Labour Compliance for Enterprises in Cambodia (Part 2)

PART II

Labour compliance requirements for the opening and operation of enterprises or establishments

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Introduction

After understanding the legal framework, employers must ensure daily compliance with mandatory administrative and employment obligations. These requirements undergo frequent inspection by labour authorities and are the most common sources of administrative penalties if neglected.

This part covers enterprise registration, record-keeping, internal governance, and employee obligations.

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1. Declaration of the Opening of an Enterprise or Establishment

Once registered with the Ministry of Commerce and the General Department of Taxation, every enterprise must submit a Declaration of the Opening of an Enterprise or Establishment to the Ministry of Labour and Vocational Training (“MLVT”). In this regard, the enterprise owner must file such a declaration prior to commencing operations.

However, enterprises or establishments employing fewer than eight (8) workers without machinery may submit the Declaration within thirty (30) days after permanently commencing operations. Inthis regard, Prakas No. 110/25 dated 05 May 2025 on the Declaration of Opening and Closing of Enterprises or Establishments shall apply and be duly implemented.

Any enterprise owner or director failing to comply with the above obligations or commencing operations without submitting the required declaration may be subject to an administrative fine imposed by the MLVT of approximately Five Million Forty Thousand Riels (KHR 5,040,000; approx. USD 1,260). 

Accordingly, the director or person in charge of the enterprise, deemed an “employer” under the law, shall be jointly liable with the enterprise.

Currently, facilitate submission of the Declaration of the Opening of an Enterprise or Establishment, including other services provided by the MLVT, the Ministry authorizes all companies and enterprises to submit applications through the Labour Centralized Management System (LACMS) and Foreign Workers Centralized Management System (FWCMS).

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2. Updating Enterprise or Establishment Information

The enterprise or establishment owner or director undergoing any changes to the essential information in the Declaration of the Opening of an Enterprise or Establishment shall notify the MLVT within a maximum period of thirty (30) days from the date of such change. Such changes include, but are not limited to:

1. Name of the enterprise;
2. Owner, representative, or director of the enterprise;
3. Shareholders’ transfer or change, governors’ details, or articles of association amendments;
4. Address;
5. Type or format of the enterprise;
6. Business objectives or activities;
7. Tax identification number or updates to new patent tax;
8. Business suspension;
9. Permanent cessation of business;
10. Head of administration, human resources manager, or labour compliance manager;
11. Banking information;
12. Contact details, including phone number, email address, or system user account; and 
13. Other general enterprise information, such as employee numbers, main products, brand names, order details, raw material imports, and export activities.

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3. Establishment Register Book

Following the approval of the Declaration of Opening of an Enterprise or Establishment, every establishment must create and properly maintain an Establishment Register Book. Prior to use, this book must be submitted to the MLVT for registration or authorization. Once all pages are fully used, the enterprise or establishment owner or director shall have the obligation to keep all usage related documents for three (3) years. MLVT labour inspectors may request and review the book at any time.

Any enterprise owner or director violating this requirement or failing to maintain an Establishment Register Book may face an administrative fine imposed by the MLVT of approximately One Million Six Hundred Eighty Thousand Riels (KHR 1,680,000 KHR; approx. USD 420).

Accordingly, the director or person in charge deemed an “employer” under the law, shall be jointly liable with the enterprise.

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4. Payroll Book and Computerized Payroll System

Factories, enterprises, and establishments are required to prepare a payroll book, which may be a computerized payroll list. Prior to use, the payroll book must first be registered with the MLVT. The book shall be kept in the enterprise’s payroll or administrative office. The employer is also required to retain it for three (3) years after all the pages are fully used.

If the enterprise owner or director fails to comply with this obligation or to maintain a payroll book, they may be subject to an administrative fine imposed by the MLVT of approximately Five Million Forty Thousand Riels (KHR 5,040,000; approx. USD 1,260).

Accordingly, the enterprise director or person in charge, deemed an “employer” under the law, shall be jointly liable with the enterprise.

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5. Internal Regulations of the Enterprise

An enterprise or establishment employer employing at least eight (8) workers must prepare internal regulations within three (3) months after opening, and only after consultation with worker representatives. To be legally valid, these internal regulations must first be registered with or approved by the MLVT labour inspector. The Internal Regulations constitute an important legal document supplementing the Labour Law and other relevant regulations. Generally, they define misconduct types, disciplinary actions, dispute-resolution procedures, and occupational health, hygiene, and safety measures, among others.

If the enterprise owner or director fails to comply or maintain internal regulations, they may be subject to an administrative fine imposed by the MLVT of One Million Six Hundred Eighty Thousand Riels (KHR 1,680,000; approx. USD 420).

Additionally, failing to prepare Internal Regulations within three (3) months, or maintaining Internal Regulations not registered or approved by the labour Inspector, likewise results in an administrative fine of One Million Six Hundred Eighty Thousand Riels (KHR 1,680,000; approx. USD 420).

Accordingly, the enterprise director or person in charge, deemed an “employer” under the law, shall be jointly liable with the enterprise.

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6. Declaration of Employee Movements (Hiring and Termination)

Enterprises and establishments are required to submit a notification to the MLVT whenever they hire a worker or employee or when they terminate the employment of any worker or employee. This notification must be made in writing within fifteen (15) days from the date of hiring or termination.

If the enterprise owner or director fails to comply or does not submit the notification on employee movements, they may be subject to an administrative fine imposed by the MLVT Three Million Three Hundred Sixty Thousand Riels) (KHR 3,360,000; approx. USD 840).

Accordingly, the enterprise director or person in charge, deemed an “employer” under the law, shall be jointly liable with the enterprise.

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7. Cambodian Employment Card

Pursuant to Article 32 of the Labour Law, every Cambodian national performing work as a worker/employee for wages from an employer must possess a Cambodian Employment Card. The labour inspectors are authorized to issue this employment card upon the voluntary request of the worker/employees (Article 35). In this regard, the enterprise owner is not required to apply for the Employment Card on behalf of worker or employees, nor to pay related government fees.

Under Article 32.2, Cambodian employment must be accompanied by a Cambodian Employment Card. However, no MLVT penalty provision currently exists for violations of this requirement. Therefore, enterprise owners or directors are encouraged to advise their Cambodian workers or employees to apply for the Card upon commencing employment.

Conversely, the employer is obligated to record the hiring and termination of workers or employees, wages, and wage increases, and must submit the Employment Card to the labour inspector for endorsement (entry or exit updates) within seven (7) days after the date of hiring or termination (Article 37).

Failure or refusal to obtain endorsement for the entry or exit of a Cambodian employee in the Employment Card may result in an administrative fine imposed by the MLVT of One Million Six Hundred Eighty Thousand Riels (KHR 1,680,000; approx. USD 420).

Accordingly, the enterprise director or the person, deemed an “employer” under the law, shall be jointly liable with the enterprise.

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8. Recognition of Shop Steward Elections

All enterprises and establishments employing at least eight (8) workers must conduct elections to select shop stewards to represent and protect the interests of the workers. The election of shop stewards must be carried out within a maximum six (6) months after the opening of the enterprise or establishment, and new shop stewards must be elected fifteen (15) days before the expiration of the current mandate.

Enterprises and establishments required to have shop stewards include industry, commerce, mining, construction, banking services, agriculture, ports, hotels, restaurants, educational institutions, and other production sectors. Shop stewards comprise principal and assistant stewards, each serving a two-year (2-year) mandate.

Pursuant to Article 5 of Prakas No. 302, after the election, the enterprise or establishment must submit the election report to the competent authorities. Upon receipt of the report, the relevant authority will issue a recognition letter of the shop steward election.

If the enterprise owner or director fails to comply with this requirement, either by not organizing the shop steward election or violating the prescribed procedures, they may be subject to an administrative fine imposed by the MLVT Five Million Forty Thousand Riels (KHR 5,040,000; approx. USD 1,260).

Accordingly, the enterprise director or the person in charge, deemed an “employer” under the law, shall be jointly liable with the enterprise.

Domestic compliance obligations are only part of the equation. Part III will address foreign labour compliance, social security obligations, and high-risk penalty areas, concluding with strategic compliance guidance.

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ILAW CAMBODIA LAW OFFICE is dedicated to supporting enterprises, investors, and multinational companies in navigating these regulatory frameworks. Leveraging profound Cambodian labour law expertise and ILAWASIA’s regional platform, we provide comprehensive guidance, compliance assessments, and hands-on advisory services to ensure organizations remain fully compliant while safeguarding business interests. Whether establishing operations or expanding your existing workforce in Cambodia, ILAW CAMBODIA LAW OFFICE remains a premier partner for ensuring long-term success and legal integrity.



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