Rivermate | Cambodia flag


Dispute Resolution and Legal Compliance

Understand dispute resolution mechanisms and legal compliance in Cambodia

Labor courts and arbitration panels

Labor courts in Cambodia are governed by the Labour Law of 1997 and have authority over individual labor disputes. These disputes can range from conflicts over employment contracts, working conditions, wages and benefits, termination of employment, to discrimination and harassment claims. Labor courts are located in specific provinces and municipalities and are typically presided over by a single judge. The process of resolving a dispute involves filing a complaint, optional conciliation, a hearing, and a judgment.

The Arbitration Council of Cambodia

The Arbitration Council was established by the 1997 Labor Law and further detailed within the 2002 Prakas on the Arbitration Council. It has jurisdiction over collective labor disputes and disputes within industries deemed critical for the public. The council is composed of representatives from employers, employees, and the government (Ministry of Labor and Vocational Training). The process of resolving a dispute involves initiation, conciliation, arbitration, and an arbitral award.

Typical Cases Handled

Labor courts typically handle cases such as wrongful dismissal, disputes over unpaid wages or overtime, harassment or discrimination in the workplace, and breaches of employment contracts. On the other hand, the Arbitration Council handles disputes arising during negotiation of collective bargaining agreements, strikes or lockouts, and impasses in labor relations within essential services.

Important Notes

Decisions by labor courts may be appealed to a higher court, while arbitration awards by the Arbitration Council are usually final and binding. Cambodia's labor dispute resolution system prioritizes conciliation and mediation to achieve amicable solutions whenever possible.

Compliance audits and inspections

Compliance audits and inspections are essential tools for assessing a business's adherence to various laws and regulations. These audits can be categorized into labor audits, social audits, environmental audits, and financial audits.

Types of Compliance Audits and Inspections

Labor Audits assess a business's adherence to Cambodian labor laws and regulations, covering areas like wages and working hours, occupational health and safety, freedom of association and collective bargaining rights, child labor and forced labor prohibitions, and anti-discrimination practices.

Social Audits go beyond legal compliance, evaluating a company's ethical and social responsibility practices. This often aligns with international standards such as SA8000 or similar frameworks.

Environmental Audits examine a company's compliance with environmental laws and regulations, including waste management, pollution control, and resource utilization.

Financial Audits verify the accuracy and completeness of a company's financial records and statements.

Who Conducts Compliance Audits and Inspections

Compliance audits and inspections are conducted by government agencies and independent third-party auditors. The Ministry of Labor and Vocational Training (MLVT) is the primary government body responsible for conducting labor inspections and, often, factory audits. Other relevant ministries may conduct audits and inspections based on their specific areas of oversight. Businesses often engage reputable, independent auditing firms to conduct compliance audits, especially those that are part of global supply chains and need to meet international buyer or brand requirements.

Frequency of Audits and Inspections

The frequency of compliance audits and inspections in Cambodia depends on several factors such as the industry, company size and risk profile, and buyer requirements. Sectors with higher risks may face more frequent inspections. Companies with a history of non-compliance or those deemed to have higher social or environmental risk may be subject to more regular audits. International buyers often require suppliers to undergo regular audits as a condition of doing business.

Importance of Compliance Audits and Inspections

Compliance audits and inspections in Cambodia serve several vital purposes. They help uphold legal and ethical standards, protect workers' rights, mitigate business risks, and maintain buyer confidence. Audits can uncover potential legal, reputational, or financial risks, allowing businesses to take corrective actions.

Consequences of Non-Compliance

Businesses found to be non-compliant with Cambodian laws or international standards may face various consequences. These include the development and implementation of corrective action plans, fines and penalties from the MLVT or other relevant authorities, suspension or termination of operations, loss of contracts with international buyers, and reputational damage.

Reporting and whistleblower protections

In Cambodia, there are several channels available for reporting violations depending on the specific nature of the issue. The primary agency for corruption-related whistleblowing and reporting is the Anti-Corruption Unit (ACU). The Anti-Corruption Law (2010) mandates that the ACU receive reports and take measures to protect whistleblowers. The ACU has a website where reports can be filed, reports can be submitted in person, and there is a designated hotline for reports.

Sector-Specific Mechanisms

Some sectors have their own regulatory bodies or reporting channels. Labor disputes can be reported to the Ministry of Labor and Vocational Training. Suspicious financial activity may be reported to the Cambodia Financial Intelligence Unit (CAFIU).

Non-Governmental Organizations (NGOs)

Several NGOs may assist with reporting violations and advocate for whistleblower protection, such as Transparency International Cambodia.

Whistleblower Protections in Cambodia

Whistleblower protection in Cambodia is primarily governed by the Anti-Corruption Law (2010). However, the protections in the law are limited in scope and enforcement mechanisms can be weak.

Legal Provisions

The ACU has a duty to protect whistleblowers from retaliatory acts that threaten the individual's life, health, freedom, reputation, or property according to the Anti-Corruption Law, Article 13. The explicit protections apply primarily to corruption-related reporting. Reporting other violations might not guarantee the same level of protection.

Practical Considerations

Despite legal provisions, there's limited evidence to suggest that whistleblowers receive robust protection in practice. Retaliation is a serious risk. While reports to the ACU can theoretically be submitted anonymously, safeguards for anonymous reporting are not strong in practice. Societal stigma against whistleblowing and a work culture that emphasizes loyalty to organizations over transparency can deter reporting.

Key Recommendations for Whistleblowers in Cambodia

Carefully weigh potential consequences before reporting. Retaliation can be severe. Gather and preserve any evidence related to the violation and any instances of retaliation. Consider contacting NGOs that specialize in whistleblower protection for advice on reporting strategies and support. If possible, consider reporting through channels that provide stronger anonymity or those outside the direct purview of the individuals involved in the violations. Safety must be the top priority for whistleblowers in Cambodia. While reporting violations is essential for maintaining integrity, individuals need to be aware of the risks and limitations in the current context.

International labor standards compliance

Cambodia, being a member of the International Labour Organization (ILO), plays a significant role in upholding internationally recognized labor standards. This commitment is demonstrated through the ratification of all eight fundamental ILO Conventions, which include the Freedom of Association and Right to Organize Convention, Right to Organize and Collective Bargaining Convention, Forced Labour Convention, Abolition of Forced Labour Convention, Minimum Age Convention, Worst Forms of Child Labour Convention, Equal Remuneration Convention, and Discrimination (Employment and Occupation) Convention. Additionally, Cambodia has ratified several other ILO conventions addressing issues like labor inspection, occupational safety and health, and migrant workers.

Reflection in Domestic Labor Laws

Cambodia's domestic labor legislation, primarily the 1997 Labor Law, is heavily influenced by international labor standards and the ratified ILO conventions. Key areas where international standards are mirrored domestically include:

Freedom of Association and Collective Bargaining

Both Cambodian law and ILO Conventions 87 and 98 guarantee workers' rights to form and join unions, engage in collective bargaining, and take strike action. There are also mechanisms for registering unions and regulating how labor disputes are settled.

Elimination of Forced Labor and Child Labor

The Labor Law prohibits all forms of forced labor, aligning with ILO Conventions 29 and 105. The minimum working age is 15, with stricter regulations for hazardous work, aligning with Conventions 138 and 182.

Equality and Non-Discrimination

Cambodia's law, echoing ILO Conventions 100 and 111, prohibits discrimination in employment based on race, color, sex, religion, political opinion, national extraction, or social origin. It also mandates equal pay for work of equal value.

Workplace Health and Safety

The Labor Law incorporates workplace safety guidelines, although these standards are viewed as somewhat less rigorous than comparable international frameworks. Cambodia has ratified ILO Convention 155 (Occupational Safety and Health) and Convention 187 (Promotional Framework for Occupational Safety and Health).

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.