Employees on undetermined duration contracts in Cambodia have previously been entitled to indemnity for dismissal payments upon termination by an employer (save in cases of serious misconduct). With effect from 1 January 2019, the indemnity will be replaced by a mandatory seniority payment, payable twice every year.

What is a seniority payment?

The indemnity for dismissal payment was an end-of-employment payment, intended to assist with the transition to new employment. As the indemnity payment will be removed, employees will instead receive a ‘seniority payment’ every six months.

Who is entitled to a seniority payment?

All employees who are on undetermined duration contracts (i.e. permanent employees) are entitled to a seniority payment after one month’s service.

How much must be paid?

The annual seniority payment is 15 days wages, including fringe benefits.

When must it be paid?

Seniority payments must be paid twice a year. The first half (7.5 days of the employee’s wages and other fringe benefits) of the seniority payment must be paid in June each year, and the remaining half (7.5 days of the employee’s wages and other fringe benefits) must be paid in December each year.

What should employers do?

Employees must ensure that they comply with the payment obligations. Employment contracts or handbooks which refer to the old indemnity provisions will need to be amended.