Cambodia - Changes In Seniority Payments Impacting Factories And Manufacturing Enterprises.

Legal News & Analysis - Asia Pacific - Cambodia - Regulatory & Compliance - Labour & Employment

1 February 2021

 

The Ministry of Labour and Vocational Training (“MLVT”) has issued a Notification (No 003/21) dated 21 January 2021 on seniority payments which significantly impacts the salary payment obligations of those operating factories and manufacturing enterprises.
 

While a press release dated 23 December 2020 initially announced the postponement of the seniority indemnity payment to 2022 for all sectors (see our previous alert on this topic) factories and enterprises in the manufacturing sector will now be treated differently.
 

Reminder: This notice only applies to unspecified duration contracts (UDC) in Factories and Enterprises in the manufacturing sector.
 

The notification sets the payment of the seniority indemnity in factories and manufacturing establishments as follows:
 

Accrued Sums

Schedule of Payments

Back Payment of Seniority Indemnity accrued before 2019 which is meant to be settled in the year 2020

Quarter 1 and 3 of 2021

Back Payment of Seniority Indemnity accrued before 2019 which was meant to be settled in the year 2021

Quarter 2 and 4 of 2021

Seniority indemnity accrued for year 2020

Quarter 1 and 3 of 2021

Seniority indemnity in 2021

Quarter 2 and 4 of 2021

 

Alternative Arrangements
 

For some manufacturers, it may prove difficult to bear the accrued seniority indemnity payments from previous years altogether in 2021. It should therefore be borne in mind that this Notification allows manufacturers to negotiate and consult with employees and reach a different agreement on the payment schedule for settling the accrued seniority indemnity payments up to the end of year 2020.
 

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For more information, please contact:

 

Matthew Rendall, Senior Partner, SokSiphana&associates (a member of ZICO Law)

[email protected]