Source of regulation
The Labour
Law (LL), adopted on 10
January 1997, contains the
legislative provisions on termination of employment in Cambodia. Additional
sources of law include the Constitution, and regulations of the Royal Government
and the Ministry in charge of labour. An Arbitration Council (AC) has
been established to resolve collective disputes that are not settled through
conciliation. Although Arbitration Council awards are binding only on the
parties involved in the dispute, these awards are useful in interpreting
Cambodian labour law. The
Arbitration Council website contains the Cambodian
Labour Law, many relevant regulations, and AC awards.
Scope of legislation
The LL covers all enterprises and establishments, whether
public, semi-public or private. It also applies to professional offices
and associations or groups of any nature. Nevertheless, some categories
of workers are excluded from its scope. These are:
- judges
of the judicial branch;
- permanent
workers in public service;
- personnel
of the police, the army and the military police;
- personnel
in air and sea transportation industries; and
- domestic or household servants.
(Art. 1, LL)
Contracts of employment
Article 66 of the Labour Law distinguishes between two
types of contracts: fixed duration contracts (FDCs) and undetermined duration
contracts (UDCs). FDCs are characterized by a fixed term, typically either
a set period of time or a defined task. UDCs do not contain a fixed term.
An FDC must be in writing. If not, it is considered to be a UDC (Art. 67(7), LL). Moreover,
FDCs must be limited in duration to not longer than two years, or they
will automatically be characterized as UDCs (Art. 67(2), LL).
The legal requirements relating to termination of employment
contracts vary depending on whether the terminated contract is an FDC or
a UDC.
The LL also contains specific provisions for termination
of apprenticeship contracts (Arts. 63-64, LL).
Termination of employment
FDCs
An FDC normally terminates at the end of its specified
term, or when the employee has performed the required tasks (Art. 73,
LL).
An employee can terminate an FDC before its ending
date:
- if
both parties agree in writing to terminate the contract early;
- if
the employer has engaged in serious misconduct; or
- in case of force majeure. (Art. 73, LL)
If an employee terminates an FDC before the expiration
of its term for reasons other than these, the employer is entitled to damages
equal to the amount of harm sustained.
UDCs
A UDC can be terminated at will by either of the parties. An
employee can terminate a UDC for any reason, but the employee must give
written notice to the employer (Art. 74, LL).
Dismissal
FDCs
An employer can terminate an FDC before its ending
date:
- if
both parties agree in writing to terminate the contract early;
- if
the employee has engaged in serious misconduct; or
- in case of force majeure.
(Art. 73, LL)
If an employer does not wish to continue to employ a worker
after the expiration of an FDC of more than six months duration, the employer
must inform the employee prior to the expiration of the contract. Failure
to provide such notice results in the automatic extension of the FDC for
the same period of time as the term of the initial contract (Art. 73, LL). The
Arbitration Council has found that if the initial FDC plus any extensions
exceed two years, the contract automatically becomes a UDC.
UDCs
Although a UDC can be terminated at will by either of the
parties, an employer can only terminate a UDC for “a valid reason relating
to the worker’s aptitude or behaviour, based on the requirements of the
operation of the enterprise....” (Art. 74, LL).
Before dismissing an employee, the employer must provide
written notice of termination.
Serious misconduct on the part of the employee
Serious misconduct justifies the termination of both FDCs
and UDCs. If an employee engages in serious misconduct, the employer is
not required to give prior notice of termination. However, the employer
must dismiss the employee within seven days of learning about the serious
misconduct (Arts. 26, 82 LL).
The following are examples of serious misconduct by the
employee:
- theft
or embezzlement;
- fraudulent
acts upon hiring (e.g., presenting false documentation), or during employment
(e.g., sabotage, divulging confidential information);
- serious
infractions of disciplinary, safety and health regulations;
- threats,
abusive language or assault against the employer or other workers;
- encouraging
other workers to engage in serious misconduct;
- political
propaganda, activities or demonstrations within the establishment;
- committing
violent acts during a strike; and
- failing to return to work
within 48 hours of a court declaring a strike illegal, absent a valid reason.
(Arts. 83B,
330, 337,
LL)
Prohibition on discrimination during termination
When terminating an employee, an employer cannot take into
account the employee’s race, colour, sex, belief or religion, political
opinions, trade union membership or activities, or participation in a strike
(Arts. 12, 279, 333, LL).
Indeed, special rules apply to protect union activists as well as
worker representatives known as shop stewards from unwarranted termination
(Arts. 282, 293-295, LL; Prakas 313/00).
Collective dismissals
Special provisions govern collective dismissals, i.e., those
resulting from a reduction of the establishment’s activity or from an internal
reorganization (Art. 95, LL).
Notice and prior procedural safeguards
FDCs
If an employer wants an employee to stop work at the end
of an FDC, the employer must inform the employee prior to the end date
of the contract as follows:
- For
FDCs with a term of over 6 months to one year: 10 days notice
- For
FDCs with a term exceeding one year: 15 days notice
No notice is required for FDCs of 6 months or less (Art.
73, LL).
UDCs
When an employer (or employee) terminates a UDC, prior
written notice is required. The amount of notice required depends upon
the length of continuous service:
- For
employment less than 6 months: 7 days notice
- For
employment from 6 months to 2 years: 15 days notice
- For
employment more than 2 years and up to 5 years: 1 month notice
- For
employment more than 5 years and up to 10 years: 2 months notice
- For
employment more than 10 years: 3 months notice (Art. 75, LL)
The length of the notice period can be extended by agreement,
but it cannot be reduced (Art. 76, LL). An employer can provide
payment in lieu of notice for all or part of the notice period. The amount
of this payment should equal the wages and benefits that the employee would
have received if the notice requirement had been respected, based on average
earnings over the previous 12 months (Art. 77,
LL; AC 51/04). During
the notice period the employee is entitled to two days’ paid leave to look
for a new job (Art. 79, LL).
Exceptions to notice requirements
No notice is required:
- for
termination of probationary contracts and internships (although Phnom
Penh garment industry employers must provide probationary employees 7 days
notice,
and apprentices 1 day notice prior to termination (Notice 06/97));
- in
the event of serious misconduct on the part of one of the parties; or
- in case of force majeure,
which makes one of the parties unable to fulfil the conditions of employment
(Art. 82, LL). For the employer,
this could include closure of the establishment due to the employer’s
death or pursuant to an order by a public authority, or a catastrophe leading
to material destruction (Art. 85, LL). (Art. 82, LL)
However,
employers must always give notice when an employee becomes chronically
ill, insane or permanently disabled (Art. 86, LL).
Collective Dismissals
An employer must inform employee representatives in writing
prior to a collective dismissal in order to seek their advice on minimizing
the adverse impact upon employees. The Labour Inspector should be informed
of this process. In exceptional cases, the Ministry in charge of labour
can suspend the dismissals to give the parties time to negotiate an agreement
(Art. 95, LL).
An employer first must terminate employees with the lowest
professional qualifications, and then terminate those with the least seniority. An
employee’s seniority is increased by one year for married employees, and
by one additional year for each dependent child. Employees terminated
through collective dismissals have priority in rehiring for 2 years (Art.
95, LL).
Severance pay
FDCs
At the expiration of the contract (the end of the term
or completion of the task), the employer must pay the employee severance
pay, which may be fixed by collective agreement but should not in any case
be less than 5 per cent of the total wages paid during the length of the
contract (Art. 73, LL).
UDCs
If the worker is dismissed for a reason other than serious
misconduct, the employer must pay an indemnity for dismissal. The amount
of the indemnity depends upon the employee’s length of continuous service:
- For
employment from 6 to 12
months: 7 days wages and benefits
- For
employment over 1 year: 15 days
wages and benefits for each year of employment, up to a maximum of six
months’ wages.
(Art. 89, LL)
The Arbitration Council has found that employers should
use the employee's average earnings over the previous 12 months, not minimum
wage, when calculating the indemnity for dismissal.
An employer does not have to pay an employee who resigns
the indemnity for dismissal, unless the employer pushed the employee to
resign. An employer must pay the indemnity for dismissal if the employer
treats the worker unfairly or repeatedly violates the terms of the contract
(Art. 90, LL).
Avenues for redress
Damages under FDCs
If an employer terminates an FDC before the agreed term,
absent serious misconduct by the worker or force majeure, the employee
is entitled to damages. These damages should at least be equal to the remuneration
that the worker would have received through the duration of the contract
(Art. 73, LL).
Damages under UDCs
If the employee is dismissed without a valid cause, the
employer must pay damages (Art. 91, LL). To fix the amount of damages,
the court should consider local custom, the type and importance of the
services rendered, the employee’s seniority and age, any deductions or
payments made to a retirement plan, and other circumstances establishing
the existence and the extent of the harm incurred (Art. 94, LL).
Instead of providing proof of damages in court, the worker can ask for
a lump sum payment equal in amount to the indemnity for dismissal (Art.
91, LL).
Settlement of Disputes
Prior to any judicial action, an aggrieved employer or
employee can opt to refer a dispute to the Labour Inspector for conciliation. The conciliation procedure is not compulsory, and should be initiated
by one of the parties by reporting the dispute to the Labour Inspector.
Once notified of the dispute, the Labour Inspector must set a hearing date
for within 3 weeks to conciliate the dispute. The Labour Inspector must
write a report containing the result of the conciliation, whether there
is an agreement or not. Although the initial referral to the Labour Inspector
is voluntary, a conciliated agreement is enforceable by law. If no agreement
is reached, the parties may file a complaint in a court of competent jurisdiction
within two months, after which time the claim expires (Arts. 300 and
301, LL; Prakas 318/01).
Further information
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