MyanmarLegal Wire

Cambodia Legal Update: Implementation of retroactive seniority payments postponed to 2021

27
Mar
2019

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CAMBODIA LEGAL UPDATE: IMPLEMENTATION OF RETROACTIVE SENIORITY PAYMENTS POSTPONED TO 2021
 

With the 2018 amendment of the Labor Law and Prakas No. 443 of the Ministry of Labor and Vocational Training (“MLVT”), which introduced seniority payments for all existing unlimited duration contracts (for more details, please see our prior Cambodia legal update here), employers are required to begin making seniority payments this year. Further information on these ongoing payments were provided by the MLVT in its information declaration on seniority payments dated 28 December 2018 (for more details, please see our Cambodia legal update here). However, questions remained regarding the required retroactive seniority payments (payments made to eligible employees for work prior to 2019). On 22 March 2019, the MLVT issued Ministerial Instruction No. 042/19, which addresses the payment of retroactive seniority payments by employers other than those in the textile, garment, and footwear industries.

The instruction provides as follows:

  • The implementation of retroactive seniority payments will be delayed until 2021 (“Implementation Date”).
  • The retroactive seniority payment amount due must be paid in installments of six days per year (half paid in June and the remainder in December). There is no clear indication regarding the basis of this six-day calculation.
  • Before the Implementation Date, all employees who are terminated for reasons other than serious misconduct, retirement, or death are entitled to a one-off, lump-sum payment of the full amount of the retroactive seniority payment due.
  • Employees who resign or are terminated for serious misconduct are not entitled to any retroactive seniority payment.
  • Employers must follow MLVT Prakas No. 443 and other relevant regulations, under which ongoing seniority payments (from 2019 onwards) of 15 days per year must be paid in two installments per year.

We will continue to monitor the issue of seniority payments for further developments. If you have any questions about this alert, please contact me (leung.seng@vdb-loi.com) or Mr. Alex Larkin (alex.larkin@vdb-loi.com).


VDB Loi is a network of leading law and tax advisory firms with offices in Cambodia, Indonesia, Laos, Myanmar and Vietnam. We provide the highest quality solutions for transactions and taxation. Our general areas of practice are corporate, finance, licensing and disputes. Our principal specialized areas of practice are energy, infrastructure, real estate and construction, telecom, and taxation.


You can find more information on our Cambodia office here.

Kind regards,

Leung Seng | Senior Associate
PYT & Associates, member of VDB Loi
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Phnom Penh 120101
Cambodia
 
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