Payment in Lieu of Prior Notice and Damages

On 14 August 2020, the Ministry of Labour and Vocational Training (“MLVT”) issued Clarifications on Payment in Lieu of Prior Notice and Damages upon Termination of an Undetermined Duration Contract (“UDC”) (“Clarifications”). According to the Clarifications, payment in lieu of prior notice for termination of a UDC is not applicable if (1) prior notice is not required based on Article 82 of the Labour Law, (2) prior notice is made in conformity with Article 75 of the Labour Law, or (3) the factory or the enterprise has been closed due to the disappearance of the owner given that a separate procedure will be followed. 

Moreover, the Clarifications provide that terminated employees can receive damages under Article 91 (New) of the Labour Law in the event of (1) termination without a valid reason, or (2) individual termination (not the universal termination) that affects reputation, dignity or misunderstanding from the publics or other employees on the terminated employee. However, elements or conditions to receive these damages are not met if there is a universal reduction of production or a situation towards bankruptcy that requires termination of the production in part or in entirety. 

In the situation of global difficulties due to the Covid-19 crisis and in accordance with Article 87 (New) and Article 91 (New) of the Labour Law, it can be considered as a valid reason for termination of an employment contract if any of the following circumstances is met:

  • cancellation of entire orders, cancellation of an order of a particular product leading to entire termination of a particular production line, suspension of accepting all goods produced, and no payment made by the mark owners according to the sale contract (factories/enterprises shall have sufficient evidence of the above); 
  • complete closure of a factory or an enterprise after attempting to resolve economic difficulties through legal measures including work suspension and/or collective termination of employment contracts of employees; or
  • bankruptcy. 

Special Use of Foreign Employees

Pursuant to Prakas 277/20 on Special Use of Foreign Employees dated 14 August 2020 issued by the MLVT (“Prakas 277”), the use of foreign employees may exceed 10% of the total Cambodian workforce.

Prakas 277 provides that employers under the scope of Article 1 of the Labour Law that  could not find sufficient Cambodian workforce for a particular workplace, a particular type of work, or a particular shift may request for special recruitment of foreign employees for a quota exceeding 10% of the total Cambodian workforce. 

For any inquiry, please contact us at or +855 99 888 017. Thank you.

Related articles