
8,500,001 to 12,500,000
* Cambodian riel (KHR)
Non-residents are taxed at a flat rate of 20%, which constitutes a final tax.
Fringe benefits are taxable at the flat rate of 20% of the amount paid.
How Can Multiplier Help?
With Multiplier’s PEO/EOR solution, treading into a new market is as seamless as confidently ice-skating.
We can help you onboard your preferred candidate, handle HR issues and payroll, and ensure compliance with local laws. By partnering with our EOR in Cambodia, you avoid the hassle of setting up a foreign branch or subsidiary.
Once you have chosen your desired talent, start generating and customizing employment contracts for them in a few clicks and manage the workforce from a single platform. You can also pay thousands of employees in Canadian Dollars with a single click. Hire and expand using the best SaaS-based PEO service in Cambodia. Contact us to grow your business today.