On 21 September 2018, the Ministry of Labour and Vocational Training (“MLVT”) issued two new Prakas (Ministerial Proclamation): (i) Prakas No. 442, which establishes a new requirement to pay employees monthly wage instalments twice a month; and (ii) Prakas No. 443, which relates to the introduction of seniority payments.
Prakas No. 442: Monthly wages to be paid in two installments
According to Prakas No. 442, commencing from 2019 onwards, all owners of enterprises or establishments that are covered under the provision of the Cambodian Labour Law shall pay monthly wages in two installments per month to their employees.
Prakas No. 443: Introduction to seniority payments
Additionally, under Prakas No. 443, from 2019 onwards, all enterprises are required to provide ongoing seniority payments to their employees whose contract is deemed as an undetermined duration contract under the Labour Law. This replaces the previous ‘severance payment’ requirements.
A seniority payment is only applicable to an employee with an undetermined duration contract.
An employee with a fixed duration contract is not entitled to a seniority payment, but is instead entitled to a severance payment at the end of the duration of their employment contract. At the expiration date of a fixed duration contract, workers employed under such contracts are entitled to severance pay which is proportional to both their wage and length of their employment contract and as stated in the collective agreement. If the employment contract or collective agreement does not stipulate such information, the severance pay shall be equal to at least 5% of the wages paid during the length of the contract.
Under Prakas 443, employers shall adhere to the following requirements:
Accrued seniority payments are based on salary only and not bonuses and other benefits.
Pursuant to Prakas 443, the total accrued seniority payment made to each employee shall not exceed 6 months.
Based on the recent Labour Law amendment, employees who have been dismissed due to serious misconduct shall not be entitled to seniority payments, whereas under Prakas 443, workers who have resigned shall not be entitled to receive their remaining portion of the accrued seniority payment from previous years.
This alert is for general information only and is not a substitute for legal advice.