Asia employment law bulletin 2020
While it may be premature to forecast the disruptive impact of the new social security schemes on employment relations in Cambodia and the overall attractiveness of the Cambodian labour market, the recent introduction of the long-awaited pension and unemployment schemes have created new concerns for the private sector in relation to increasing labour costs in Cambodia.
A new Law on Social Security Schemes (LSSS) was promulgated on 2 November 2019.
While the LSSS came into effect the day following its promulgation, certain key provisions relating to the conditions, formalities and procedures to determine contribution rates for the social security schemes will be issued in subsequent implementing regulations.
Notably, the LSSS will be applicable not only to persons covered by the Labour Law (as in the case of the previous legislation), but also to civil servants in the public sector including, among others, officials working in judiciary organizations, former civil servants and veterans, persons working in air and maritime transportation, household servants and self-employed persons.
There are four pillars of social security schemes under the LSSS: (1) pensions; (2) health care; (3) occupational risk; and (4) unemployment. All the schemes are predicated on compulsory contributions being made by employers and employees.
The existing contribution rates for the occupational risk scheme and health care scheme (as regulated by the previous law) will continue to be applicable to employees in private sectors, until they are superseded by new implementing regulations. At present, for employees working in the private sector, the monthly contribution rate for the occupational risk scheme payable by employers is equivalent to 0.8% of an employee’s monthly average salary. The monthly contribution rate for the health care scheme payable by employers is equivalent to 2.6% of an employee’s average monthly salary.
The contribution rates for pension and unemployment schemes will be determined in new implementing regulations.
Employers, companies or enterprises that fail to comply with their contributory obligations are liable to a fine from ten to thirty times the daily base wage of all affected employees.
This article has been prepared in collaboration with Sarin & Associates, an association of Cambodian admitted Attorneys-at-Law, working in a commercial relationship with DFDL.
Vansok Khem, DFDL
Chris Robinson, DFDL