Thanks to historic sites like Angkor Wat and incredible beaches lining the coast, Cambodia has long been a popular destination for backpackers, expats, and digital nomads exploring the world.
However, when you dig a little deeper, you discover a country filled with untapped potential. With an emerging tech scene and a young population, Cambodia has the potential to become one of the next up-and-coming remote work hot spots.
Advantages of Hiring in Cambodia
As Cambodia continues to develop and grow, the basic infrastructure and support for businesses that want to hire local talent is improving.
Here are a few fast facts about the country:
- Language: Khmer
- Currency: Cambodian Riel (KHR) & US Dollar (USD)
- Capital City: Phnom Penh
- Population: 17.1 Million
- Cost of Living Rank: 88th
Cost-Effective Labor
Cambodia is a very affordable place to do business. It boasts a younger, well-trained workforce open to new employment opportunities. Additionally, multilingualism is common, with most people speaking both Khmer and English.
Local wages and the cost of living are lower than in many parts of the world, making it possible to live and work in Cambodia quite affordably.
Strategic Location and Trade Agreements
Cambodia is bordered by Thailand, Vietnam, and Laos and not far from China and Malaysia. What makes this location particularly advantageous for Cambodia is that it’s a member of trade agreements like the ASEAN Free Trade Area (AFTA) and Regional Comprehensive Economic Partnership (RCEP), which reduces barriers to doing business with countries like Thailand, China, Australia, and Japan, among others.
Government Incentives and Improving Infrastructure
The Cambodian government is actively engaged in creating a more welcoming business environment via programs like the new Special Economic Zones, which encourage business investment through financial incentives such as tax breaks.
Cambodia’s Minister of Labour and Vocational Training is also heavily focused on closing the country’s skills gap to help Cambodia reach its goal of elevating the Kingdom to upper-middle-income status by 2030 and high-income by 2050.
This includes the government’s Pentagonal Strategy, as well as the Strategic Plan for Employment Development, Social Security and Vocational Training 2024-28.
There’s also been a push to update infrastructure, including improving access to the internet and other communication services across the country. This is positioning Cambodia as a more attractive place for doing business and helping to grow its tech sector.
Hiring Compliantly in Cambodia
Employment Contracts
Employment contracts aren’t mandatory in Cambodia, but they’re frequently utilized to maintain formal working relationships. Contracts must specify working hours, wages, and any other relevant employment details.
There are several different contract types, including:
- Fixed-term contracts: These are designed for specific periods of employment and can’t last longer than two years, including any renewals.
- Probationary contracts: Probationary contracts can’t last longer than three months for regular employees, two months for skilled workers, or one month for unskilled workers.
- Apprenticeship contracts: These contracts, which are designed to provide on-the-job training to employees, must be in writing and can last no more than two years.
Working Hours & Pay
The Cambodian workweek is 48 hours, and employees can’t work more than eight hours daily.
Employees are entitled to at least one day off a week, typically on Sundays. Overtime must not exceed 10 hours a day and must be paid at 150% of an employee’s average salary. That number jumps to 200% if work occurs on Sundays or holidays. Workers are entitled to at least two hours of overtime pay in those cases.
The minimum wage in Cambodia is around KHR 818,000 (USD 204), and payroll cycles are typically monthly.
Taxes
Employers are required to contribute around 5.4% of total employment costs on behalf of the employee. This breaks down to 2.6% for health insurance, 0.8% for the national social security contribution, and 2% for pensions.
The pension fund is the sole contribution employees are responsible for, which is also 2%.
Income taxes owed by the employee are determined by their income level. The breakdown is:
- KHR 0-1,500,000: 0%
- KHR 1,500,001-2,000,000: 5%
- KHR 2,000,001-8,500,000: 10%
- KHR 8,500,001-12,500,000: 15%
- KHR 12,500,001 and over: 20%
Termination Process & Severance Pay
Employers must have a legitimate reason for terminating employees and are required to provide notice. Notice ranges are:
- Six months or less: seven days
- Up to 24 months: 15 days
- Up to five years: one month
- Up to 10 years: two months
- 10 years or more: three months
Severance pay is mandatory. Employees who have been with a company for between six months and one year are entitled to seven days’ wages at their standard rate. Employees who have worked at a company for more than one year are entitled to 15 days’ wages at their regular salary for every year of employment. This maxes out at six months’ wages.
Paid Leave
Vacation and Holiday
Cambodians receive 15 paid national holidays. In addition, employees are entitled to up to 18 days of vacation each year. Vacation accrues at a rate of 1.5 days a month, starting after one year of employment.
Sick Leave
Employees are entitled to take up to six months of sick leave. The first month is paid in full. Employees are paid 60% of their regular salary in the second and third months. The remaining three months are unpaid.
Parental Leave
In Cambodia, mothers receive 90 days of paid maternity leave, paid at 50% of the employee’s regular salary. There is currently no provision for paternity leave.
Why Digital Nomads Love Cambodia
There are so many reasons why digital nomads flock to Cambodia. For starters, the cost of living is hard to beat.
Combined with the beautiful weather, incredible history, and increasingly robust business infrastructure, Cambodia is an obvious draw for people who may feel that nearby countries are too overrun with fellow nomads — or simply too expensive.
Cambodia is making an effort to capitalize on that popularity. While there is no digital nomad visa, Cambodia does offer a Business Visa, also known as the E-class visa or EB visa, designed for employees, freelancers, and business owners. The visa allows non-residents to work in Cambodia for 30 days within a three-month period.
Confidently Hire in Cambodia with RemoFirst
One of the biggest challenges when hiring in a new country can be ensuring that you’re adhering to all of that country’s employment regulations. With so many rules to keep track of, it’s easy to get lost in the details.
The best way to stay compliant is to partner with an Employer of Record (EOR) like RemoFirst. We take on all the formal HR tasks, including onboarding, payroll, and ensuring full compliance with employment laws.
Contact us today to book a demo and learn how we can help you confidently hire a global team.
