Employer of Record in Cambodia

Expanding your business into Cambodia presents unique opportunities, given its growing economy and emerging talent pool. However, successfully hiring employees in the country requires a clear understanding of local labor laws, tax regulations, and administrative processes. Companies looking to establish a presence and hire staff in Cambodia have several pathways to consider, each with its own set of legal and operational implications.

When considering hiring employees in Cambodia, your primary options include:

• Establishing a local entity: This involves registering a company or branch office in Cambodia, a process that typically requires significant time, capital, and a deep understanding of local corporate and tax laws.
• Partnering with an Employer of Record (EOR): An EOR, like Rivermate, allows you to quickly and compliantly hire employees in Cambodia without needing to set up your own legal entity. The EOR acts as the legal employer, handling all local compliance.
• Hiring independent contractors: This option offers flexibility but carries the risk of misclassification if the working relationship resembles that of an employee. Misclassification can lead to significant penalties from Cambodian authorities.

How an EOR Works in Cambodia

An Employer of Record (EOR) simplifies international hiring by acting as the legal employer for your workforce in Cambodia. This means the EOR assumes responsibility for all local employment obligations, while you retain full control over your employees' day-to-day tasks and management. In Cambodia, an EOR typically handles:

• Legal employment contracts: Drafting and managing compliant employment agreements in line with Cambodian labor law.
• Payroll processing and tax withholding: Ensuring accurate and timely payment of salaries, social security contributions, and income tax to the relevant Cambodian authorities.
• Employee benefits administration: Managing mandatory benefits such as social security, health insurance, and other statutory requirements.
• Labor law compliance: Staying up-to-date with changes in Cambodian employment legislation and ensuring all practices adhere to local regulations.
• HR support and termination: Providing guidance on HR best practices, managing leave, and overseeing compliant termination processes when necessary.

Benefits of an EOR for Hiring in Cambodia

Utilizing an EOR service offers substantial advantages for companies aiming to expand into Cambodia without the complexities of establishing a local entity. These benefits include:

• Rapid market entry: Hire employees in Cambodia within days or weeks, rather than the months typically required for entity setup.
• Reduced legal and compliance risk: Transfer the burden of navigating complex Cambodian labor laws, tax regulations, and social security obligations to the EOR.
• Cost efficiency: Avoid the significant upfront costs and ongoing administrative expenses associated with company registration and maintaining a local office.
• Access to top talent: Recruit and onboard skilled professionals across Cambodia regardless of your physical presence, broadening your talent pool.
• Focus on core business: Free up internal resources from administrative and compliance tasks, allowing your team to concentrate on strategic growth and business operations.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Cambodia includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Cambodia.

Cambodia's tax system, overseen by the General Department of Taxation, mandates employers to handle various obligations, including social security contributions and income tax withholding. Employers must contribute to the National Social Security Fund (NSSF) at rates of 0.8% for occupational risk and 1.3% for healthcare, payable monthly by the 15th. They are also responsible for deducting income tax from employees' salaries based on progressive rates, with monthly remittance due by the 15th.

Employees benefit from personal and dependant allowances, reducing taxable income. Tax rates for residents range from 0% to 20%, depending on income levels, while non-residents face a flat 20% rate. Employers must file monthly tax returns and perform annual reconciliations to ensure compliance, with penalties applying for late submissions. Foreign workers and companies face additional considerations, such as residency status, potential corporate tax obligations, and VAT registration if applicable.

Cambodia's labor market shows significant variation in salaries based on industry, role, and experience. Typical monthly salaries range from $400 for customer service roles to $3,000 for software engineers, with sector-specific differences such as garment workers earning around $200-$350 for entry-level positions and up to $3,000 for managers. The technology and finance sectors tend to offer higher compensation, especially for skilled professionals.

Legal minimum wages as of 2025 are approximately $200/month for garment, textile, and footwear workers, with regulations mandating overtime pay at 150% and contributions to social security. Employers commonly supplement base pay with bonuses like a 13th-month salary, annual bonuses, and performance incentives, along with allowances for transportation ($20-$50/month), meals ($1-$3/day), housing, and healthcare. Salaries are paid monthly via bank transfer or increasingly through digital/mobile methods, with compliance on tax and social security contributions essential.

Salary growth is expected to be 5-10% in high-demand sectors in 2025, driven by economic expansion and increased emphasis on benefits. Employers should stay compliant with evolving regulations and consider competitive packages to attract skilled talent amid rising wages and digital payroll adoption.

Cambodia's labor laws mandate minimum leave entitlements for employees, including 18 days of annual leave after one year of service, with provisions for pro-rated leave for shorter tenures. Employers generally allow employees to take their full annual leave, and unused leave can often be carried over, though not legally required. Upon employment termination, employees are entitled to payment for accrued but unused leave.

Public holidays in Cambodia typically range from 25 to 30 days annually, during which employees receive regular wages; work on these days entitles employees to overtime pay. Key holidays include Khmer New Year, Water Festival, and Independence Day. Sick leave is less specifically regulated, with many companies offering around 6 paid days per year, but this varies by employer. Maternity leave is fixed at 90 days with 50% pay, while paternity leave is limited to one paid day. Additional leave types like bereavement, study, or special leave are usually governed by company policy rather than law.

Cambodia's labor law mandates key employee benefits including paid public holidays (~26 days/year), annual leave (1.5 days/month), sick leave (reasonable provision), maternity leave (90 days, 50% pay via NSSF), severance pay, seniority indemnity, and employer contributions to the NSSF for social security and pension. While some benefits like paternity leave are optional, many employers supplement statutory benefits with private health insurance, performance bonuses, transportation, meal, housing allowances, and professional development to attract talent.

Health insurance varies from basic NSSF coverage to comprehensive private plans, with employers often covering significant premiums. Retirement benefits are primarily through the NSSF, with some larger firms offering additional pension schemes. Benefit packages differ by industry and company size, with multinational corporations and sectors like tech/finance offering more extensive perks compared to SMEs or garment industries.

In Cambodia, employment agreements are essential for defining the employer-employee relationship, covering job duties, compensation, working hours, and termination terms. They ensure legal compliance and mutual understanding, with written contracts generally required for employment exceeding three months. Non-compliance can lead to legal penalties.

Cambodia recognizes two main contract types: fixed-duration and indefinite (unspecified duration). Fixed-duration contracts specify a start and end date, often used for temporary or project-based work, with a maximum of two renewals; a third renewal converts it into an indefinite contract. Indefinite contracts continue until terminated by either party.

Cambodia is progressively adopting remote work, influenced by globalization and technological progress. Although there are no specific remote work laws, existing labor laws govern remote employees similarly to on-site staff, requiring clear employment contracts, adherence to working hours, wages, social security, and tax obligations. Employers should ensure policies align with these regulations to promote fair treatment.

Flexible work options gaining popularity include full-time remote work, part-time arrangements, and hybrid models, which can enhance talent retention and productivity. Key considerations for employers involve establishing clear contracts, ensuring legal compliance, and implementing best practices for managing remote teams effectively.

Employers should develop comprehensive remote work policies aligned with Cambodian labor laws to ensure fair treatment and legal compliance while leveraging flexible arrangements for talent management.

Cambodia's labor laws specify strict procedures for terminating employment, emphasizing notice periods, severance pay, and lawful grounds. Employers must follow these rules to avoid legal disputes. Notice periods vary based on contract type and seniority, ranging from no notice for fixed-duration contracts to three months for employees with over 10 years of service.

Severance pay is mandatory for indefinite-duration contracts terminated without cause, calculated based on seniority:

Termination reasons include with or without cause, with serious misconduct allowing immediate dismissal without notice or indemnity. Employers must adhere to procedural steps such as documentation, investigation, formal written notice, and prompt final payments. Employees are protected against wrongful dismissal and discrimination, with rights to appeal, reinstatement, or compensation if wrongful termination is proven.

Cambodia's economy is progressively adopting flexible work arrangements, leading to a rise in freelancers and independent contractors. This trend provides businesses with agility and access to specialized skills without the traditional employment overheads. However, companies must navigate local regulations to correctly classify workers as employees or independent contractors to avoid misclassification risks, which can result in penalties like back taxes and social security contributions. The legal distinctions between these classifications are crucial, with factors such as control, integration, financial risk, and exclusivity playing significant roles.

Engaging independent contractors requires a well-structured service agreement that clearly defines the scope of work, payment terms, duration, and relationship clauses to support the independent contractor status. Intellectual property rights are also vital, necessitating explicit contract clauses to assign IP ownership to the client. Independent contractors manage their own tax obligations, including income tax and VAT, and are responsible for their own insurance needs, unlike employees who are covered by the National Social Security Fund.

Independent contractors are prevalent across various sectors in Cambodia, driven by the demand for specialized skills and project-based work. Common roles include software developers, graphic designers, business consultants, and freelance journalists. The table below highlights key industries and roles:

This growing trend is further fueled by the digital economy and globalization, expanding opportunities for independent contractors in Cambodia.

Foreign nationals wishing to work in Cambodia must obtain both a valid visa and a work permit. The most common visas are the Business Visa (E-Visa), valid for 30 days and extendable, and the Ordinary Visa (Type O), also initially valid for 30 days with extension options. Employers typically sponsor these visas, which are prerequisites for applying for a work permit.

The work permit application requires a valid visa, employment contract, educational and professional certificates, medical clearance, and company documents. Processing costs range from $100 to $200 with a timeline of 4-8 weeks. Once approved, employees can apply for a work book, costing $50-$100, processed within 2-4 weeks. Employers are responsible for sponsorship, reporting changes, and ensuring compliance, with penalties including fines or deportation for violations.

Foreign workers can also pursue permanent residency after five years of continuous residence, provided they meet financial and language requirements. Dependent visas (D-type) allow spouses and children to reside in Cambodia, contingent on proof of relationship and financial capacity.