During the difficult time of the Covid-19 crisis, businesses in Cambodia may have a number of options to manage their operation including but not limited to work suspension, use of annual leave, use of unpaid leave, and employment termination. In exercising each option, businesses have to strictly comply with relevant requirements under the Cambodian Labor Law (“Labor Law”) and applicable regulations. In this article, we will share some of the requirements for work suspension in the Garment, Textile, Footwear, Travel Good, and Bag Manufacturing (“GTF”) and Tourism sectors and other sectors outside of these sectors.
Work Suspension in other Sectors outside the GTF and Tourism Sectors
Under the Labor Law, when an enterprise faces a serious economic or material difficulty or any particularly unusual difficulty, which leads to a suspension of the enterprise’s operation, the enterprise may suspend employment contracts of employees. This suspension shall not exceed two (2) months and be under the control of the Labor Inspector.
In the event that the enterprise fulfils the requirements of labor contract suspension above, the enterprise does not have to pay the suspended employees unless there are provisions to the contrary. In best practice, even though there is no requirement of wage payment during lawful work suspension, employers may pay partial wages to employees in order to support their living expenses during the suspension period.
Other obligations such as provision of accommodation by the employer as well as the employee's duties of loyalty and confidentiality towards the enterprise continue to be in effect during the period of suspension.
Failure to comply with the procedure of suspension of employment contract will result in unlawful suspension and therefore employees are entitled to full payment of wages.
Work Suspension in the GTF and Tourism Sectors
The Ministry of Labor and Vocational Training (“MLVT”) issued Guideline 045/20 on Suspension of Employment Contract and Suspension of NSSF Payment for Factories, enterprises and establishments in the Garment and Tourism sectors having been Materially Impacted by the Covid-19 Crisis, dated 17 April 2020 (“Guideline 045”).
Factories, enterprises and establishments in the GTF and Tourism sectors (including hotels, guest houses, restaurants and tour agents in Phnom Penh, Siam Reap, Preah Sihanouk, Kep and Kampot provinces) that face lack of raw materials, orders, export market, customers using their services, or have an unusual difficulty that leads to suspension of production or business operation are required to fulfil certain requirements for suspension of employment contracts of employees.
The employers in the GTF and tourism sectors may request for suspension of employment contracts based on the following:
- submitting the prescribed form to the Department of Labor Inspection of the MLVT in Phnom Penh or the provincial Department of Labor and Vocational Training;
- posting announcements and sending notifications to the suspended employees;
- preparing a list of suspended employees in accordance with the prescribed form and formality; and
- attaching three (3) copies of the latest payroll ledger, the certificate of incorporation, the tourism license (for the tourism sector), the patent tax certificate, the registration certificate with the NSSF (if available), and the bank account number of the employers.
In addition, the MLVT’s approval on suspension of employment contracts is subject to onsite inspection by the Labor Inspector at the requesting factories or establishments. Please note that the employers in the GTF and tourism sectors, whose status has been updated with the MLVT, are required to submit the prescribed forms and attachments through the MLVT’s online platform.
Employment contracts cannot be suspended for more than two (2) months. However, in exceptional circumstances and if the situation so requires, the MLVT may grant additional period of suspension of employment contracts.
Upon the MLVT’s approval on suspension of employment contracts, the employers in the GTF sector have the obligation to provide the monthly contribution up to USD 30 to each suspended employee. Such monthly contribution is reduced if the employees are subject to suspension for a period of less than twenty-one (21) days. However, the employers in the tourism sector are required to provide the monthly contribution to the suspended employees on a voluntary basis and in accordance with their own internal procedures.
The suspension of employment contracts may be terminated prior to the suspension period approved by the MLVT. In such a case, the employers are required to notify the MLVT on the premature termination of the suspension period at least two (2) working days prior to the date of the resumption of work.