Labour Compliance for Enterprises in Cambodia (Part 3)
PART III
FOREIGN LABOUR, SOCIAL SECURITY, AND COMPLIANCE RISKS
Introduction
As enterprises expand, compliance becomes more complex, particularly when employing foreign workers and managing social security obligations, which carry the highest administrative penalties and enforcement risks.
1. Authorization to Employ Foreign Workers or Employees in Cambodia
Enterprises and establishments employing foreign workers or employees must comply with the following requirements, as outlined below:
- Annual Quota Authorization for the Employment of Foreign Workers
Article 264 of the Labour Law and Prakas No. 196 establish the principles governing the employment of foreign workers or employees in enterprises and establishments. The number of foreign workers or employees must not exceed 10% of the total number of Cambodian workers or employees, allocated as follows:
- 3% for office employees
- 6% for skilled workers or employees
- 1% for unskilled workers or employees
If the employer requires foreign workers or employees exceeding the above quota, the necessity must be clearly and specifically justified, including the specialized functions, technical expertise, and the concrete reasons for such request.
Whether the request falls within or exceeds the 10% quota, the application must be submitted before the end of November each year. Requests exceeding the 10% quota constitute a special request addressed to the Minister of Labour and Vocational Training.
If the enterprise owner or director fails to comply with this requirement or to obtain prior authorization, may be subject to an administrative fine imposed by the Ministry of Labour and Vocational Training of Twelve Million Six Hundred Thousand Riels (KHR 12,600,000; approx. USD 3,150).
In this respect, the director or the person in charge of the enterprise, deemed an “employer” under the law, shall be jointly liable with the enterprise.
- Foreign Employment Contract
The employer or owner of an enterprise or establishment hiring the foreign worker must submit a Fixed Duration Contract (FDC) for each foreign employee to be registered with the Department of Occupational and Manpower or the Provincial/Municipal Department of Labour and Vocational Training. All foreign employment contracts must be made in writing in three (3) copies and accompanied by a Khmer translation if the original contract is in a foreign language. In case the foreign employee’s contract expires or is modified in any way, the employer or owner must apply for a new registration.
Although the law does not impose penalties for failure to register the foreign employment contracts, the enterprises and establishments are still required to comply, as such registration is a mandatory prerequisite for the foreign work permits and employment cards applications, as described below.
- Application for Foreign Work Permit and Employment Card
Pursuant to Article 261 of the Labour Law, all foreign nationals entering and intending to work or engage in any occupation in the Kingdom of Cambodia must possess a work permit and an employment card issued by the Ministry of Labour and Vocational Training (“MLVT”).
For self-employed foreigners, and foreign enterprise and establishment owners or directors, the work permit and employment card must be obtained before commencing work. No foreigner is permitted to perform any occupation without a valid work permit and employment card, even as the employer.
The same provision also specifies that to obtain a work permit and employment card, the applicant must:
- Have legally entered and be resident in Cambodia;
- Hold a valid passport;
- Hold a valid residence document; and
- Obtain a medical certificate issued by the Ministry of Labour and Vocational Training.
Enterprises or establishments violating these requirements or employing foreign workers without an employment card, as stipulated above, may be subject to an administrative fine imposed by the MLVT of Twelve Million Six Hundred Thousand Riels (KHR 12,600,000; approx. USD 3,150).
In this respect, the enterprise director or person in charge, deemed an “employer” under the law, shall be jointly liable with the enterprise.
Conversely, any foreign national working or engaging in any occupation, whether self-employed or otherwise, without a work permit or employment card may be subject to an administrative fine imposed by the MLVT of Fifty Million Four Hundred Thousand Riels (KHR 50,400,000; approx. USD 12,600).
In this case, it shall be the individual responsibility of each foreign national concerned, and each must pay the fine separately.
2. Registration of Enterprises or Establishments and Employees with the National Social Security Fund
The employer or owner of an enterprise or establishment is required to register their enterprise or establishment with the National Social Security Fund (NSSF) which must be completed within thirty (30) days from the opening date of the enterprise or establishment.
In addition, the employer must register each employee with the NSSF within three (3) days from the employee’s commencement date, except for employees already holding an NSSF membership card.
- Contribution Payments
Contribution payments shall be made monthly. The employer is obligated to collect and remit contributions, both the employer’s and the employee’s share into the NSSF account no later than the fifteenth (15th) day of the following month. Payments made after the thirtieth (30th) day of the month are considered late or outstanding.
Upon registration with the NSSF, enterprises and establishments must make monthly contributions at the following rates:
- 0.8% of the employee’s monthly contributable wage for the Occupational Risk Scheme;
- 2.6% of the employee’s monthly contributable wage for the Health Care Scheme.
These contribution rates are the employer's sole responsibility.
For the Pension Scheme, contributions are a shared obligation between the employer and the employee at a combined rate of 4% of the employee’s contributable wage (shared equally during the first five (5) years).
Conclusion
The regulatory obligations outlined in this publication, from enterprise registration, internal regulations, employee documentation, and reporting requirements to the lawful employment of foreign workers and mandatory NSSF registration, constitute essential compliance duties that every employer must understand and implement. Full adherence to these legal obligations not only ensures operational legitimacy but also promotes workplace stability, enhances employee protection, and strengthens long-term business resilience.
With the ongoing evolution of Cambodia’s labour regulatory framework, enterprises and establishments must remain vigilant and proactive. Establishing robust internal compliance systems, maintaining accurate records, and updating procedures in accordance with new legal developments are critical steps to avoid penalties and ensure uninterrupted business operations.
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 deliver extensive and effective legal solutions, compliance assessments, and interactive consulting to ensure organizations remain fully compliant while safeguarding their business interests. Whether establishing operations or expanding your existing workforce in Cambodia, ILAW CAMBODIA LAW OFFICE remains a trusted partner promoting procedural certainty and long-term success.
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal advice; while efforts have been made to ensure that the information is accurate and up to date, its accuracy cannot be entirely guaranteed, and readers should not act or refrain from acting based on the content of this article without first seeking professional legal consultation, as they are strongly advised to obtain advice from a qualified legal professional appropriate to their specific circumstances.
Annex
Penalty Schedule Table
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