The Cambodia Labour Law states that for both Severance pay, and Redundancy pay, and the payment should be made at the end of the month with the salary. However, there are additional differences depending on the type of employment contract that are used in the employment. The two types of employment contract in Cambodia are Fixed Duration Contract (FDC) and Undetermined Duration Contract (UDC).
Fixed Duration Contract (FDC) must state a precise finishing date and it cannot longer than two years in length. It can be renewed for one or more times as long as the renewal does not surpass the maximum duration of two years but cannot be longer than four years in total. If the employee is employed by a FDC contract, it normally ends on a specified date. If you want to terminate an employee before the finishing date and both parties agree to terminate the contract, it can terminate by writing in the presence of labour inspector and also signed by the two parties of the contract. If both parties do not agree to terminate the contract, it can be terminated under the misconduct or acts of God. If the employer decides to terminate the contract before finishing on the specified date excluding the above situation, the employer needs to pay the remuneration he or she would have received until the end date on the contract. In addition, as per the labour law, the employee has the right to receive severance pay at the end of the contract or expiry of the contract.
This type of contract has a notice period as follow:
- No notice is required for the contracts of 6 months or less
- Ten days for the contracts of more than 6 months to 1 year
- Fifteen days for the contracts of more than one year
Employees who are employed using a Fixed Duration Contract are entitled to severance payment, and it must be at least 5 percent of the total wages of the full term of the contract.
Undetermined Duration Contract (UDC) is an open-ended contract. Unlike the FDC it has no expiry date. Even if the initial contract has a set duration if it continues over two years without a renewal with a set period, it automatically becomes an UDC. The UDC has the following notice period:
- Seven days for less than six months of the length of the service
- Fifteen days for the length of service from six months to two years
- One month for the length of service from two years to five years
- Two months for the length of service from five years to ten years
- Three months for more than ten years
During the notice period, the employee is entitled to two days leave per week with full payment to look for a new job.
If the employer cannot give the required notice period to the employee in a case of termination, the employee is entitled to the amount equal to the wages and all kinds of benefits that the employee would have received during the official notice period.
Although severance pay for a UDC is no longer applicable from 2018 and it is replaced by Seniority pay. However, in practice severance pay is commonly paid when an employee is terminated without fault. Seniority pay is paid twice a year and is equal to the daily average wages and benefits multiplied by 7.5. In Cambodia wages or salaries are generally paid twice a month and Seniority pay will be paid together with wages in the second payment of June and December.